What Are My Options if I Do Not Pass the Means Test?

Experienced Lawyer

Once you have made the decision that Chapter 7 bankruptcy is right for you, it’s not uncommon to find yourself experiencing some sense of relief. After struggling to make ends meet in order to cover your debts, you finally have a path that seems like the best option for you. But, what happens if you do not pass the means test? It can be difficult to discover that this may no longer be a viable option for you, especially when you have finally come to terms with your situation. This is just one reason why choosing an attorney to represent you can provide you with alternative options. Knowing that there are other routes you may be able to pursue can help to alleviate the situation you find yourself facing.

The Means Test

Chapter 7 bankruptcy gives debtors the ability to to experience relief from much of their debts. Although you may have the ability to retain some of your assets, it can be expected that much will be sold off to pay any existing debts. The means test is a formula utilized to determine eligibility for debtors in pursuance of Chapter 7 bankruptcy. The purpose is to ensure that those who may have the ability to pay back their debts are not able to have their debts wiped in the way that Chapter 7 allows. The means test reviews your monthly income over a period of time in comparison with your debts. If your income is more than that of the median income within your state, it will need to be determined if you are able to repay your debts. If you are unable to pass the means test, Chapter 13 may be the best and most viable option.

If you are unable to pass the means test, an attorney will take a look at the details to determine whether there is a way to continue pursuing Chapter 7, or if there is another option for you. Additionally,  an attorney can take a look at your case to help determine the best way to strategize next steps. It may help to review your means test to determine if any errors were made. If we discover that the test was completed accurately, Chapter 13 may be the next option to consider.

Considering Chapter 13

Although Chapter 7 may appear to be the only option, there is another alternative. An attorney can take a look at your specific situation to help determine your options. Another bankruptcy option includes Chapter 13 bankruptcy. Chapter 13 gives those with the ability to pay back their debts to be able to do so in a way that is manageable for them. In most cases, this will involve putting together a plan that proposes how you will pay back all of; or a portion of these debts over the course of 5-7 years. We can provide you with the support and legal counsel needed when putting together a plan for the courts.

Have you recently discovered that Chapter 7 is not the best option for you? Are you terrified that you will be left to manage creditors on your own with no other options to alleviate your debts? Consider contacting a chapter 13 bankruptcy lawyer Memphis, TN offers for assistance in exploring alternatives to Chapter 7 bankruptcy.

Thank you to our friends and contributors at Darrell Castle & Associates, PLLC for their insight into bankruptcy and the means test.