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Determining Debt Relief Options by Eligibility

By
Real Estate Attorney

TAKING THE MEANS TEST IN Dallas, TX

Determining Your Bankruptcy Eligibility

After you have met the basic qualifying criteria needed to file bankruptcy, the next step in the bankruptcy process will be to determine which chapter of the U.S. bankruptcy Code you are eligible to file under. Although each chapter can provide consumers with distinct benefits, there are strict limitations as to who can file under a certain chapter. Many of these heightened eligibility requirements come as the result of the government's focus on limiting the use of certain chapters, particularly Chapter 7 bankruptcy, to those who are truly in need and unable to pay their preexisting debts.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the legislation largely responsible for these new filing restrictions, now requires consumers to submit their financial information to the court for an income-based evaluation known as the means test. The means test is administered after a bankruptcy petition has been filed and prior to a specific chapter being chosen. Essentially, the means test will compare your average monthly income to the state of Colorado's median monthly income. The means test determines your eligibility as follows:

  • If your monthly income is less than Colorado's median monthly income, then you will automatically be eligible to file Chapter 7 bankruptcy.
  • If your monthly income is greater than Colorado's median monthly income, the bankruptcy court will further review the amount of disposable income you have available after you pay fixed monthly expenses, including housing costs, food, and other essential living expenses.

When analyzing your disposable income, courts will primarily focus on whether you have the available funds needed to make monthly payments toward your preexisting debts. If it is determined that you do not have the available funds to pay a certain percentage of your debts over the 3- to 5-year Chapter 13 payment plan, then you will most likely be able to file Chapter 7 bankruptcy. If, however, the court determines that you are able to pay a certain percentage of your debts using your disposable income, then you will most likely be required to file under Chapter 13.

Speak with a DFW Bankruptcy Lawyer to Weigh Your Options

A firm comprised of real people who represent real people just like you, our legal team does not hide behind legal jargon and we never pass your case off to paralegals or support staff. We are always honest and up-front and will work closely with you to determine which chapter of bankruptcy you are eligible to file under. In addition, we will guide you step by step through the bankruptcy process, ensuring that you are always kept well-informed and that you are able to obtain the best possible results.

As our attorneys have accumulated a positive reputation for our grit and commitment to clients, you can be confident that we will be by your side for the long haul. We are here to help, and we utilize every ounce of experience and resource we have to help you succeed. If you would like to learn more about which chapter you may be able to file under, please do not hesitate to contact a bankruptcy attorney from a reputable firm today.