Qualifying for Bankruptcy: What is the Means Test?

Consumer debt is something that affects many people in the United States, and Texas is no exception. In fact, one in five Americans has an issue with debt hardship of some kind. Bankruptcy is a solution to which others look for relief from debt. Bankruptcy is a legal classification that a person cannot repay his or her debt. A judge will honor a request for bankruptcy status if the person meets the criteria.

Common Types of Bankruptcy

Two types of bankruptcy are common for individual consumers: Chapter 7 and Chapter 13. Chapter 13 bankruptcy is an option that requires the person to develop a repayment plan. The courts will expect the person pay a small portion of his or her debt back to the creditors. A Chapter 7 bankruptcy is one that may excuse the debtor from repaying the debts. Texas has some special exemptions, and Jed Shaw can advise you on how to use these to your financial advantage.

What is The Means Test?

Before any person can qualify for bankruptcy, he or she will have to pass the bankruptcy means test. The bankruptcy means test is a test that looks at a person’s disposable income and general income. First, the person must have income that is lower than the Texas state median to qualify. Next, the person must not have too much disposable income or the judge will not approve the application. The means test involves the applicant’s six month income total. He or she must calculate the total income for the past six months. If that figure is lower than the state median, the person will most likely be eligible for Chapter 7 bankruptcy. Chapter 13 bankruptcy is an option for people who can afford to pay some of their debts back to the creditors.

After Filing for Bankruptcy: What’s Next?

After an applicant files for bankruptcy, some of the stresses of life may subside. For example, creditors are not allowed to try to collect debts during the bankruptcy process. They may not make debt collection calls or perform any types of harassment. The debtor will go to a hearing with the creditors where they can voice their opinions or try to fight the bankruptcy motion.

The Consequences of Filing for Bankruptcy

Bankruptcy is just one option for a person who is having debt problems. Some consumers may not appreciate the consequences of bankruptcy such as a tarnished credit report. A bankruptcy can affect one’s credit for 7 to 10 years. Many creditors will deny a person who has been through bankruptcy, and the denials will keep occurring until the bankruptcy drops off that person’s record. Therefore, a consumer has the right to consider an alternative option such as the one offered by Jed Shaw at the Shaw Defense firm.

Alternative Options to Traditional Bankruptcy

Jed Shaw is a licensed specialist who can help a struggling consumer with an alternative solution to filing for bankruptcy. His goal is to get consumers out of debt so they can enjoy their new stress-free lives. An interested person can schedule an appointment with Mr. Shaw by dialing 713-750-9038. He will present an alternative option that can brighten up any debt-ridden consumer’s day.

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