Misuse of Bankruptcy laws is something that was commonly seen in the 1990s and early 2000s which led to a series of changes in the Bankruptcy laws. Many individuals who had substantial assets also started declaring bankruptcy and ended up dissolving their debts effortlessly. To ensure the borrower truly needs a bankruptcy claim, there are the following tests that he/she can consider before filing for bankruptcy-
- Means test
A means test is basically verifying if your income is lower than the median income of your state. Every state in the US based on various factors like standard of living, inflation, cost of living, etc., determine a basic minimum median income needed to survive in that state. For instance, the median income is bound to be lower for Texas compared to a resident of California or New York. To file bankruptcy as per Chapter 7, the applier’s income must be below the median income for his/her state.
You can log on to this link https://recoverylawgroup.com/bankruptcy/ to determine if you are eligible for certain exemptions based on the number of family members, and other aspects. If a borrower fails the means test by a small margin, there is no need to be disappointed. One can reach out to 888-297-6203 and seek personalized guidance on how you can still be eligible for Chapter 7 bankruptcy with income exceeding the state median.
- Net household income
If you are the only person earning in the family. The net household income which is the net total income and certain qualified expenses can help you qualify for the Chapter 7 bankruptcy code. These expenses may include childcare, taxes, insurance premium, home and/or car mortgage, charitable contribution, attorney fees, etc. This is the reason why it’s never a bad idea to seek professional help by logging on to https://recoverylawgroup.com/bankruptcy/ especially if you reside in Los Angeles & Dallas, TX.
Other qualified expenses that can be considered while calculating net household income can be salary deductions, reasonable living expenses, alimony, secured debt payments, etc. Any monthly installments towards any tax expense are also considered deductible. It is not the end of the road if the borrower cannot qualify for the means test or the net household income test. A bankruptcy can also be filed with Chapter 13 if these tests are not met.
How does Chapter 13 bankruptcy work?
Chapter 13 also can help in reducing a considerable amount of debt through a redesigned payment plan. Most of the unsecured debt can be nullified by filing through Chapter 13 as well. The arrangements for Chapter 13 are complex and might require attorney assistance. Worry not! 888-297-6203 is your solution to all your bankruptcy problems. Dial-in now!