Chapter 7 Bankruptcy Attorney in Boulder, Colorado
Information on the Chapter 7 Means Test
The majority of bankruptcy cases filed in the Bankruptcy Court for the District of Colorado are Chapter 7s. Chapter 7 is the fastest and least expensive method for obtaining relief from debt. In 2005 Congress amended the bankruptcy code to make it more difficult for individuals with primarily consumer debts to file for Chapter 7 bankruptcy. Congress did this by requiring that consumer debtors complete a Chapter 7 Statement of Current Monthly Income and Means-Test Calculation ("Means Test") as part of their bankruptcy filing.
At the office of Goff & Goff, LLC, our lawyers are skilled at handling bankruptcy cases for clients in Boulder and across the surrounding communities. We strive to help clients understand the Chapter 7 bankruptcy process and how taking the Means Test can help establish their eligibility to file for bankruptcy.
Concerned about the Chapter 7 Means Test? Contact us today online or by phone at 303-872-0535 for a free telephone consultation.
Fortunately, many consumer debtors don't need to worry about "failing" the Means Test, because the only debtors who have to "pass" it are those whose income is above the median household income in the State in which they reside. Currently, the median household income for Colorado households of 2 is $65,668; 3 is $70,838; and 4 is $78,905. Households in excess of 4 are permitted an additional $6,900 per person.
Below or Above-Median?
In order to determine whether you are a below or above-median debtor, your Current Monthly Income must be determined by adding up all of the income earned in your household for the preceding six months. Virtually all sources of income, including wages, child support, IRA distributions, gifts, etc. must be added together to determine your Current Monthly Income. If the total amount of income earned in the six months immediately preceding the month in which you file your bankruptcy case, multiplied by two, is greater than the median household income which applies to you, then you are subject to the Means Test.
If you are an "above-median" debtor it does not mean that you cannot file a Chapter 7 bankruptcy. However, you are subject to the Means Test, and if you do not pass it, you will probably have to stay out of bankruptcy or file for Chapter 13, which requires monthly payments. The key for above-median debtors is to pass the Means Test, and to do so an experienced bankruptcy lawyer is indispensable.
The Means Test Itself
The Means Test is a very complex eight page formula in which your income is plugged in, and certain deductions and exclusions are allowed. (Provide link to PDF Means Test) If there is a positive difference between your gross income and the permitted deductions and exclusions, you fail the Means Test; if there is no such difference you are deemed to not have any "disposable income" to fund a Chapter 13 Plan, and you are allowed to file for Chapter 7. It is not unusual for above median income debtors with competent legal representation to pass the Means Test, and no debtor should file a Chapter 13 bankruptcy unless a Chapter 7 filing has been thoroughly explored and ruled out your lawyer.
For more information about Chapter 7 and Chapter 13 bankruptcy, the Means Test, liquidation, or other bankruptcy issues, contact us online or by phone at 303-872-0535. We offer free telephone consultations.
Our office is open Monday through Friday, 8:00a.m. to 5:30 p.m. For your convenience, we accept Visa and MasterCard.
Spanish Language Services Available / Se Habla Español
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