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Bankruptcy can be a useful tool if you’re struggling with large amounts of debt. Most Americans file for Chapter 7 or Chapter 13. To file for bankruptcy, you have to be eligible. When you choose to file for bankruptcy, it may feel overwhelming at first. No doubt you’ll have your share of questions to ask.
What Is the Means Test?
The means test has a couple of different parts. The first part of the test checks your household income. Gather as much documentation as you can about your income for the last six months. Also, make sure to include any changes to your income in the last six months. For instance, if you had a high-paying job for the last six months but recently lost your job, this is an important exception. If you now have a higher-paying job, this will also be considered.
If you have a lower income than the median income, you pass the means test. If you don’t, this doesn’t mean that you can’t file for Chapter 7 bankruptcy. There is another part of the test that you can rely on.
To start the second part of the means test, you need to document all of the expenses you’ve had for the last six months. You need to list your medical costs, clothing costs, groceries and more. These are allowable expenses. If you have a low enough disposable income, this means that you can continue forward with the Chapter 7 process. If you do not pass the means test, then you still may be able to file for Chapter 13 bankruptcy.
Can You Keep Your Credit Cards?
When you file for bankruptcy, you have to list all of your debts. If you have any zero balances, then you do not have to list the card. However, once you file for bankruptcy, your creditor may cancel your card anyway. In some cases, the creditor may allow you to sign a new contract, but don’t expect to keep all of your old and current cards. If you owe debts on your card, you do have to list them in the bankruptcy documents.
If you are struggling with your debts, there is a good chance that you qualify for bankruptcy. The type of bankruptcy that you’re eligible for will depend on your circumstances. To figure out whether you’re eligible for bankruptcy, set up a consultation with a chapter 13 bankruptcy lawyer, like the attorneys at Kamper & Estrada, PLLC as soon as possible.