Kentucky residents who are experiencing financial struggles will seek myriad ways to improve their circumstances. For many, bankruptcy is considered a last resort. However, once they understand the process and its benefits, it is worthwhile. With that, it is important to understand the rules for a Chapter 7 bankruptcy.
One key aspect of a Chapter 7 bankruptcy is the means test. People should be cognizant of getting beyond the presumption of abuse. The means test is part of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). This is in place to stop people who may have the income or assets to pay their debts and are simply using bankruptcy to clear unsecured debt. After making the payments for the necessities of life, if a person does not have sufficient money left to pay their debts, then they have passed the means test.
There are two situations in which a person will fail the means test. First, they may have too high an income. Second, they have unreasonable expenses. Expenses for family safety and upkeep; buying needed items for work; health care costs; and telecommunication services are generally viewed as necessities. Filing with the presumption of abuse means that the case will be assessed more carefully that it would be otherwise.
Once the expenses are shown to be necessary, a discharge may be granted. For those who fail the means test, the bankruptcy can be filed again if the financial situation worsens. Also, Chapter 13 is a viable alternative. Bankruptcy is a strategy to clear debt, stop creditor harassment and move forward toward a better financial situation. The means test is one example of obstacles to overcome. Having legal assistance with Chapter 7 or any other strategy for debt relief may be essential to a case.