What Type of Bankruptcy Should I File?

Let the Bankruptcy Means Test Help

A new law has created complicated guidelines to determine whether you should file a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. Using a formula called a “means test”, you can compare your income to your expenses to tell if you can pay something back to your creditors. If the formula concludes that you can pay something back, you probably cannot file a Chapter 7 Bankruptcy, and must opt for a Chapter 13 Bankruptcy, which includes a payment plan. However, the new means test does not eliminate the possibility of a Chapter 7 Bankruptcy for most people.

Steps in the Means Test

Ft. Lauderdale bankruptcy attorney Jeffrey Solomon can prepare the test for you and will make the required calculations. First, you must analyze your income for the six months prior to filing your case. Then we take the average of your income over those six months and multiply it by 12 to determine your annual income.

Next, you and your attorney will compare your average income to the median income of residents of Florida based on the number in your household. If you fall below the median income level, you probably may file a Chapter 7 Bankruptcy. While there are other considerations, an attorney can best assist you in understanding them.

Means Test Outcomes

If your total from the means test places you over the median income, do not worry. It is still possible to file a Chapter 7 Bankruptcy. The means test provides several deductions to your gross income, including payroll taxes, secured debt for your home and vehicle, government guideline allowed budget credits for rent, food and clothing and other necessary expenses.

If the test shows that you have excess income, even as little as $100 per month, it may prevent you from filing a Chapter 7 Bankruptcy. In this event, you would file Chapter 13 Bankruptcy and arrange a monthly payment plan to a trustee who would then pay your creditors. Often, the person filing for bankruptcy only has to pay a tiny percentage of her debt.

Attorney Solomon provided more information about Means Tests on his other website. The means test can be a valuable tool in making the critical decision about bankruptcy. To take the test you will need to acquire records of your income for the last six months. The Law Office of Jeffrey Solomon is very familiar with administering the means test and explaining it in an easy to understand way. Contact our Ft. Lauderdale bankruptcy lawyer today to let us help you shoulder the burden and make this complicated process as easy as possible.