It is common for people to do a bit of internet research when they are contemplating bankruptcy. This is certainly understandable considering people typically do not know a bankruptcy attorney and don’t want to air their personal financial situation by asking family or friends for a referral. So, to the internet they go and they figure out that a Chapter 7 would be a great way for them to obtain a fresh start without making any payments. But they they read that a 6-month backwards looking calculation called a means test will determine whether or not they will qualify for Chapter 7 bankruptcy. After looking up their household size and realizing that they are over the average income for their household size many people give up on looking any further at bankruptcy. In my opinion, this is a mistake.
Halcomb Singler, LLP, has helped many, many people who earn more than the average on the means test file for Chapter 7 bankruptcy. The means test was added to bankruptcy code in 2005 as a way to push more and more bankruptcy filers into a Chapter 13 repayment plan instead of the faster and “easier” fresh start offered by Chapter 7. The means test is a portion of the bankruptcy petition that must be completed by most people who file bankruptcy (exceptions include some military filers as well as those whose debts are primarily business instead of consumer). The purpose of the means test is to determine whether a family SHOULD have money at the end of the month to repay creditors after taking into account reasonable living expenses. The means test is in addition to the debtors’ schedules I and J in which debtors are required to list all of their actual income and expenses as of the date of the filing of the bankruptcy petition. If the means test shows that the debtors should have more than $166.67 left at the end of each month the debtors “fail” the bankruptcy means test.
While I certainly understand that many people will take to the internet and complete their own means test to determine whether they can qualify for a Chapter 7 bankruptcy, don’t stop there if you determine that you don’t qualify. First of all, making more money than the average family of your size in Indiana only means that there is a presumption that you cannot file Chapter 7. The presumption may be rebutted through the remaining calculations of the means test. However, the means test deductions are more complex than you may think and if you fill it out yourself you may miss some deductions that may qualify you for a Chapter 7. It is similar to completing your taxes….your chances of missing something are less than a CPA. Similarly, a bankruptcy attorney in your area will know at least a few deductions that are permitted in your district and may not be permitted elsewhere in the country.
Erika Singler has experience representing those individuals and couples who have above-average income in Chapter 7 bankruptcy (perhaps due to the location of Halcomb Singler, LLP in Carmel, Indiana) and enjoys thinking creatively to determine whether there is any legal way for an individual or spouse to qualify for a Chapter 7 bankruptcy even when their income can be considered substantial in relation to their household size. Certainly, there is never any guarantee that you will qualify for Chapter 7 bankruptcy. However, I recommend speaking with an attorney prior to giving up on bankruptcy all together.
Erika Singler offers one free initial consultation at Halcomb Singler, LLP, for those contemplating bankruptcy. To schedule your appointment please contact our office at (317) 575-8222 x 12 or click here and a representative from our office will contact you to schedule an appointment.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.