The Comparison Of Your Income To The Median Income In Your State
The means test provided by the new bankruptcy laws consists of two steps. The first section evaluates all assets and properties, while the second section compares your income to the monthly median income for your state. To determine your annual income, multiply your monthly income by twelve. Now, if the quantity is less than the state's median income, you are eligible to file for chapter 7 bankruptcy. Alternatively, if your annual income is greater than the median, you cannot petition for chapter 7 protection. You will be required to file a petition under chapter 13, and your income will be factored into a formula so that you can not only repay your debts but also regain financial control.
Formula for the Means Test
Here, it is essential to note that the means test formula does not take your entire monthly income into account. Only the quantity remaining after deducting necessary living expenses such as food and shelter is considered. If the court or trustee determines that you cannot pay even $100 per month, you may be granted immediate bankruptcy. Alternatively, if it is determined that you can pay at least $10,000 over a period of five years, your case will be considered under chapter 13. If the amount you can pay falls between $6,000 and $10,000, another mathematical calculation is used to determine the chapter under which you are eligible to register your case. According to the new bankruptcy laws, you cannot file for chapter 7 if you can pay at least 25 percent of your total unsecured obligations. Similarly, if you cannot pay even 25 percent of your unsecured obligations, you may be granted bankruptcy.""
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