Texas inhabitants who are considering filing for bankruptcy have many different options. One of the most common is known as Chapter 7 bankruptcy, after which some debts may be discharged by a judge. However, to be eligible for this type of bankruptcy, you have to pass what is known as the means test.
What is the means test?
The means test is an evaluation based on your income to determine your eligibility to file for Chapter 7 bankruptcy. This test works by comparing your monthly income to that of your state’s median monthly income for a family of your size. If your monthly income is more than the state’s median, you likely won’t be eligible for this type of bankruptcy. Rather, you’ll need to file for a different type of bankruptcy, like Chapter 13, during which you set up a payment plan to pay off all of your debts.
Additional parts of the evaluation
Apart from evaluating your income, there are a few other eligibility requirements that you’ll have to meet in order to file for Chapter 7 bankruptcy. If you’ve filed for bankruptcy within the past eight years, you’ll be ineligible for filing again. Also, if you had a bankruptcy dismissal within the last 180 days, you’re ineligible for filing for Chapter 7 bankruptcy.
As part of the bankruptcy process, you’ll have to receive credit counseling. This counseling must be from a government-approved counseling agency. An important part of this counseling process is a two-hour financial management course that helps to teach you tactics for better managing your finances in the future.
If you’re to the point where you can no longer afford the debts that you have, you may need to file for bankruptcy. You will need to meet certain criteria if you want to file for Chapter 7 bankruptcy. It’s always a good idea to consult an attorney before making such a big decision to ensure that it’s in your best interest.