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Options after failing the bankruptcy means test

On Behalf of | Aug 10, 2021 | Bankruptcy

The bankruptcy means test is used to determine whether you can file for Chapter 7 bankruptcy to erase your debt. The test takes several factors into account, including your family size, expenses and income to assess whether you have adequate disposable income to repay outstanding debts. If you’re a Texas resident and are thinking about filing for bankruptcy, here is some information about how the test works and how the results can affect your case.

How does the bankruptcy means test work?

The bankruptcy means test will clarify whether you can file for Chapter 7 or Chapter 13 bankruptcy. The assessment has two parts and they are both designed to see whether your disposable income is enough to pay off your debt. Your bankruptcy attorney will fill out and submit the form to the court along with your additional filing papers.

The means test is only for individuals who have debts such as medical bills or credit card debt. If your debt is mainly from a company you own, you don’t need to pass the test. If you file for Chapter 13 bankruptcy, the test factors into creating your repayment schedule.

What happens if you fail the test?

There is no appeals process if you don’t pass the bankruptcy means test. However, you don’t automatically have to file for Chapter 13. You can wait a while and try to take the test again.

Keeping mind that the information you used to fill out the means test is a reflection of your finances for the past six months. After six months, you can take the test again if you think you may qualify for Chapter 7 debt forgiveness. If you can’t wait any longer to retake the test, you can file for Chapter 13 bankruptcy and repay your debts in three to five years.