Liquidate Your Assets to Pay Off Your Debts

To determine if you qualify for Chapter 7 bankruptcy, you'll take the means test. The means test considers many factors, including income and expenses. Most people who take the test pass easily, meaning they can file for Chapter 7 bankruptcy.

The first step of the means test is to input your household income to see if it falls below your state's median income. If you've had a recent life change, like losing your job, that will be considered in the process. After putting in your info, if your household income is found to be below the median, you'll pass the means test and be able to file for Chapter 7 bankruptcy.

Some of our clients may need to prepare for step two of the means test, which includes gathering documentation about their expenses from the past six months. Allowable expenses include rent, groceries, clothing and medical costs, while everything else will be seen as disposable income. If your disposable income is low enough, you may still qualify for Chapter 7 bankruptcy. It's important to be thorough during this process, so you don't accidentally overlook expenses that could help your cause.

If you ultimately do not pass the means test, you can still file for Chapter 13 bankruptcy. Contact us to get more information about the means test and your next steps.