have 5000 monthely after taxes; have student loans, house payment, day care, insurance is about 2500 of that is gone; how to file chapter 7 bankruptcy; advised that chapter 13 is what I qualify for
Personal Injury Lawyer
Currently, the means test in Texas is $39,673 for a single person household. That means, if you are living by yourself and make more than $39,673, you probably don't qualify for Chapter 7. Keep in mind that the means test is calculated based on your gross income which means it looks at your income before taxes. Thus, it sounds like you do not qualify for Chapter 7 but Chapter 13 may be right for you depending on your specific situation. Below I attach a link to the US Trustee website which outlines Means Test figures for all states and for various household sizes. This site also has a lot of information on means testing.
You should find a qualified bankruptcy attorney in Texas who can better explain these options to you and determine what needs to be done for your specific situation.
DISCLAIMER The answer given above serves for educational purposes only and is meant to provide general information for a basic understanding of the applicable law. Take notice that the answer above does not create an attorney-client relationship as this website is not intended to provide anyone with case-specific legal advice. Further take notice that any information on this site should not be used as a substitute for case-specific legal advice. Readers should also be aware that laws and their applications frequently change. As such, any information provided on this site is general in nature and may not apply to specific factual and legal situations. Contact a professional, competent attorney licensed to practice law in your jurisdiction to receive case-specific legal advice before making any important decisions regarding your legal issue.
What the previous answer gave you was the median income in Texas, not an explanation. The means test is a formulaic approach to determine whether a person has the financial capacity to repay some of their unsecured debt in chapter 13 bankruptcy. If you make less than the median gross income, you are automatically presumed to "pass" the means test, meaning that all other things being equal you can file chapter 7. If you make more than the median income (based on your average for the last six months), you then fill out a lengthy form plugging in certain numbers based on your actual expenses and others based on a government approved budget for reasonable monthly living expenses. It is far too complex.to cover in detail here, but if you have ever completed an income tax form and itemized deductions, that gives you a sense of it. At the end of this form, you finally calculate a monthly disposable income based on your gross pay and these allowable expenses you've just spent pages adding up and if your disposable monthly income is low enough under this formula, you again "pass" the means test. If you fail the means test, while in some cases with special circumstances it still may be possible to file a chapter 7 case, most people have to file chapter 13.
Look for an attorney with at least 10 years experience, who is a member of the National Association of Consumer Bankruptcy Attorneys, and is in a small practice where you will get personal advice from the attorney. Beware of attorneys who have just recently started practicing bankruptcy and firms where your case is entirely processed by a paralegal.
I am licensed only in Texas. Offering information of a general nature in response to a question is not intended to be legal advice in your state.
Chapter 7 Bankruptcy Attorney
Mr. Asatryan gave you a Median number, not the Means Test. I have clients who passed the Means Test while earning double the Median number. The Means Test is not just about income, it's about income and deductible expenses. You have a house payment, day care, insurance: all these items and others you haven't mentioned are deductible. Please seek out a local experienced bankruptcy attorney who can perform the Means Test accurately and file your case properly. Means test is not intuitive for lay person and many individuals come to my office assuming WRONGLY that they don't qualify for chapter 7. Money is at stake here, spend wisely for professional assistance to ensure you do not compound problems.