What is the Means Test?
The Means Test is a simple test that you can use to determine your eligibility for a chapter 7 or a chapter 13 bankruptcy in Daytona Beach.
The US government implemented the means test in 2005 with the idea of preventing the wealthy from taking advantage of the bankruptcy system in mind. The test is an easy way to distinguish what people will qualify for a chapter 7 bankruptcy and what people will qualify for a chapter 13 bankruptcy based on their monthly income and expenses, should they choose to file for bankruptcy. Taking the means test and qualifying one way or the other does not mean that you have to file for bankruptcy; to be sure that bankruptcy is the right choice for you it is a good idea to meet with a Daytona Beach bankruptcy lawyer to assess your options.
How does the Means Test work?
The Means test is a formula that subtracts your monthly expenses from your monthly income to determine the amount of “disposable income” you have available every month. The level of disposable income is used to determine your ability to pay your existing and future debts. The less the amount of disposable income you have, the more likely you are to qualify for chapter 7 bankruptcy because the bank views that it as meaning you simply do not have the means to pay back your debts.
If your income is lower than Florida’s median income than that qualifies you for a chapter 7 bankruptcy in lieu of having to take the means test.
What to do after taking the Means Test
The Means Test will provide you with an easy way to assess what your level of disposable income is and determine whether you really have the ability to make your payments. The knowledge of whether you qualify to file for a chapter 7 bankruptcy or a chapter 13 bankruptcy can help you explore your options or prepare yourself to file for bankruptcy. It is always a good idea to meet with a Daytona Beach bankruptcy lawyer to ensure that your means test result is accurate and that filing bankruptcy is your best option.
Call a Daytona Beach Bankruptcy attorney today to schedule a FREE consultation and find out what your options may be.