Bankruptcy laws can be quite complex, thanks to the Bankruptcy Abuse Prevention and Consumer Protection Act that was passed in 1995. But there’s no need to be discouraged – you don’t have to go through it alone! A professional bankruptcy attorney can walk you through the process step-by-step.

In order to file, you’ll first need to complete the following:

Means Test
The Means Test will determine whether you qualify for Ch. 7 based on your income level.

Credit Counseling
After you pass the means test, you’ll still need to have credit counseling briefing before you can file for Ch. 7 or 13. A bankruptcy attorney can set you up with a qualified credit counselor.

Debtor Education
Before your debts can be discharged, you’ll be required to enroll in debtor education, otherwise known as a financial management course. Again, an attorney can help you manage this part of the process.

Worried about the requirements? Let a DebtStoppers bankruptcy attorney handle it for you! Our lawyers in Atlanta and Chicago can help you through the preliminary bankruptcy process and answer any questions along the way. Call us any time at 800-440-7235 or fill out our free one-on-one debt analysis form online.

The Means Test

The means test determines how much income you can allocate towards a payment plan.

Passing the test indicates that you have no other means to pay off debts than Ch. 7 bankruptcy. If you don’t pass, the law assumes you would be better off reorganizing your debts into a payment plan under Ch. 13.

Again, most people who are considering bankruptcy end up passing the means test. If you’re drowning in debt, chances are you don’t have a lot of play money. But since the test’s calculations can be on the complex side, why not do yourself a favor and seek professional assistance? Our bankruptcy attorneys can do the number-crunching so you don’t have to.

Two-part process

There are two parts to the means test – and you only need to pass one to be eligible for Ch. 7.

Test #1: Median income

Your average household income over the past six months will be compared with the median income in your state. You can find median income levels for Illinois, Georgia and other states here. If your income level is below the median, you qualify for Ch. 7 bankruptcy. If it’s not, you’ll go on to Test #2.

Test #2: Disposable income

This is where things get a bit more complicated – and your attorney’s help will come in handy. After allowable expenses are deducted from your income, your disposable income – or, the amount you have left over to spend each month after making necessary payments – will be determined. This is the amount that bankruptcy laws consider available for paying unsecured creditors. There are several outcomes.

• If your disposable income over the next five years is less than $6,000 (or $100/month), you pass – and are free to file for Ch. 7.
• If your disposable income is greater than $10,000 over the next five years, the law assumes you don’t really need to file for Chapter 7 bankruptcy and instead encourages you to file for Ch. 13. However, you may still be able to qualify for Ch. 7 if can prove special circumstances.
• If your disposable income is between $6,000 and $10,000, you’ll need to pass another, more complicated test. This one compares your predicted disposable income to your amount of unsecured debt. If it’s less than 25 percent of unsecured, non-priority debts, you’ll pass the means test. If not, you will not be considered for Ch. 7 bankruptcy.

Feeling a bit overwhelmed by the idea of all that number-crunching? Remember, you don’t have to be a math whiz to take the test – our bankruptcy attorneys can do it for you!

Get in touch with a Chicago or Atlanta attorney by calling toll free at 800-440-7235 or online though our personal debt analysis form.

And for more information on the means test, you can always check out the Chapter 7 Means Test law library page.