The Means Test & Bankruptcy in IL

Wondering if You Qualify for Chapter 7?

No matter how hard you work, it seems that you can never catch a break. The bills just keep coming in faster than your income, amassing more and more debt every month. This is a sure sign that you need to contact an attorney for help. Smith Ortiz, P.C. has the knowledge and skills to help you turn around this financial disaster and get a fresh start. With over 25 years of combined experience with bankruptcy law, we can help you turn your situation around.

Specifically, our team has the resources to determine if Chapter 7 bankruptcy is the best option for you. Before filing, federal law requires debtors to pass the means test, which can be complicated to understand. We are here to answer your questions and pursue the lasting financial relief you need.

Determining Chapter 7 Eligibility Using the Means Test

Chapter 7 bankruptcy is the most common form and exists for individuals who don't have enough income to cover all their debts. As such, the means test prevents people from taking advantage of the system by taking a close look at the filer's income.

You are required to answer two questions according to the means test:

• Is your monthly income less than the median income for a similarly sized household in Illinois?
• Do you have enough disposable income to repay certain debts?

If you answer "yes" to the first question, you are automatically eligible to file for Chapter 7. If not, you must calculate whether you have enough "disposable income" to pay off a portion of your unsecured debts. Disposable income is everything left over after your monthly expenses have been covered.

If your disposable income exceeds a certain threshold, you may be required to file for Chapter 13 instead. Chapter 13 bankruptcy requires debtors to make monthly payments on certain debts over a three-to-five-year period.

• Related Blog: Differences Between Chapter 7 and Chapter 13 Bankruptcy