If the resulting calculation shows that a debtor’s income is less than or equal to the state median, they have passed the means test. However, if the debtor makes more than their state’s median income, in order to be eligible for bankruptcy they must pass a second part of the means test.
The second part of the test involves calculating expenditures over the last six months. Certain costs such as rent, clothing, groceries, car payments, and medical costs are considered to be “allowable expenses.” The allowable expenses are subtracted from total income and result in the amount of disposable income that is available to pay off debts. If this is low enough, an individual may still qualify for Chapter 7.
It is very important to calculate these as accurately as possible, as an omission of items or conflicting amounts for the same expense can result in your application being rejected. For this reason, it is highly recommended that you hire a bankruptcy attorney to keep you from making crucial mistakes.
Attorneys You Can Count On
We’ve only been able to scratch the surface of all the complicated bankruptcy laws. For help attaining accurate calculations of your income and expenses in order to avoid penalties, reach out to our team. We have helped several Oklahomans overcome their debilitating debt and find their way to a brighter future. Reach out to our Tulsa bankruptcy attorneys for more information.