Tuesday, August 16, 2016

Richmond VA Bankruptcy: What Is a Bankruptcy Means Test?

Are You Considering Bankruptcy in Richmond, VA?

What Is a Means Test?

If you are considering filing for Chapter 7 or Chapter 13 bankruptcy in Richmond, VA, your attorney will likely mention a “means test.” But what is a means test in bankruptcy, and what does it entail?

A means test is an examination of your income and ability to pay your creditors to determine whether you are eligible to file for Chapter 7 or Chapter 13 bankruptcy. The means test was put in place to prevent abuse of the Chapter 7 bankruptcy provision, and if you are considering Chapter 7, you will have to take this test first.
Chapter 7 vs Chapter 13

For many individuals struggling with debt, Chapter 7 is the most preferred bankruptcy option because more debt is forgiven. Under Chapter 7, you are saying you are almost completely unable to resolve your debts. Some of your eligible assets may be sold for partial repayment, but remaining unpaid debts are generally forgiven.

By contrast, Chapter 13 bankruptcy is for individuals who have some ability to repay their debts, and it involves reorganizing and setting up repayment plans with creditors. Under Chapter 13, you get to keep your assets, but you still must repay your debts over time. 

How the Means Test Works

If you fear that you won’t be eligible for Chapter 7 because of your income, understand that the means test for bankruptcy measures not only your income, but your “disposable” income, in order to determine your ability to repay your creditors. If you have a lot of expenses that wouldn’t be easily removed from the equation, you may still qualify for Chapter 7 under the means test even if your income is high.

Your income from the past six months is averaged to determine your “current monthly income.” This amount is compared against your eligible monthly expenses to determine how much of your income is disposable. If this amount is below a certain threshold, you may be eligible to file for Chapter 7; if not, your attorney may recommend filing for Chapter 13.

The Clinger Law Firm is a team of expert bankruptcy lawyers in Richmond, VA who can advise you about the means test for bankruptcy and help you determine your options. To learn more about filing for bankruptcy in Richmond, VA, call us for a free initial consultation at 804-788-1655.


Tuesday, May 24, 2016

Bankruptcy Can Stop Bill Collectors in Richmond VA

If you are drowning in bills and debt you are not alone. The average household credit card debt in the United States is approximately $16,048.  The average credit card debt in Virginia is $6,494. Your bills and debt may not even be from credit card. Bills and debt can stack up for many reasons including hospital bills or loss of work. No matter what your situation is a bankruptcy can be an option to stop bill collectors and wage garnishment.

At the Clinger Law Firm, we are experienced bankruptcy attorneys in Richmond, VA. Our law firm has over 30 years experience in providing debt relief to consumers. The goal of our blog is to give general information about bankruptcy in Richmond, VA. If you are considering filing a bankruptcy; we can provide you with a FREE initial consultation with one of our bankruptcy attorneys. Call the Clinger Law Firm at (804) 788-1655.