St. Paul Chapter 7 Bankruptcy Means Test

When most of your income is directed toward paying off debt, you cannot get a firm foothold in life. Your mental health may suffer if you face constant demands from creditors. Chapter 7 bankruptcy could relieve the pressure, but not everyone qualifies.

The St. Paul Chapter 7 bankruptcy means test determines the forms of debt relief available to you. Our seasoned Chapter 7 bankruptcy attorneys at Walker & Walker Law Offices, PLLC can explain your options during an initial consultation. Contact us today to get started.

The Chapter 7 Bankruptcy Option

Chapter 7 bankruptcy is for individuals, married couples, and sole proprietorships. Chapter 7  erases debt quickly, but it is only available to people without substantial assets.

When you consult our firm, we can review information about your finances to determine whether you qualify for Chapter 7. If your income from all sources over the preceding six months is below the median income for households the same size as yours, you qualify.

You may be eligible for Chapter 7 even when your income exceeds the median. However, in such cases, our St. Paul Chapter 7 bankruptcy attorney must apply a means test.

How Does the Means Test Work?

The means test requires a close look at your assets and expenses to determine whether you have adequate disposable income to repay some or all of your unsecured debt. If you do not pass the means test, you are likely eligible for another form of bankruptcy.

The first step in the means test is determining your disposable income. Our bankruptcy attorneys will ask you to disclose your expenses for:

• Housing
• Food
• Health insurance and healthcare
• Transportation
• Child care
• Taxes, alimony, and child support

You are entitled to full credit for your actual healthcare and child care expenses, but some are subject to IRS limits. For example, if your housing expense exceeds the applicable limit, the amount above the limit would be considered disposable income.

When we establish your disposable income under the means test, we can determine whether you are eligible for Chapter 7 bankruptcy in St. Paul. If you do not qualify but have experienced a recent significant drop in income or a sudden increase in healthcare expenses, waiting a month or two could change the result of the means test.

The Chapter 7 Process

Assuming you pass the means test, our St. Paul attorneys can help prepare your Chapter 7 bankruptcy petition. You will need to provide documentation of your income and debts and disclose any transfers of assets over the preceding 90 days. When you have compiled all the necessary information, our attorneys can meet with you to go over the petition, ensure it is accurate, and get your signature.

When we file the petition, the bankruptcy court will issue a letter that stays, or pauses, any collection activity on your debts. If you have student loan debt, we will also file a separate petition within the bankruptcy proceeding to prove that paying back the loan will cause undue hardship.

In a few weeks, the bankruptcy trustee will send you a notification of a creditor conference required under 11 United States Code 341. This is a brief virtual meeting over Zoom in which the bankruptcy trustee confirms your identity and the information you presented in your petition. If all goes smoothly, the trustee will discharge your debts a few weeks later.

Consult a St. Paul Bankruptcy Attorney About the Chapter 7 Means Test

Excessive debt can prevent you from establishing housing, accessing healthcare, and providing stability for yourself and your family. If you need a fresh start, Chapter 7 bankruptcy can provide it.

Our attorneys at Walker & Walker Law Offices, PLLC, regularly work on the St. Paul Chapter 7 bankruptcy means test with clients. Contact us today to start regaining control over your finances.