When you are deciding if filing for bankruptcy is an option for you, there are a few things that you need to take into consideration. If your monthly income for the six months before filing is above your state’s median, you will probably not be able to file Chapter 7. Instead, you will file Chapter 13 personal bankruptcy and make a court-approved repayment plan.
If your disposable income after paying your living expenses is at least over $166 a month, you will pay out your back debt over a five year period. If your income is below your state’s median, your repayment plan will be three years instead.
To determine if you can file Chapter 7, or Chapter 13 bankruptcy, you will be required to take a means test. First, you will file a Statement of Current Monthly Income and Means Test Calculation. The information you provide in the first section of the form will determine if your income is less than your state’s median income.
If your income is less than the median, then you can file either Chapter 7 or Chapter 13 bankruptcy. The benefit of filing Chapter 7 over Chapter 13 is that you will not have to make any monthly payments to the court, and all of your qualifying debt will be eliminated.
If your income is more than the median, you will have to fill out the second part of the form to find out how much money you have left over after paying your living expenses. To figure out the amount allowed for the expenses the standard IRS allowances will be used. If after entering the financial information, and it shows that you can afford to pay at least 25% of your debt, you will not be allowed to file a Chapter 7 bankruptcy.
If you have more questions about the type of bankruptcy that is best for your unique situations, contact a Fort Worth bankruptcy attorney.