Bankruptcy is a means employed by many to discharge debt and give the debtors a chance for a clean slate. However, in order to prevent fraud, a “Means Test” under the Bankruptcy Abuse Prevention and Consumer Protection Act was created by the Bankruptcy Court. To qualify for bankruptcy that enables the debtors to have their debts cleared and have a fresh start, the means test must be passed first to discourage abuse of the system.
Means Testing information – compels you to be eligible for the requirements through passing the “means test” before being qualified to apply for Chapter of the Bankruptcy Code. Once you determine that the monthly income for your household is lower than the average income of your estate, you are qualified for the means test but if it is higher, you might need to deduct the pre-set expenses and calculate your disposable income.
To compute your disposable income, you need to get the total amount of your income and deduct the following:
- Daily household expenses
- Healthcare costs
- Housing and utility expenses
- Transportation expenses
- Car payments
- Insurance expenses
- Court-ordered expenses such as child support and alimony
- Childcare cost
- Miscellaneous expenses
If the number left is insufficient to pay off a part of the debts over a repayment plan lasting five years, then you are eligible to file bankruptcy. The calculations for filing for bankruptcy are complicated and overwhelming but with the help of our bankruptcy attorney, we will help you in determining your qualifications and complete your computations.
Arizona Median Income Levels
There is a presumption that you have passed the means test and qualified to start a Chapter 7 bankruptcy process if your monthly household income is less than the median income for your family size.
- 1 Member in the Household – $41,993.00
- 2 Members in the Household – $55,022.00
- 3 Members in the Household – $56,503.00
- 4 Members in the Household – $64,604.00
- 5 Members in the Household – $72,704.00
- 6 Members in the Household – $80,804.00
- 7 Members in the Household – $88,904.00
- 8 Members in the Household – $97,004.00
- 9 Members in the Household – $105,104.00
- 10 Members in the Household – $113,204.00
Arizona Means Test Exemptions
There are 3 circumstances in which a means test is unnecessary:
- You are a disabled veteran that incurred debts while on active duty
- You are a member of the military or homeland defense
- If your debts are non-consumer or were incurred through a business
Discharge of debts
There is debt relief after bankruptcy discharge has been issued so the debtor is not legally bound to pay back the debts which have been discharged by the bankruptcy. Debt collectors are also prohibited from debt collection once the debts are discharged. However, there are exemptions and these cannot be discharged by filing for bankruptcy and these will need to be settled with the creditors. The process usually takes 4-6 months and you must complete all the necessary requirements prior to filing. After this, you will be required to take another debtor education course from an approved U.S. Bankruptcy Trustee agency in Arizona.
Are you looking into declaring bankruptcy but you are not sure of what form of bankruptcy to avail? Are you worried about forthcoming liabilities?
While bankruptcy filing may be done by any person without a bankruptcy lawyer, you will be responsible for fully understanding everything related to bankruptcy law. We at Phoenix Fresh Start have experience in bankruptcy cases. Our bankruptcy attorneys may help clear the air for you, especially on terms which may be mind-boggling for you such as bankruptcy exemptions, debt settlement, insolvencies, mortgage payments, debt management and many more. Do not hesitate to ask for advice. Call us at Phoenix Fresh Start now for a free initial legal consultation