When you have reached a point in your finances where you believe bankruptcy is among your most viable options, you will likely consider chapter 7 bankruptcy. Chapter 7 bankruptcy involves the selling off of significant assets in order to pay off creditors. However, to qualify for the clean slate provided by chapter 7, your information must go through a means test.
By way of the means test, the bankruptcy court is able to determine whether you have the available funds or income to repay your debt. If they find that you have the funds necessary for repayment, you may have to file for chapter 13 bankruptcy – which provides an opportunity for the debtor to make payments via a three-to-five-year payment plan.
What information goes into a means test?
When you fill out your means test forms, a lot of financial information and related details will be asked of you. Such details include:
- Monthly income
- Number of dependents and deductions
- Money spent on necessities like food and clothing
- Healthcare expenses
- Rent or mortgage amounts
- Utilities and other bills
- Vehicles that you own or lease and a description of each
- Owed taxes
- Life insurance expenses
- Education payments
- Monthly childcare expenses
Knowing what to expect out of the means test and other stages of bankruptcy can go a long way in making an efficient, painless process. When you and your attorney sit down and discuss your bankruptcy options and other potential solutions to your financial challenges, make sure you also have all relevant documents with you.