While there are specific eligibility requirements for filing a Chapter 13 bankruptcy, the Means Test for Chapter 13 is primarily used to determine the length of the repayment plan. The repayment plan is either three years or five years, depending on your ability to repay your debt.
The Means Test will reveal how much disposable income you have to repay debt. Chapter 13 Trustees use the Means Test to help determine how much your unsecured creditors receive through the bankruptcy. A Supreme Court ruling in 2010 made it clear that the Means Test is only a starting point. Other factors are considered by the Trustee, including:
- Loss of employment
- Reductions in income
- One-time payments received prior to filing
- Increases in allowed expenses
There are specific expenses that can and cannot be used as part of the Means Test calculation. An experienced bankruptcy attorney can provide the guidance needed to receive the maximum benefit of a Chapter 13 Bankruptcy. It is important that you make a fully informed decision when considering bankruptcy.
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