Chapter 13 Bankruptcy Means Test

Means Test Chapter 13 Bankruptcy

Are you eligible to file a Chapter 13 bankruptcy?

The bankruptcy  form titled “Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income”. This the means test Chapter 13 bankruptcy. When a filing bankruptcy either Chapter 13 or Chapter 7, part of the process of determining a debtor’s eligibility or commitment period in a Chapter 13 bankruptcy is the “Means Test“. The analysis of income, expenses and ability to pay all or part of the debts owed. Also the length of the chapter 13 plan is determined by the means test chapter 13.

Completing the  Means Test Chapter 13

Means Test in Chapter 13 bankruptcy

Chapter 13 0% Interest

Like the Chapter 7 Means test, the chapter 13 means test is a multiple step process. The first step is to determine the income of the Debtor and spouse. Even if the spouse is not filing bankruptcy.  The calculation period for income is the six complete calendar months prior to filing the bankruptcy petition.  The six months income is then annualized. And compared to the median income for the Debtor’s household size (number of persons in household including children).  If the Debtor’s annual income as calculated is below the median income. Then the Chapter 13 Plan commitment period is thirty-six months (3 years). If it is above the commitment period is five years.  Ask a bankruptcy attorney about the means test chapter 13.

Means Test Analysis of Monthly Expenses

If the income as calculated is above the median income the second step must be completed which involves the analysis of monthly expenses and other adjustments to disposable income.  In the expense step of the means test chapter 13, both actual expenses (like taxes and insurance) and standard expense deductions from the Internal Revenue Service are utilized.

Means Test Results What it Determines

After calculating the expenses, the determination must be made as to the amount of “disposable income” is available to the Debtor to make Chapter 13 Plan payments.  The Debtor would be required to pay either 100% of the unsecured debts or the total monthly disposable income. As determined by the means test over the required plan commitment period of 36 or 60 months.

Chapter 13 Means Test Should be Done by a Bankruptcy Lawyer

The  means test Chapter 13 involves very complex and precise calculations which need to be performed by a bankruptcy attorney.  There are many restrictions and guidelines which must be followed when reporting the income and expenses on the means test Chapter 13. Officially the Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income.  Be sure to discuss your income and expenses in detail with your bankruptcy lawyer so that this form may be completed accurately and avoid any negative repercussion, including potential criminal charges.

Filing bankruptcy is a very serious decision.  Be sure to consult with an experienced bankruptcy attorney about the different options available in bankruptcy.  The benefits as well as the negative implications of filing bankruptcy. Ask about the means test chapter 13.

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