Negosentro | How To Know If You Qualify For Bankruptcy | Are you in so much debt that you are contemplating filing for bankruptcy and you don’t even know how to go about it? Well, this is the post for you. Read carefully onward.
While there is not a cutthroat amount of debt to signify the qualification of an individual for Chapter 7 bankruptcy vs credit repair does have some peculiarity that warrants the same.
What to know to find out if you qualify for bankruptcy
Do I qualify for bankruptcy? Well, filing for bankruptcy doesn’t require a minimum amount of debt to be covered but you just have to pass a Chapter 7 Bankruptcy ‘Means Test’.
To pass this ‘Means Test’ you must have little to no disposable income. That is the means test will compare your average income for the last six months preceding your bankruptcy against the median income of a similar household in your state. If your income is below that, you automatically qualify for bankruptcy.
The median income does vary from state to state and as such, you must be willing to research the median income in your state. Though the median income most of the time doesn’t pose a problem as many with little or no income have been able to qualify for bankruptcy in the past.
What If My Income Is Above The Median Income In My State?
Now, if your income is above the median income in your state, this warrants no worry from you. As many debtors fret over their inability to qualify for this part of the means test. There is a second chance.
If your income is above the median income in your state, you will then have to take the second portion of the means test. This involves deducting your expenses from your income to determine if you have any income remaining to pay your creditors.
Do know that what you are only allowed to deduct from your income is either the national or the state standard living allowances as your expenses.
If after the deduction of allowable expenses, the remaining income results in an indisposable income, then you are allowed to file for bankruptcy. And if after the deduction of all allowable expenses and your expenses are lesser than your net income, then you wouldn’t be able to qualify for bankruptcy. This falls under the purview of ‘presumption of abuse’ – that is, that you have the income to pay creditors.
Lastly, you should understand the following as they are very important for you to qualify for bankruptcy. That;
- You can repay your debts outside of bankruptcy.
- Your creditors’ willingness to work with you.
- Your ability to discharge the types of debts that you have.
- You haven’t filed for Chapter 7 bankruptcy in the last eight years.
- You haven’t filed for Chapter 13 bankruptcy in the last six years.
- You must wait for a minimum of 181 days if your bankruptcy case has been tossed aside before you file again.
- You must register and finish a counseling course offered by an approved credit counseling agency.
- You should understand that the Judge has the discretion of approving or disapproving your bankruptcy case even if all the requirements are met.
