Understanding Chapter 7 Bankruptcy In Maryland

In this article, you will discover:

• The Means Test’s role in qualifying for Chapter 7 bankruptcy.
• The documentation required for the Means Test.
• Your legal options should you fail the Means Test, and how an attorney can help.

What Is The Means Test, And How Is It Connected To Bankruptcy?

The Means Test is a form you must complete to determine if you qualify for Chapter 7 bankruptcy. It looks at your income over the six months before filing for bankruptcy. It compares that income against some expenses established by the Internal Revenue Service and some of your actual expenses. The Means Test also determines whether there is a presumption that filing a Chapter 7 is abusive.

Is The Means Test Mandatory In Maryland?

Yes. In Maryland and nationally, you must fill out that Means Test form to file a Chapter 7 bankruptcy; it’s a requirement.

What Documents Are Required For The Means Test?

You will need to supply income documentation for the past six months. If you are self-employed, you will typically need your operating reports for that period. If you have any other income, you will need documentation detailing these earnings. You will also need documentation detailing some of your expenses and showing what monthly payments are on certain debts.

What Is The Effect of The Means Test On Married Couples In Maryland?

Unless you are separated or divorced, you must complete the form and include your spouse’s income, whether you’re filing with your spouse or not. For this, you will need some of your spouse’s financial information, and an attorney can help you identify and collect this documentation.

Keep in mind that having your spouse’s information on the form doesn’t mean that they’re filing for bankruptcy, too. Simply having their information on your form won’t impact them; it simply helps give a clearer picture of your household’s financial situation.

Owner and Senior Attorney Alon Nager is an experienced lawyer with offices in Columbia, Annapolis, and Towson, MD. He’s helped many clients like you navigate the intricacies of bankruptcy law. With over 17 years of experience, he is prepared to provide you with appropriate bankruptcy solutions so that you can get back to business.

Still have questions? Ready to get started? Contact Nager Law Group today to schedule an initial consultation.

We Are Here To Help. Call Today For An Evaluation: (443) 492-9003

What Are My Options If I Fail The Means Test?

If you fail the Means Test, sometimes a simple workaround can be found. For example, you could complete a section for exigent circumstances that could reduce your income to where you might qualify.

At that point, you may be in a situation where you have been making more income than you expected going forward in the six months leading up to the bankruptcy. You may get an exception that way or wait until your income is such that you qualify.

If you don’t qualify, the other options are to file a Chapter 13 bankruptcy or a Chapter 11 bankruptcy in most cases. There are different types of bankruptcies, but they don’t typically apply to most individuals.

What Are The Biggest Challenges I Might Face When Going Through The Means Test?

If you’re over the income limit for the Means Test, your attorney may be able to run through some calculations and qualify you. Sometimes, you need to wait until you are in a financial position to pass. The figures are adjusted from time to time, so sometimes, these can increase.

Sometimes, the biggest challenge is getting six months of documents to go through for the Means Test and gathering some of the other information. We help our clients obtain that documentation as much as possible so we can do the necessary calculations to complete the form.

What Advice Do You Give Clients Who Have Fluctuating Income And Worry About The Outcome Of The Means Test?

The only sure way to know is to complete the form. If the number seems to be close or might change, you can wait and recalculate it in the following months and see if you qualify at that time.

Sometimes, your income simply won’t allow you to pass the Mean’s Test, so you must discuss filing a different type of bankruptcy case. If you have a fluctuating income, this can usually average out, allowing you to qualify.

Unfortunately, if you have lost your job, bankruptcy courts will look at the last six months to determine your income. You may have to wait to file so your income is reduced during the six-month period they’re looking at.

If you have concerns about whether or not you qualify for Chapter 7 Bankruptcy, reach out to Nager Law Group. We’ll help you understand your options, represent you skillfully, and work to make every step of the bankruptcy process simple, stress-free, and understandable.

Still Have Questions? Ready To Get Started?

For more information on Understanding Chapter 7 Bankruptcy In Maryland, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (443) 492-9003 today.