The Means Test for Chapter 7 Bankruptcy Eligibility

Mistakes to Avoid When Submitting to the Means Test

If you’re looking to get a fresh start in bankruptcy and you want to wipe out whatever debts you can, you’ll need to submit to a means test, so that you can file for protection under Chapter 7 of the bankruptcy laws. The purpose of the means test is to confirm that you lack the necessary resources to repay your creditors over three-to-five-years in a Chapter 13 reorganization. Here are some of the common mistakes you want to avoid, so that you maximize your chances of qualifying for Chapter 7.

Don’t Take the Test without Help from Your Lawyer

The means test is complicated—don’t try to save a few bucks by completing it on your own. An experienced attorney will make certain you take all the right steps.

Don’t Take Deductions that Aren’t Permitted

Not all of your monthly expenses may be deducted to determine your disposable income. For example, you can’t take deductions for most retirement plan contributions or for any contributions you may to your child’s college education.

Don’t Take More than You Can Prove

Taking deductions for expenses that you can’t document in writing is a risky proposition. If you can’t prove the deduction, you could face allegations of bankruptcy fraud.

Be Aware of the Consequences of Inflating Your Household Size

The larger your household size, the more disposable income you’ll be able to have and still meet the means test. However, you’ll have to include all income earned by anyone designated as a household member, so there may be little or no benefit.

Be Careful with Child Support Payments

Child support can only be deducted from your income if you have actually paid it. Likewise, you only need to include it in income if it has actually been received.

Contact Attorney Howard N. Sobel

At the office of Howard N. Sobel, we provide personal bankruptcy counsel to men and women throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.

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