Duluth and Gwinnett County Bankuptcy lawyer

404.791.4449

Duluth and Gwinnett County Bankuptcy lawyer

What Is A Bankruptcy Means Test In Georgia?

 

One of the first steps taken in the bankruptcy process is the means test. This test is very complicated, but it is essential for both Chapter 13 and Chapter 7 bankruptcy. You will work with an experienced attorney who can help you navigate the bankruptcy means test if you select Cornwell Law Firm.

 

Bankruptcy Means Test in Georgia

 

What Role does the Means Test Play?

 

There are three ways that a person qualifies for Chapter 7 Bankruptcy. If you have more non-consumer debt than consumer debt, then you may qualify. This applies to business debts and sole proprietors. If you are a consumer, your income must be less than the state median for the size of your household, or you have to qualify by the means test. If you do not qualify for Chapter 7 bankruptcy, you will likely be eligible to file for Chapter 13 bankruptcy. This test will show how much of your income will be used to pay your creditors.

 

How Does The Means Test Work?

 

The means test takes your current gross monthly income, and it will also apply objective expense deductions. Everyone living in the same county will get equal deductions for things like clothing, car ownership, food and clothing. The IRS allowances for offers in compromise are used to calculate objective deductions.

 

Car loans, mortgages, payments on priority claims, health care, withholding taxes, term life insurance and secured debts will also be used in the means test. These expenses are considered actual, provable expenses. This test is extremely complicated. That is why you should select a knowledgeable Bankruptcy attorney who has a thorough understanding of the means test. Bankruptcy attorney Keith Cornwell will guide you through the means test. This will help ensure you are eligible for Chapter 7 bankruptcy if appropriate.

 

Attorney Keith Cornwell Can Address Qualifications For Bankruptcy

 

If you want to know more about the means test, you should consider contacting us. We will offer you a consultation at no charge. You can fill out a contact form or call us. Our phone number is 404-791-4449. We will not only assist you with the means test, but we can also help you with the process of filing for bankruptcy.

 

Georgia Bankruptcy Means Test

 

Anyone wanting to file Chapter 7 bankruptcy has to pass Georgia's means test. This test is only applied to those with higher income. So if your income falls below Georgia's median level for your household size, you'll be exempted from this test and can file for Chapter 7.

 

If you have an income that is above Georgia's median then you will have to complete the means test. This will determine whether or not you are able to repay portions of your unsecured debts via Chapter 13 bankruptcy.

 

Exemptions For the Means Test:

 

If the bulk of your debts are not mainly consumer debts, then you will be exempt from the Georgia means test. This also holds true if you happen to be a disabled VET and incurred this debt primarily while you were still on active duty or while engaged in homeland defense activity.

 

Median Income in Georgia

 

If you have a current income that falls below the median income for Georgia, then it is presumed you have passed the means test and are therefore eligible for filing Chapter 7 bankruptcy.

 

They determine your average household income by averaging out your total monthly income for the past 6 months. If you're above the median income limit, with an income that has fallen over the past 6 months, then a wait of a couple of more months might see your income fall below the median level of Georgia standards. After determining your monthly income, you take that and multiply it by 12 in order to see what the annual income will be that is used for the purpose of the Georgia median income test.

 

The Means Test:

 

If you have an income that exceeds the Georgia median for one household that is your size, then you have to complete the means test. That involves calculating your expense and income information.

 

You need to collect the necessary information for being able to accurately calculate this figure. That means personal records and current monthly income.

 

Income includes any and all sources. This means rental income, business income, pensions, retirement plans, dividends, unemployment income, or anything coming in from outside sources.

 

The Georgia median income test is comprised of the following income levels:

 

  1. Household Member - $40,0631.00
  2. Household Member - $52,610.00
  3. Household Member - $55,829.00
  4. Household Member - $68,085.00
  5. Household Member - $76,185.00
  6. Household Member - $84,285.00
  7. Household Member - $92,385.00
  8. Household Member - $100,485.00
  9. Household Member - $108,585.00
  10. Household Member - $116,685.00

 

A large part of the information on your expenses will be based on Georgia, National, and Local averages and comes directly from the IRS and the Census Bureau. You do have some expenses that are allowed you like legally obligated expenses regarding for health and welfare.

 

Once the information has all been collected, you can subtract all of what Georgia allows you from your income, and see what your amount of income is under whatever bankruptcy law is available to you for your plan to pay the unsecured creditors involved in your Chapter 13.

 

If you have a total monthly income that across 60 months or under turns out to be less than $7,475, then you will have passed the means test. You may now file Chapter 7 bankruptcy. Should that figure be above $12,475.00 then you have failed the means test. You will not be eligible for Chapter 7.

 

If you have a disposable income that is less than the means test and falls between $7,475-$12,475, then you will have to do some further calculating to see just exactly where you stand, and whether or not you truly have a Chapter 7 case.

 

If you have a total monthly income that across 60 months or under turns out to be less than $7,475, then you will have passed the means test. You may now file Chapter 7 bankruptcy. Should that figure be above $12,475.00 then you have failed the means test. You will not be eligible for Chapter 7.

 

If you have a disposable income that is less than the means test and falls between $7,475-$12,475, then you will have to do some further calculating to see just exactly where you stand, and whether or not you truly have a Chapter 7 case.

 

Remember, just because you are eligible to file Chapter 7 doesn't mean you should. Usually Chapter 7 can be a better option if you are not concerned with keeping secured property like your home and mortgage. The main thing is to speak with a top attorney, like the ones at the Cornwell Bankruptcy Law Firm and let them give you the advantage of their expertise. Call US today and get your FREE consultation.