Do I Qualify for Bankruptcy?

Calculating Eligibility

You may be concerned about whether you will qualify to file for chapter 7 bankruptcy, and have the opportunity to discharge your debt. Most people that are struggling financially are likely to qualify for this form of bankruptcy, which allows them to get a fresh start. The process of determining whether you will qualify involves the means test, which measured your current debts and income against the median that has been in Arizona. All of your income (from any source) for the past six months will be evaluated against the average income for an individual in the state.

Getting the Means Test Right

If your income falls below the allowed average in the state, you will qualify to file chapter 7 bankruptcy and not have to take the means test. If you calculate your average monthly income and it is at or above the Arizona average, you will have to file a means test. What this test entails is a listing out of all of your sources of income as well as expenses and other assets. if it is determined by the court that you have the means to pay off at least a portion of your debts, then you will be eligible for a Chapter 13 debt restructuring. Chapter 13 bankruptcy is an alternative for those who do not qualify for chapter 7, either by having an income above the allowed average, or in cases in which the individual owns too much property or other assets that they fear could be lost in filing chapter 7. Chapter 13 allows them to pay off back obligations over a period of years, in one payment.

This can be a good alternative for those who have fallen far behind in payments and need the time to get their finances back on track, particularly if they are threatened with foreclosure, repossessions, lawsuits or other financial problems. If you are considering the option of bankruptcy, you need to sit down and calculate how much disposable income you have if you have not yet done so. Price Law Group can be an invaluable asset during this process. By meticulously going through your personal finances, all of your areas of expenses will be factored into the means test. This way, you can be guaranteed that you are getting the help that you are entitled to under U.S. bankruptcy code.