| Before you file your petition for a chapter 7 | | | | auto, mortgage, and food. On the worksheet, |
| bankruptcy your Minneapolis bankruptcy lawyer | | | | deduct the monthly expenses total from the |
| will administer a bankruptcy mean test. This test | | | | monthly income total. The remaining amount |
| will reveal whether you have the available income | | | | indicates your disposable income per month. |
| to pay your debts on a monthly repayment | | | | Higher disposable income reduces your chances |
| schedule. | | | | for qualifying to file chapter 7 bankruptcy. The |
| If you are unable to offer monthly repayment | | | | courts would prefer to establish an agreement for |
| due to a lack of disposable income, you have | | | | repayment of those debts using your disposable |
| passed the means test and may file for chapter | | | | income. Doing so qualifies you for chapter 13 |
| 7 bankruptcy after consulting your Minneapolis | | | | bankruptcy. |
| bankruptcy attorney. Failure of the test will result | | | | Chapter 7 Bankruptcy Means Test Failure |
| in your inability to file for chapter 7 bankruptcy | | | | Chapter 7 allows for debt to be discharged from |
| but you will still be able to file for chapter 13 | | | | your record. If you fail the test, however, you do |
| bankruptcy. | | | | have alternative options and will not necessarily be |
| The Bankruptcy Means Test: How Does it Work? | | | | saddled with an amount of debt if you are unable |
| The bankruptcy means test analyzes six months | | | | to pay that mount. |
| of average monthly income accrued prior to your | | | | If you file for chapter 13 bankruptcy, the court |
| filing. The test will guide you to look at your | | | | will adjust, monitor, and review your budget. You |
| monthly income to see if it is below your state's | | | | will be required to repay debtors over a five year |
| median income level. Since this is set by state, it | | | | period. Any balance remaining after the five years |
| is best to consult with an expert in Minneapolis | | | | of repayment will be discharged by the court. The |
| bankruptcy law regarding the median income level | | | | court will ensure that you are able to make basic |
| for Minnesota. If you are below the median, you | | | | payments for necessities such as food and |
| may proceed with filing Chapter 7. | | | | clothing. |
| If your income rests above the median level for | | | | The bankruptcy means test exists to prevent |
| your state, you must determine your disposable | | | | abuse by debtors who are able to pay off their |
| income on a per-month basis. You must then use | | | | debts. Bankruptcy is a life-changing decision that |
| a worksheet to generate a budget depicting your | | | | should only be approached with the assistance of |
| expenses including utilities, clothing, medical, gas, | | | | a Minneapolis bankruptcy law professional. |