The Means Test In Bankruptcy
One misconception around bankruptcy involves the Means Test. Yes, such a test exists. It is designed to compare your Current Monthly Income to the Median Income that applies to your geographic area. If your CMI is lower than the Median Income, then the presumption is that you qualify for a bankruptcy filing. However, your Charlotte bankruptcy attorney will rightfully tell you this is not where the analysis ends.
Beyond Median Income
Even if your CMI exceeds the Median Income, it doesn’t necessarily mean you won’t be able to achieve a bankruptcy filing and discharge of debts. If your CMI exceeds the Median Income, the next step is to subtract your monthly expenses to determine your monthly disposable income. You are allowed some disposable income each month per the bankruptcy rules, without being disqualified for filing.
More On Disposable Income
If you exceed the allowable disposable income per month for qualifying automatically for a bankruptcy, the next option is for your attorney to determine what percentage of your general unsecured debt can be paid with your disposable income. Generally speaking, if your disposable income each month would pay less than 25% of your monthly debt to general unsecured creditors (Credit Cards, Medical Debts, etc), then you should still qualify for a Chapter 7.
There are many options in bankruptcy, including a Chapter 13 for individuals who are behind on mortgage payments but want to keep the home in bankruptcy. Call today to speak to an attorney about your options in bankruptcy. Getting educated is empowering and that’s part of the bankruptcy attorney’s job—take advantage of it! 704.749.7747.