Birmingham, AL Law Firm Guides Clients Through Means Tests

Alabama Bankruptcy Attorneys Explain Options to Clients

Once you decide that you want to file for bankruptcy in Alabama, your next step will be to determine whether you are eligible to file for chapter 7 bankruptcy, or if you will need to file for chapter 13. This determination is made through a chapter 7 means test.

What is a Means Test?

In 2005, the U.S. Congress reformed federal bankruptcy laws, and the means test was implemented as a prerequisite to a bankruptcy filing. Everyone who wishes to file for chapter 7 bankruptcy in Alabama must pass this test, which uses a formula to determine whether they are below a certain income level.

The first part of the means test determines whether your income is more or less than the median income for a household of your size in Alabama. If your earnings are less than the median income, you will be eligible to file for chapter 7 bankruptcy. If your earnings are higher than the median income for your household size, you will be required to complete a means test analysis.

If your disposable income falls below the median income, you will be eligible for chapter 7 bankruptcy. However, if you have regular income and need to cure a default on your mortgage to avoid foreclosure or want to keep certain personal property, chapter 13 bankruptcy might be a better option for you.

Contact an Experienced Birmingham, AL Bankruptcy Attorney

Are you undecided about which type of bankruptcy you might be eligible for? Contact the Birmingham bankruptcy lawyers at the Bond & Botes Law Offices online or call 1-877-581-3396 to schedule your free consultation and weigh your options.