Chapter 7 Means Test in Kentucky
Bankruptcy protection is an excellent option for many people who have amassed significant unsecured debt and want to start over with a relatively clean slate after emerging from the legal filing. Chapter 7 bankruptcy is especially effective for many who are low-income earners and have an overload of monthly debt that continues to grow even when they are making payments toward reducing their balance. This is especially true when that debt is a credit card account.
The problem is that Chapter 7 bankruptcy must be qualified for the petitioner, and their income has a direct application on that qualification. This is based on a standardized means test, but it differs in each state due to differing median income levels per state. Luckily, Kentucky is a state with a low average income per household. Kentucky means test takes that into account when consulting with an experienced bankruptcy attorney who understands how to prepare for the petition filing.
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Median Household Income Test
The first step in the Chapter 7 means test evaluation is determining household income. All income is totaled for the six months immediately before filing and divided by six for a monthly average determination. This monthly income number is then multiplied by 12 months for an annual income level. Those individuals who fall below the annual median income level for the particular county in which they live are automatically qualified for a Chapter 7 filing. However, the test does not stop there for those who do not meet the standard in the initial step.
Exemptions and Expenses
Another component of the means test is presenting a financial statement for the magistrate that could result in a favorable decision on a Chapter 7 petition. This is accomplished through exemptions and monthly expenses. Most applicants have unique financial circumstances that lead to a petition, and most times, those circumstances are the monthly family expenses.
In addition, the level of income calculated in the means test goes down considerably when multiple member household files and all earners are stacked with respect to income level. This means that cases can get complicated quickly. Most times, it is best to consult with a bankruptcy attorney beforehand due to this and other potential problems because there are both state and federal exemption schedules that cannot be interchanged. Choosing the right exemption schedule is vital in many cases, and your attorney can help in making this determination.
While it is possible to file for a Chapter 7 bankruptcy without legal counsel, it is assuredly not recommended. Some technicalities can result in an unsuccessful attempt at filing, and there are legal issues that an experienced Kentucky bankruptcy attorney will know during the financial statement evaluation. Chapter 7 means test determination. Always call an attorney with a strong track record of successful filings for their clients who is well-versed in both state and federal bankruptcy law.
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