With smart timing you can take advantage of the unusual way that your “income” is calculated for the Chapter 7 means test.
Determining your correct “applicable state” can make the difference between passing and failing the means test.
We show by example how the means test works, when a person qualifies for a Chapter 7 case simply by income.
You can have more income for the purpose of passing the means test as your household size increases. But what IS your household’s size?
You only have to pass the means test if you have “primarily consumer debts.” If you have more business debts, skip the means test.
You have to pass the means test to qualify for a Chapter 7 case. It’s often an easy test to pass but one with some crucial twists and turns.
You must use the right “number of people in your household” to qualify for Chapter 7. It’s not always obvious.
You must use the right “state in which you live” to qualify for Chapter 7. It’s not always obvious.
“Income” is not what you think it is–it’s much broader than usual and fixates on the 6 full calendar months before your bankruptcy filing.
Besides the many 3-year cost of living increases happening on April 1, 2016, new median income amounts also start applying on the same day.
You qualify for Chapter 7 without having to pass the “means test” if you fit within these very specific military-related exemptions.
Soon families of larger than 4 people can have a bit more income and qualify for a 3-year Chapter 13 payment plan instead of a 5-year one.
As of April 1, 2016 you can have a little more “disposable income” and still pass the “means test” to qualify for Chapter 7 bankruptcy.
Think about filing bankruptcy in early 2016 if you had some extra source of money in mid-2015.
The reality is that most people who want to file a “straight bankruptcy” Chapter 7 case can do so; if not, Chapter 13 may be better anyway.
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