Means testing plays a crucial role in determining your eligibility for Chapter 7 or Chapter 13 bankruptcy in Louisiana. This test is a calculation that compares your household income to the median income for a household of your size in the state. If your income falls below the median, you may automatically qualify for Chapter 7 bankruptcy, which provides a complete discharge of eligible debts.
However, if your income exceeds the median, additional calculations are performed to determine if you have enough disposable income to repay a portion of your debts through a Chapter 13 repayment plan. This involves deducting specific monthly expenses from your current monthly income to arrive at your monthly “disposable income.” The higher your disposable income, the more likely you are to qualify for Chapter 13.
It’s important to note that certain types of income are excluded from the means test, and some expenses are pre‑determined based on national or local standards, while others are based on your actual expenses. The means test is complex and requires a thorough understanding of bankruptcy law and the specific requirements in Louisiana.
At Simon Fitzgerald LLC, we have extensive experience with the means test and can help you understand how it applies to your situation. We can guide you through the process, ensuring that all calculations are performed accurately and that all of your eligible expenses are included. This can make a significant difference in the outcome of the means test and your eligibility for bankruptcy.
In conclusion, means testing is a critical component of the bankruptcy process that can significantly impact your eligibility for Chapter 7 or Chapter 13 bankruptcy. With the help of the experienced bankruptcy attorneys at Simon Fitzgerald LLC, you can navigate this process with confidence, knowing that you’re making the best decisions for your financial future.
What happens if I don’t pass the means test but still need to file for bankruptcy in Louisiana?
If you don’t pass the means test for Chapter 7 bankruptcy in Louisiana, it doesn’t mean that you’re out of options. You may still be eligible to file for Chapter 13 bankruptcy. This type of bankruptcy, often referred to as a “wage earner’s plan,” allows individuals with regular income to develop a plan to repay all or part of their debts.
Under Chapter 13 bankruptcy, debtors propose a repayment plan to make installments to creditors over three to five years. If your income is below the median income for Louisiana, the plan will be for three years unless the court approves a longer period. If your income is above the median, the plan generally must be for five years. In no case can a plan provide for payments over a period longer than five years.
Chapter 13 offers individuals a number of advantages over liquidation under Chapter 7. Perhaps most significantly, Chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time.
Moreover, Chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a Chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under Chapter 13 protection.
How can I still qualify for Chapter 13 bankruptcy if I don’t pass the means test in Louisiana?
If you don’t pass the means test for Chapter 7 bankruptcy in Louisiana, Chapter 13 bankruptcy can provide an alternative solution. Unlike Chapter 7, Chapter 13 focuses on restructuring your debts and creating a manageable repayment plan based on your ability to pay. To qualify for Chapter 13, you need to demonstrate a regular source of income that is sufficient to fund the proposed repayment plan. The means test is not a determining factor for eligibility in Chapter 13, but rather an assessment of your ability to repay debts. Chapter 13 bankruptcy provides a structured framework to address your debts and offers a chance to regain control over your financial situation.
For more information on means testing and bankruptcy eligibility, you can visit: U.S. Court’s Chapter 7 Bankruptcy Basics
At Simon Fitzgerald LLC, our experienced bankruptcy attorneys are dedicated to helping individuals like you navigate the complexities of bankruptcy law. We understand the challenges you may face and can provide personalized guidance to determine the best course of action for your unique circumstances. Contact us today for a consultation and let us guide you towards a fresh financial start.
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