Financial troubles can be an incredibly stressful burden. For those suffering under unmanageable debts, it is all too easy to feel like there is nothing you can do. Your situation is not hopeless. Bankruptcy can help people recover from financial ruin and reclaim their lives. A Maryland or Washington DC bankruptcy attorney can assess your financial situation to determine if filing for bankruptcy is right for you, and if it is, he can help you find the best way to go about it.
There are two basic types of consumer bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Each type has distinct requirements and provides a different method for dealing with your debts. Deciding between them can be a daunting task for a layperson. One of the first steps to determine which type of bankruptcy to file begins with something called the means test. This is a detailed snapshot of your current financial situation that a bankruptcy court requires to decide your eligibility to file. The bankruptcy means test includes a calculation of your average gross income over the six-month period prior to the month in which you file your case. As a threshold issue, the court will determine if your income is above or below the median income for similar households in your area.
For example, if you are a single person living in Baltimore and you decide to file bankruptcy in October, your means test calculation will be an average of your income, before taxes and other deductions, from April 1 through September 30. For cases filed after March 15, 2011, the median gross annual income for a single person in Maryland is $55,774, or $4,647.83 per month on average. If your average income is below this amount, you are below median and your means test calculation is complete. If your average income is above this amount, you are above median, and an additional calculation is necessary to determine if you can file Chapter 7 or to determine the length of a Chapter 13 plan.
If your income is below the median, you are immediately eligible to file for Chapter 7 bankruptcy as long as you can show that you cannot afford to make any meaningful payments to your creditors. If you are filing a Chapter 13 case and are below median, your case can be as short as three years. If your gross income is more than the median, you may still be eligible for Chapter 7, but determining this requires a painstaking analysis of your deductions under bankruptcy law and rules. If your income is above median and you are filing Chapter 13, your case must be five years long except in certain circumstances. Although the forms for the bankruptcy means test are available online, completing a means test form without experienced legal counsel can lead to confusion and have potentially disastrous consequences if completed wrong.
Consulting a Maryland bankruptcy lawyer or a Washington DC bankruptcy attorney will ensure that you receive a tailor-made solution that is right for you and that your bankruptcy means test accurately reflects your income and expenses.
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