Why Is It Important To Know About Means Test?

  • Means Test

Why Is It Important To Know About Means Test?

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When people struggling with debt wish to get rid of it through bankruptcy, one of their major concerns is the chapter under which they should file. While chapter 7 gets rid of all unsecured debts in a relatively smaller timeframe, Chapter 13 allows you to keep non-exempt property while paying your creditors through a 3-5 years repayment plan. However, lawyers of Dallas based bankruptcy law firm Recovery Law Group say, which chapter you will be able to file depends on the Means test.

While filing for bankruptcy your income of the past six months is taken into consideration and deductions which are allowed (as per law) are made from it. It is important to be aware of the deductions as they may make a difference in your disposable income which will alter your bankruptcy filing chapter. Your disposable income plays a very important role in the selection of bankruptcy chapter. If your disposable income is less, you can file for Chapter 7; else you are required to file for Chapter 13. Additionally, the amount you end up paying your unsecured creditors also depends on your disposable income.

Since Means test can be extremely crucial, it is important that the test is done accurately as it affects not just your bankruptcy discharge amount but also duration. Hiring experienced bankruptcy lawyers is therefore important. You can do so by calling 888-297-6023.