Future.

The term bankruptcy is likely a familiar one, but did you know that there are many different types of bankruptcy? One of the more common types used for individuals is Chapter 7. The following provides more information on this type of bankruptcy:

• Defined. Chapter 7 bankruptcy involves the discharge of qualifying debt. Examples can include credit card debt and medical debt. Once discharged, the individual that is granted relief through a successful petition for bankruptcy is no longer liable for the discharged debt.

• Process. The process begins with an application or petition for relief. If granted, an automatic stay will go into effect. This is a court order that means creditors can no longer demand payment. A trustee will be assigned to the case to review the assets and liabilities and administer the case.
• Aftermath. It is important to take proactive steps after a bankruptcy is complete to begin rebuilding your credit. It is important to pay all bills on time. It can also help to get a credit card. Establishing that you can manage a credit card and make payments on the due date will help to build your credit score.

Putting together a petition for relief requires completion of an application as well as submission of various schedules and paperwork. A failure to properly complete this petition can result in a denial of relief. As such, it is wise to seek legal counsel. An attorney experienced in handling Chapter 7 bankruptcy cases can provide assistance throughout the application process and help better ensure you receive the relief you need.

If you are giving some thought to filing for bankruptcy, you may be wondering about the bankruptcy means test, and what it means and entails. Essentially, the bankruptcy means test determines whether you will be able to move forward with a Chapter 7 bankruptcy, if preferable, or if your only option is to file for Chapter 13 bankruptcy.

There are benefits and drawbacks associated with both types of bankruptcy filings, but determining which bankruptcy process to follow is an important first step in regaining control over your finances.

What the bankruptcy means test involves

If you undergo a bankruptcy means test, the first step involves determining whether your household income over the last six months falls below the median income in place in Mississippi. If you have lost or taken on a new job within the last six months, you can expect that the income changes will factor in when determining whether you can proceed with a Chapter 7 bankruptcy. If your income falls below the median threshold in place in Mississippi, you automatically pass the test and can move on with your Chapter 7 filing.

If you do not pass the means test during the first step, the second step involves gathering documentation regarding all expenses you had in the last six months. Once you take into account expenditures for food, rent, medical bills and so on, any money left over is disposable income that you should reasonably be able to put toward your debt. If your amount of disposable income is below a particular level, you may still be able to proceed with a Chapter 7 bankruptcy.

If you really want to file for Chapter 7 bankruptcy but you do not pass the means test, you may wait six months and then try again. If you cannot wait another six months to file, your best bet may be to proceed with a Chapter 13 bankruptcy.