The Process of Filing for Bankruptcy
The first step in the process is to call us at 631-878-1935 and set up an appointment for a phone consultation or in office visit to discuss your case or simply fill out the email request form and someone from our legal team will call you to set up an appointment.
Once we have determined that you would like to see if you qualify for a bankruptcy we will ask you to compile the following documents so that we may run a means test to see if you qualify to file a bankruptcy petition:
A bankruptcy “means test” determines if your income is low enough to file Chapter 7 Bankruptcy. It is a formula that keeps filers with larger incomes from filing for Chapter 7 . Filers with higher income who fail the means test may file for Chapter 13 bankruptcy to repay a portion of their debts. You do not have to be penniless to use Chapter 7 Bankruptcy. You may have significant monthly income and still qualify for Chapter 7 bankruptcy. This occurs when you have a lot of expenses, such as a high mortgage payment.
The means test deducts specific monthly expenses from your current monthly income to arrive at your monthly disposable income. Your current monthly income is the average income you have earned over the six calendar months before filing for bankruptcy. The higher the disposable income, the more likely you will not be permitted to file for Chapter 7 relief.
The first step in the means test is to determine if your income is more or less than the median income in your state. If your earnings are more than the median, next you have to figure out if there is enough money left over, after subtracting certain allowable expenses, to repay some of the debt you owe.
If your income is less than the median income for a household of the same size in your state, you pass the means test and do not have to go any further. You are permitted to file a petition for Chapter 7.
If your income exceeds the state median, the means test analysis gets more complex. You would next determine if there is enough income left over “disposable income”, after paying the “allowed” monthly expenses, to pay a portion of your unsecured debts (such as medical bills or credit card bills). If your disposable income is more than a certain amount, you fail the means test and cannot file for Chapter 7.
Median income levels vary by household size, and state. Every county has different allowed amounts for expenses such as basic necessities, housing, and transportation.
Following the Means Test
Once you have passed the means test, the next step is to file your Bankruptcy Petition with the court and you receive an index number identifying your case.
Next the court will assign a date for your 341 meeting of the creditors (usually 3-4 weeks after filing of petition). At the 341 hearing any and all creditors are permitted to show cause as to why their claim should not be discharged and your petition is reviewed by a Trustee under oath. The trustee will usually give an indication at the 341 meeting if he/she will recommend to the bankruptcy judge a discharge.
Within 4-6 weeks after the 341 hearing you will receive a discharge notice from the bankruptcy court advising that your Chapter 7 Bankruptcy is complete.