Bankruptcy Means Test
Huntsville Attorneys | Crumbley, Blackwell, Wisda & Associates, P.C.
At Crumbley, Blackwell, Wisda & Associates, P.C. we have been assisting clients with filing for bankruptcy and restructuring their financial situations in the Huntsville, Athens, Decatur, Madison, and surrounding areas for nearly 50 years. If you are considering bankruptcy protection, we can help you determine if you qualify for Chapter 7 and if you could benefit from filing bankruptcy.
What is the means test?
The bankruptcy means test is a formula designed to determine who is eligible for filing Chapter 7 bankruptcy in Alabama. Primarily, it is a way for the local bankruptcy courts to keep individuals with high incomes from filing for Chapter 7 bankruptcy protection. At the same time, it could allow for individuals with some income that have high expenses (such as a high mortgage payment) to qualify for Chapter 7, which will discharge payments of specific debts that the individual has incurred. The means test deducts monthly expenses from your current monthly income and calculates your monthly disposable income.
Each state has a different dollar amount as a threshold for qualifying under the means test. In the State of Alabama:
- If you are single, live alone, and earn less than $39,768 per year, you automatically qualify under the means test to file for Chapter 7 bankruptcy protection.
- If you have one other dependent living with you, with no income of their own, and you make less than $48,770 per year, you automatically qualify to file for Chapter 7 bankruptcy protection.
If you qualify for Chapter 7 bankruptcy protection, and your debts are primarily consumer related, you could have the majority of your debts wiped out, essentially. Meaning that creditors will not be able to collect the portion that you owe. If you have questions regarding bankruptcy or the means test, contact us. We can help to explain the means test and answer your questions. Bankruptcy Consultations are available for related cases in Huntsville, Athens, Madison, and surrounding North Alabama areas. To schedule a consultation, contact our office at (256) 539-4464 or complete an online case evaluation.