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About the bankruptcy means test

There are certain criteria individuals have to meet before they can file for bankruptcy. Kentucky residents who have substantial debt and are considering filing for Chapter 7 bankruptcy should be aware of the bankruptcy means test and how it can affect their filing.

The means test considers a debtor's expenses, income and family size to determine if he or she has enough disposable income to repay the debts that are owed. While the test was initially created to limit the number of individuals who could have their debts forgiven with a Chapter 7 bankruptcy, most people who take the test are able to easily pass it. Those who are unable to pass the test or want to keep certain items in their possession may opt to either file for Chapter 13 bankruptcy or restructure their debts.

The means test can be costly and complicated. It consists of two parts and is designed to determine if debtors have enough disposable income to apply towards their debt. The test form is usually completed by a bankruptcy attorney, who will submit it to the court with any additional filing papers.

If someone passes the first section of the test, which determines if a debtor's household income is lower than his or her state's median income, he or she can file for Chapter 7 bankruptcy. Individuals who don't pass and still wish to file for Chapter 7 or Chapter 13 bankruptcies can take the second part of the test.

A bankruptcy attorney may evaluate a client's finances and advise him or her on what type of bankruptcy would be appropriate. A lawyer may also assist his or her clients with creating affordable bankruptcy payment plans so they're able to pay off substantial debts.

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