Is The Means Test Applicable?

In my previous blog, I discussed the Means Test. The Means Test determines whether an individual or couple is eligible to file a Chapter 7 Bankruptcy. However, there are limited circumstances where the Means Test may not be applicable. In these limited circumstances, a Chapter 7 Bankruptcy is available as long as you can show an inability to make a meaningful repayment to your unsecured creditors. In this blog, we’ll discuss some of the situations.

11 U.S.C. § 707 makes the Means Test inapplicable if the Debtor is a disabled veteran (as defined in 38 U.S.C. § 3741(1)) and the debt was incurred while on active duty (as defined in 10 U.S.C. § 101(d)(1)) or while performing a homeland defense activity (as defined in 32 U.S.C. § 901). Essentially, if you are receiving military disability benefits and have received a disability rating of at least 30%, or you were discharged or released from active duty due to a disability incurred or aggravated in the line of duty, then the Means Test may not be applicable. As long as you can show that you incurred these debts while on active duty or performing homeland defense, you can remove a difficult barrier to qualifying to file a Chapter 7 Bankruptcy.

The Means Test is also inapplicable if your debts are primarily “non-consumer” debts. Examples of non-consumer debts are business debt, taxes, medical bills and some student loan debt. If the majority of your debt is attributable to one of these types of debts you may be able to bypass the Means Test entirely and file a Chapter 7 Bankruptcy.

Posted on January 22, 2016 .

Do I Qualify For A Chapter 7?

Not everyone can qualify to file a Chapter 7 Bankruptcy. The first question we will ask you is whether you have ever filed a Chapter 7 Bankruptcy. If you have, you may not currently be able to file. To be eligible to file a new Chapter 7 Bankruptcy, your previous Chapter 7 Bankruptcy must have been filed more than eight years ago.

If you’ve never filed a Chapter 7 Bankruptcy, or more than eight years has passed since your previous Chapter 7 Bankruptcy, you must still pass the Means Test. In 2005, Congress dramatically changed bankruptcy laws. One of the largest changes to the bankruptcy laws was the creations of the Means Test. The Means Test determines whether individuals or families are capable of repaying some or all of their debt. This determination is made by examining your average monthly income and comparing it to the median income for your state. If your income is below the median, you will automatically pass the Means Test and qualify to file a Chapter 7 Bankruptcy. If your household median income is greater than the state median, then you will not automatically qualify to file a Chapter 7 Bankruptcy. However, just because you are above median, does not mean that you cannot file a Chapter 7 Bankruptcy. An experienced bankruptcy attorney will be able to examine your monthly expenses and determine whether you are able to pass the Means Test even though your monthly income is above median.

Generally, if you cannot pass the Means Test, you will be required to file a Chapter 13 and enter into a five year repayment plan with your unsecured creditors. The U.S. Department of Justice offers further information regarding the Means Test here.

Many people do not want the burden of a lengthy Chapter 13 Bankruptcy. It is imperative that you retain and experienced bankruptcy attorney that knows how to correctly prepare the Means Test in a manner that is most beneficial to you. An experienced bankruptcy attorney may also be able to get you to qualify for a Chapter 7 even if you do not pass the Means Test. In fact, there are some circumstances where the Means Test can be excluded and you may file a Chapter 7 Bankruptcy regardless of your current monthly income.

In our next blog, we will be discussing situations which may exclude you from the Means Test.

Posted on January 18, 2016 .

Chapter 7 Bankruptcy

A Chapter 7 Bankruptcy is a liquidation of non-exempt assets. It is also referred to as a “straight bankruptcy” a “total bankruptcy” or a “fresh start bankruptcy”. Chapter 7 Bankruptcy offers individuals and couples a fresh start as they can completely eliminate most unsecured debt and no longer have to worry about debt collectors, law suits, levies or garnishments.

A Chapter 7 Bankruptcy is commenced with the filing of a Voluntary Petition in a United States Bankruptcy Court. The Petition is accompanied by Schedules and Statements that detail your current property, debts and recent financial transactions. Shortly after the bankruptcy is filed, it will be assigned to a Trustee. The Trustee’s job is to examine your Petition, Schedules and Statements and attempt to recover money or property for your creditors. You will meet with the Trustee at a hearing and he/she will verify that the information is your Petitions, Schedules and Statements are correct.

The idea of losing property to the Trustee can be quite scary. Luckily, the State of Missouri has laws that will protect most, and generally all of your property. The vast majority of Chapter 7 cases are called “no asset” cases. This simply means that there are no assets available for creditors and that the individual or couple filing Chapter 7 Bankruptcy is able to eliminate their debt without losing any property or paying any money to the Trustee.

Our next blog will discuss who qualifies for filing a Chapter 7 Bankruptcy.

For further information regarding Chapter 7 Bankruptcy call (314) 802-8328.

Posted on January 15, 2016 .

New Year's Resolution: Get Out Of Debt

Hello and welcome to my Blog. My name is Andrew Magdy and I have been practicing bankruptcy for around 8 years now, filing over 2000 cases in this time. I focus on Chapter 7 and Chapter 13 Bankruptcy in the Eastern District of Missouri. This is the website for my Troy, MO satellite office, which I will be available at by appointment only. Please give me a call today at (314) 802-8328 to set up your free bankruptcy consultation.

Make your #1 New Year's Resolution to put yourself back on the right track to financial stability with a fresh start, and a plan to build your credit back. I can help you with this, and it is not as difficult or scary as you might think. Just call me to chat about it, it's free.


Posted on January 11, 2016 .