Ways and Means

In order to qualify for Chapter 7 bankruptcy, which discharges most of a debtor’s unsecured debt (personal loans, credit cards, etc.), the debtor must pass a “means test.”  This examination of a debtor’s financial records begins with a determination of the debtor’s current monthly income by adding his or her gross income from the past six months together and dividing the sum by six.  If this number is below the median monthly income of the state where they debtor resides, he or she qualifies.  If not, another test involves deducing reasonable and allowable expenses (food, housing, transportation, etc.) from the debtor’s income to see if there is reasonable income left over to make debt payments.  If not, the debtor still qualifies for Chapter 7 bankruptcy.

Those who don’t qualify for Chapter 7 or who want to retain certain assets – like a house or expensive car – can choose instead to restructure their debts and pay them off in full or at a discounted rate, through Chapter 13 bankruptcy.  To discuss these or other legal issues, please call our office to schedule an appointment.  Choosing the right bankruptcy is important and every situation is unique.  Our New Jersey bankruptcy lawyers can assess your individual situation and discuss which options will be best for you.  Quality representation for any legal issue.

HINT: Sometimes bankruptcy is complicated, but never impossible.  You just have to take your time and do it right.