One of the greatest effects of the changes in the bankruptcy code in 2005 was the Means Test. This amendment was so misunderstood and terrifying for the people that they were in a hurry to file for bankruptcy before the scheduled enactment of this amendment. Some people thought that the Means Test will make it impossible to file for Chapter 7 bankruptcy.
Of course, not all the rumors were completely accurate. The Means Test takes the number of members in the debtor’s household, into account and compares the debtor’s income with the income of the average American in that area. If the debtor’s income is less than the average, he or she can go for a Chapter 7 filing. In case the income is more than the average, the debtor will have to opt for another chapter and will have to make payments to the creditors because he or she has the “means” to do so (Means Test).
However, the taking of the Means Test is avoidable for military members and businesses. Thus, a person having an annual income of $200,000 can still file for a Chapter 7 bankruptcy, if he or she is eligible for it under one of these two exceptions.
It is better to let an experienced bankruptcy attorney calculate your Means Test, even if you think that you will not pass it, as some expenses might be deductible from your income. Moreover, there some kinds of income, like social security, which are not a part of the analysis.
To learn more about the Means Test, contact the best bankruptcy lawyers of Los Angeles & Dallas, TX, the Recovery Law Group. You can visit www.recoverylawgroup.com or call on 888-297-6203.