Bankruptcy law changed dramatically in 2005. That is the year Congress enacted what is known as the “means test.” This test limits who may file under chapter 7. If you live in Nebraska and are struggling with debt then you should contact the lawyers at our Omaha office immediately.
Omaha bankruptcy attorneys guiding you through the requirements of the means test
The bankruptcy means test dictates who is eligible to file under chapter 7 and who must file under chapter 13. The goal of the means test is to make sure that people with substantially higher income than average pay some or all of their unsecured debts back to their creditors. If your monthly income is less than the median income for a family of your size in Nebraska, you likely “pass” the test and can file for chapter 7 bankruptcy, provided you haven’t filed a chapter 7 bankruptcy in the past eight years.
If your disposable income is higher than average, it is assumed you can pay off a portion of your debt and you must file a chapter 13 bankruptcy rather than under chapter 7.
Because of the serious consequences of this test, it is important to calculate or claim all of your allowable expenses to ensure you do not lose an opportunity to file under chapter 7. Omaha bankruptcy attorney Burke Smith is experienced in helping people through the means test. This includes ensuring that they claim all allowable expenses, and calculating whether waiting to file may allow you to justifiably claim lower income and thus file under chapter 7. Our lawyers will ensure that the means test is applied correctly and that you file under the chapter which is in your best interests. If you are a Nebraska resident and need assistance then contact us online or by telephone.
How a bankruptcy lawyer can help Nebraska citizens who fail the means test
If you do not pass the means test, that does not mean you are out of options. Individuals who are not eligible for chapter 7 may still file for chapter 13. While this means making monthly payments over a 3-5 year period, it also includes many benefits. Many times the repayment plan is far less than what would be required just to make your car payment and your minimum credit card payment but with the added benefit of discharging all your unsecured debt at the end. While people often prefer chapter 7, a chapter 13 bankruptcy may be a better long term plan, particularly for people who have a steady job and have car payments. If you aren’t eligible for chapter 7, do not panic. You still have options. Contact us today.