An attorney will discuss your eligibility for a discharge under Chapter 7 during your free initial consultation. A Chapter 7 bankruptcy discharges all of your eligible debts and does not involve a repayment plan.
If you do not qualify for a Chapter 7 Bankruptcy discharge, a Chapter 13 Bankruptcy offers a cost-effective solution to many clients. In most cases, a Chapter 13 debtor will pay back only a fraction of their debts through their Chapter 13 bankruptcy plan. The remaining balances will be discharged after their plan is completed.
In 2005, Congress created what bankruptcy practitioners call the “Means Test.” The Means Test (Form B22A) must be filed with the chapter 7 bankruptcy petition forms and schedules. The Means Test informs the bankruptcy court and the US Trustee whether a ‘presumption of abuse arises’ in a particular case. Properly completing this form can be a complex and time-consuming task in some cases. The US Bankruptcy Trustee will review the Form B22A and object to any improper deductions.
We discourage potential clients from relying on any of the various online means test forms. The means test forms available online allow users to deduct all of their expenses (even those expenses which are either disallowed or are limited by IRS Local Standards). We have encountered several potential clients who ‘passed’ the online means test just to discover from an attorney that the results offered from the website are inaccurate. The attorneys of this office attend yearly seminars focused on the Means Test as the laws and local procedures relating to this form continue to evolve. The shortest course available consumes a full day and over 100 pages of course material.
If your income is below the median income for your household size and location, the presumption of abuse will rarely arise. However, the US Trustee may find that your petition is an abuse based on a totality of circumstances. An experienced attorney will understand how to avoid such pitfalls.