How The Bankruptcy Means Test Impacts Olympia, Washington Residents

calculator and ledgerThe “bankruptcy means” test establishes the eligibility standards for filing Chapter 7 bankruptcy. Those who do not meet these requirements may still seek relief. They, however, must do so under Chapter 13 of the Code. These two processes are very different. Chapter 7 is often considered by debtors to be preferable because their debts are often eliminated. On the other hand, Chapter 13 requires debtors to repay a portion of their debts rather than providing for full discharge. While there are advantages and disadvantages of either approach, it is imperative to correctly apply the bankruptcy means test at the beginning of the process to fully understand one’s options. It is important to work with an attorney with knowledge about the application of the eligibility standards to ensure that your case is handled properly. Ben Cushman can help answer your questions. Contact us today to speak with a lawyer. We also serve Tacoma as well as other areas in Washington, including Grays Harbor, Mason, Cowlitz, and Pacific Counties.

Olympia, Washington attorney assisting clients with bankruptcy eligibility requirements

The U.S. Bankruptcy Code requires individuals seeking Chapter 7 bankruptcy to meet certain eligibility requirements. Eligibility is determined through the bankruptcy means test. The test was implemented to prevent high income debtors from abusing the Chapter 7 process. Generally speaking, one’s income, minus allowable expenses, must be under a certain average monthly amount to be eligible for Chapter 7 relief. The formula effectively measures an individual’s disposable income and presumes that those who are able to do so, should pay for a portion of their debts. Therefore, those whose income exceeds the level specified in the Code may be required to file for Chapter 13 bankruptcy. High income debtors may pass the test if their allowable expenses are extremely high as well. Identifying qualified expenses can be the difference between passing or failing the bankruptcy means test.

Your attorney must be familiar with the statutory requirements of the eligibility test. Early on in the representation, they will review your financial statements to identify your aggregate monthly income. This process will include reviewing your income history to determine a five-year average income amount. They will also review your expenses to identify those which may qualify as a statutorily allowable expense. If they are allowable, expenses may be deducted from your income, resulting in an adjustment downward. The court will closely scrutinize a debtor’s financial income. Mislabeling expenses as allowable or failing to identify those that could be counted may seriously impact the bankruptcy proceeding. Debtors seeking Chapter 7 relief, who ultimately fail the test, can have their case dismissed or converted to a Chapter 13 filing. Working with bankruptcy counsel can help you through this important evaluation.

Ben Cushman is an Olympia lawyer who can assist you with the bankruptcy process, including the means test. During your consultation with Ben, he will review your financial information and help determine your eligibility for Chapter 7 or 13 bankruptcy. He will take the time to explain the implications of each type of filing on your assets and liabilities. Ben will assist you in obtaining the maximum debt relief possible. Contact us today to speak with an attorney.

Washington attorney assisting those in Olympia, Tacoma, & elsewhere through bankruptcy

Ben is a lawyer who understands that every individual’s situation is unique. Whether one is currently unemployed or has significant income, unforeseen or overwhelming debt can impact all families. Regardless of the events leading to bankruptcy, Ben treats his clients with respect and gives each case the attention it deserves. Ben believes that communication with his clients is a top priority. He promptly responds to emails and phone calls. We believe that everyone is entitled to the highest level of customer service. This is true whether you are in Olympia or elsewhere.

Our attorney also serves the Thurston County cities of Lacey, Tumwater, and Yelm, the Pierce County cities of Tacoma, Puyallup, and Lakewood, the Lewis County cities of Centralia, Chehalis, the King County cites of Seattle, Auburn, Bellevue, Burien, and Federal Way, as well as other areas in Washington, including Grays Harbor, Mason, Cowlitz, and Pacific Counties.