The internet is a great tool, but not always the friend of those who are attempting to file bankruptcy. What do I mean? I mean that a bit of googling regarding bankruptcy can result in some great information, or it can result in some terrible information. Odds are that your googling about Chapter 7 bankruptcy will result in some of both. One thing that you will no-doubt learn when doing some internet investigation about Chapter 7 is that there is a thing called a Means Test…..and that if you fail the means test that you can’t file Chapter 7. What happens then is that you go an fill out the means test on the Department of Justice’s website. The purpose of this blog is to educate you as to why you shouldn’t give up on a Chapter 7 without first having a discussion with an attorney. Why?
First, you probably didn’t complete the means test correctly. I know, I know. You followed the directions. However, did you accurately use the average of your last 6 months of income? Did you know that you don’t use this month, but instead use the prior 6 months? Did you get to take an additional expense due to the age/mileage of your vehicles? Where did you obtain the number that you used for medical expenses? Did you know that you could deduct 1/60th of the remaining amount of your car payment and income taxes owed? I could go on, but hopefully I made my point. There is a lot to know about how to complete the means test in an ethical and also favorable manner that you aren’t going to read on the instructions to the means test. An experienced bankruptcy attorney has handled hundreds or thousands of bankruptcy cases and knows what you can and cannot claim on the means test. Just as a bankruptcy attorney couldn’t do your job as well as you do it, you aren’t going to learn how to be a bankruptcy lawyer through a bit of googling.
Second, just because you fail the means test does not actually mean that you won’t qualify for Chapter 7 bankruptcy. I know, I know….but the internet said. Well, there’s more to the means test than just the number showing at the end. Has there been a significant change in circumstances that results in the means test being a completely inaccurate measure of your ability to pay into a Chapter 13 repayment plan moving forward? Have you recently been divorced, for example? Or did you recently lose your job? These are a few examples of when you might be able to file a Chapter 7 even though you failed the means test. In fact, twice this month I will receive discharges of bankruptcy in Chapter 7 for debtors who failed the means test. While this doesn’t happen every day, it’s actually not that uncommon. An experienced bankruptcy attorney will know when it is likely that you will qualify for a Chapter 7 bankruptcy even though you fail the means test and when you would be disqualified and need to file a Chapter 13 bankruptcy.
Finally, an experienced bankruptcy attorney would also be able to advise you in the event that a few ethical changes in your expenses would assist you in qualifying for a Chapter 7 bankruptcy. For example, if you have a lot of upcoming medical expenses that you have been putting off, it would likely be more advantageous to file bankruptcy after incurring those expenses for purposes of the means test. There really is no end to the amount of possibilities. Nonetheless, a bankruptcy attorney has been through this many, many times so he or she will know what would and would not be beneficial actions for you to take in order to qualify for Chapter 7 bankruptcy. It is true that not everyone will qualify for Chapter 7 bankruptcy. However, if you are deep in debt and need a solution, speaking with a bankruptcy attorney in your area is very important.
If you live in the Indianapolis area and would like to meet with attorney Erika Singler call our officiate at (317) 575-8222 or click here. We routinely represent clients living in Zionsville, Westfield, Noblesville and Fishers at Halcomb Singler, LLP, and we look forward to meeting with you to determine the best path forward and out of debt.