3 Steps You Can Take To Determine If You Qualify For Chapter 7 Bankruptcy
A visit to a bankruptcy attorney is a great way to find out if you qualify for Chapter 7 bankruptcy; however, there are several things you can do prior to this meeting that may help you find out the answer to this question. Chapter 7 bankruptcy could be beneficial for your financial problems, so here are three things you can do to help you find out if you would even qualify.
Gather Your Income Information
Qualifying for Chapter 7 bankruptcy primarily involves proving that your income was lower than the median income in your state over the last six months. To do this, you will need to calculate how much income you have earned over the past six months, and you will need to make sure you add every source of income you have. This includes:
- Paychecks from work
- Income from self-employment
- Interest income from investments
- Child support payments
- Retirement income
Any unusual income, or abnormal income, must also be included in this figure. For example, if you received money from an inheritance within the past few months, it may need to be included in your figures. After gathering all your income documents, you should add them up to determine how much money you have earned in the last six months.
Compare To The State Median Income
Once you have calculated how much money you have earned over the last six months, you will need to multiply the number by two. This will show approximately how much you make in one year, and this is the number you will need to compare to the state median income.
As you do this, you will notice that the chart includes the number of dependents you have. This is because it allows you to earn more money and still qualify for Chapter 7 when you have more dependents to provide for. This chart also takes into consideration the cost of living in different states. If you live in a state that has a high cost of living, the average median income will be higher than that of a state with a lower cost of living.
If you discover that your income is less than the amount listed on the chart, you will most likely qualify for Chapter 7 bankruptcy. If your income is higher than this amount, you are not automatically disqualified; however, at that point, you should meet with a bankruptcy attorney to complete a means test.
Complete a Means Test
While you can complete a means test yourself, it is often better to let an attorney calculate this for you, because it can be complicated. A means test takes the qualification process one step further. It is used to take other factors of a person's financial situation into account, and after completing this test, you may find out that you do qualify for Chapter 7 bankruptcy.
In a means test, your attorney will look more closely into your bills, debts, and monthly expenses. This test will help reveal if you have enough money to pay your bills with the disposable income you currently have.
When this test is complete, you will know whether or not you qualify for Chapter 7. The good news is that if you do not, your attorney may suggest filing Chapter 13 bankruptcy. Chapter 13 can actually be more beneficial for people in some cases, and you can talk to your attorney to learn more about it.
If you complete these steps and decide to go through with filing for bankruptcy, make an appointment with a bankruptcy attorney to help you get started with the bankruptcy process. Visit http://www.wflaw.net to learn more.