Deciding to file for bankruptcy is a big decision, and it can cause anxiety, stress and fear. But in the long run, bankruptcy is an opportunity for you to tackle your debts and attain a fresh financial start.
Chapter 7 bankruptcy is just one available option for those struggling with debt. Also known as liquidation bankruptcy, Chapter 7 sells your non-exempt assets to repay your outstanding debts, such as medical bills, credit card debt and personal loans. While Chapter 7 is the most common type of bankruptcy, there are still some requirements that you must meet if you are considering it as an option.
North Carolina means test
One of the main methods of determining whether you are eligible to file for Chapter 7 bankruptcy is to submit to the Chapter 7 Means Test. There are two ways to pass a means test.
The first way is income-based. If your current monthly income from the past six months is less than the average monthly income for your family size, you pass the test and are eligible to file for Chapter 7.
However, if your monthly income is greater than the average income for your family size, you can still qualify for Chapter 7 by going through an extended means test analysis. This test calculates how much money you have left after paying your monthly expenses. If it finds that you don’t have enough income leftover to pay off your debts, you are likely to be eligible to file for Chapter 7.
In addition to checking how your monthly income compares to the average monthly income for North Carolina families, there are other signs that indicate you may be eligible to file for Chapter 7 bankruptcy:
- Your debt repayment would take five or more years
- Your debt takes a significant toll on your physical and mental well-being
- Your debt amounts to more than half of your annual income
If you fit any of these requirements, you’re likely to qualify to file for Chapter 7 bankruptcy. While filing for bankruptcy can be a difficult time in your life, it can ultimately lead to a more stable financial future.