On behalf of Musselwhite, Meinhart & Staples posted in bankruptcy on Monday, June 25, 2018.
Every year, numerous Kentucky residents find themselves in impossible financial situations. The debt has become so overwhelming that they are on the brink of losing everything. When one reaches this point, it may feel like there is no hope for recovery. The truth is, there is always hope. Bankruptcy may help, but how does you know if you qualify?
Chapter 7 bankruptcy is also known as liquidation bankruptcy. It is meant for those individuals who truly lack the funds to pay creditors.
To qualify for a Chapter 7 filing you must meet certain income restrictions. Figuring out if you meet the requirements are easy — our attorneys just have to complete a means test. The means test consists of a few forms that ask questions about all income sources. Once that is all down on paper, our attorneys can compare it to the state’s median income level. If your income is less than the state’s median or if your disposable income is deemed insufficient to pay debts, you may pursue a Chapter 7 filing.
There are no right or wrong answers when it comes to the means test. It really is just an income comparison. The reason income level matters is because, with a Chapter 7 bankruptcy, qualifying debts can be discharged immediately upon petition approval. With a Chapter 13 filing, which is oftern referred to a repayment plan, the debtor will have to make payments to creditors for so many years before qualifying debts are discharged.
If you would like more information about bankruptcy and the different types offered for personal reasons call us, we can help. After a careful case review, we will be able to help you pursue the bankruptcy or debt relief option thought best for your situation. A fresh financial start may be possible, just just have to figure out the right way to go about it.