Ontario Means Test Lawyer
When debt gets too much to handle, we can no longer skate by on minimum monthly payments. We have to go beyond that and find relief quickly. That’s why many people choose bankruptcy, particularly Chapter 7 bankruptcy.
Chapter 7 bankruptcy can be beneficial because it allows you to wipe out most debts in just a matter of months. You can get rid of unsecured debts such as credit card bills, personal loans, payday advances, and medical bills. Chapter 7 is quick and easy, so it’s very popular. However, not everyone qualifies.
There is a means test involved to ensure that your income qualifies. If you have little income, then you will likely qualify. If your income is more substantial, then you may qualify for Chapter 13 bankruptcy. The team at Wadhwani & Shanfeld can help you choose the right option. Contact an Ontario bankruptcy lawyer today to learn more.
What is the Means Test?
The Chapter 7 means test is a formula that is used to decide if the debtor is eligible for Chapter 7 bankruptcy. The purpose of the means test is to see if the debtor could afford to pay at least some of their debts. It is in place to test their financial ability to pay creditors. If the debtor earns too much money and fails the means test, they can only apply for Chapter 13 bankruptcy.
There are a couple steps involved in the means test. First, is the debtor’s current monthly income more than census bureau median income in that state? If the debtor’s monthly income in the past six months is lower than the median income in the state, the debtor has automatically passed the means test. However, if the debtor has income higher than the median income, they will have to go to the next step.
This next step is to subtract expenses from the current monthly income and multiply this difference by 60 months. If this amount is:
- More than or equal to $12,850,000, the debtor must choose Chapter 13 bankruptcy.
- More than 25% of the unsecured debt, the debtor must choose Chapter 13 bankruptcy.
- Less than or equal to 25% of the unsecured debt, the debtor can choose either Chapter 7 or Chapter 13 bankruptcy.
- Less than or equal to $7,700,000, the debtor can choose either Chapter 7 or Chapter 13 bankruptcy.
There are many factors that can influence your eligibility for Chapter 7 bankruptcy. Contact a lawyer to see if you qualify.
Contact Wadhwani & Shanfeld Today
Many people experience financial distress. They often opt for bankruptcy, but they need to qualify. For Chapter 7, they must pass the means test to make sure they are not abusing the system.
Learn more about the processes for Chapter 7 bankruptcy from Ontario lawyers at Wadhwani & Shanfeld. Our board-certified bankruptcy services can provide you with debt relief so you can get back on your feet. Schedule a consultation today by calling (800) 996-9932.