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Overview of the Chapter 7 means test"

As this blog has discussed previously, a Chapter 7 bankruptcy is a great way for a struggling Gulfport, Mississippi, family struggling under the weight of debt get a fresh financial start. Many people in Gulfport prefer Chapter 7 since the process does not involve a repayment plan and can be resolved relatively quickly. Sometimes, a family does not even have to turn over any of their property after filing a Chapter 7.

Perhaps because of these advantages, a little over 10 years ago, the government made changes to push people toward Chapter 13 repayment plans when they can afford them. Now, Mississippi families who make over a certain amount of money may have to file a Chapter 13. It all depends on whether these families pass what bankruptcy experts call the means test, which is a financial assessment that almost anyone filing a Chapter 7 must take.

The means test first determines how much money a family has made over the previous six months before the bankruptcy. If that number is below a certain threshold, which supposedly reflects what a typical Mississippi family of the same size makes, then the family may file a Chapter 7. Otherwise, the test guides families through additional questions about their spending.

If at the end of the day the family's income and necessary spending suggests they have some money left over to pay off some of their debts on a payment plan, then they will have to file a Chapter 13 bankruptcy if they want to pursue bankruptcy at all.

The means test is just one of the many complications bankruptcy presents for a Mississippi family. In this respect, the professionals at our law office offer assistance and advice to Gulfport families who need help navigating through the means test.

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