Federal laws come into play at any time a consumer attempts to file for chapter 7. New laws apply to these cases and eliminate the potential for abuse of the system. Today, consumers don’t qualify by proving that their income is less than the median income only. They undergo stricter evaluations to identify their eligibility.
How to Qualify for Chapter 7 Bankruptcy
In Mecklenburg County, the median income is $50,579. All consumers with an income that is greater than this value qualify for chapter 13. Previously, if their income was below this value, the consumer became eligible for chapter 7.
What Is the Means Test?
The means test is the calculation of all income sources for the last six months. The calculation identifies what chapter is available for the consumer. The reason the new law emerged is that consumer presented documentation showing a reduced income. This lower income helped them to establish eligibility without question. To re-evaluate income through the means test, contact a bankruptcy lawyer in Huntersville, NC today.
How Does the New Law Work?
The new law requires the court to assess any possibility of disposable income. They require the consumer to present documentation for monthly expenses. Typically, the expenses include utility, food, and mortgage payments. However, the total value requires full disclosure of all debts paid throughout the month. If the court identifies any disposable income, the consumer won’t qualify for chapter 7. The court advises them to utilize their expendable income to settle these debts.
Reducing Discharged Debts
New laws have changed how debts are discharged. The court includes the debts if the consumer has the income to pay off the debts. Through an evaluation, they identify the consumer’s ability to pay. The court has the right to include any secured debts in which the consumer could have settled previously.
New laws that apply to chapter 7 could help the consumer to keep more of their property. However, the consumer’s income identifies their eligibility for the program. Any gray areas that indicate a failure by choice could result in a denial of the claim. To establish eligibility hire a bankruptcy lawyer in Huntersville, NC or Visit Lake Law PLLC locally.
