What You Need To Know About The Chapter 7 Means Test

When you begin a Chapter 7 bankruptcy, you are going to have to pass a means test that determines if you can qualify for a Chapter 7 bankruptcy

. The means test has two parts. It first looks at your income and compares it to the state median for a family of similar size and structure. If you do not pass the first part of the Chapter 7 means test, you will proceed to the next part of the means test, which measures your level of disposable income. And how do they measure your expenses? They will use the "national standards" set by the IRS for certain general expenses.

The IRS national standard gives guidelines for what people should spend on their household expenses based on how big their family is. Here's an example of the national standards: a family of four is given a budget of $752 for food a month.

If you're saying that's a really small number, you're right. It probably isn't as much as most Americans probably spend in a month, and you probably spend more than the national standards. The national standards serve as a good guideline for how much your family needs to budget their finances's means. With a good budget in hand, you can get a second chance. A Chapter 7 bankruptcy is able to get you credit card debt help, protection from creditor calls, and protection from repossession for you to have a clean slate to begin again--finally being able to sleep at night without thinking about what you will have to do if your car is repossessed or you lose your home to foreclosure.

After you finish a Chapter 7 bankruptcy, you will have the opportunity to rebuild your credit. In order to avoid ever having to file bankruptcy again, it's essential not to spend beyond your means so you can get the second chance you need. The IRS national standards are really just a good guideline for what you should budget for. As long as you stay within your means, you shouldn?t have to seek out credit card debt help, wage garnishments, or protection from creditor calls ever again. A Chapter 7 bankruptcy has helped thousands of people gain financial stability and it can help you.

You must come up with a working budget and follow it! A Chapter 7 bankruptcy gives many people the legal tools to get a new beginning.

by: Jim Brown

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