Behm Law Group, Bankruptcy Attorneys

Chapter 7 liquidation bankruptcy is the most common type of individual consumer bankruptcy in the US. The process of Chapter 7 works to liquidate a filer’s non-exempt bankruptcy estate property in return for the discharge of their debts. Not only is it an effective way to free yourself from credit card debts, medical bills, and more, Chapter 7 bankruptcy represents a government-sanctioned fresh start. If you’re struggling to meet debt payments, Behm Law Group, Ltd. offers the legal support and advice you need to file a successful case for bankruptcy in Jackson, MN.

Chapter 7 bankruptcy offers a direct path to debt relief, but it’s not a process available to everyone. To prevent bankruptcy abuse, every filer must pass the Means Test before they can qualify for Chapter 7.

The Means Test examines your finances to determine if your income and debts are at a level that will benefit from Chapter 7 bankruptcy while remaining fair to your creditors. If your income is lower than the Minnesota median for a similar household size, you qualify to file for Chapter 7 bankruptcy. You may also qualify if the Means Test shows your debts are higher than your income even if your income is greater than the state median income for a household of your size.

If you’re married, you may be able to qualify for Chapter 7 bankruptcy using the marital adjustment deduction.

The Means Test looks at the household income to determine your eligibility, but if you choose to file for bankruptcy and your spouse doesn’t, you can deduct the expenses attributed solely to your spouse. By deducting these expenses, you can lower the income you list on your Means Test, making it possible to qualify for Chapter 7. It works like this:

• Your spouse’s income would usually be listed with your own on the Means Test, but he or she doesn’t want to file for bankruptcy with you.
• You choose to take away the expenses of your spouse using the marital adjustment deduction.
• In doing this, you reduce those expenses from the full income of the household, lowering your overall income and making it more likely that you will qualify for Chapter 7.

Expenses that can be deducted from your income vary depending on your location and court approval, but most deductions will allow for:

• Payroll including taxes, insurance, union dues, retirement, and other deductions
• Alimony, child support, and other court-issued domestic support payments
• Your spouse’s attorney fees
• Payments on debts in your spouse’s name
• Payments on 401(k) loans
• Expenses on your spouse’s car
• Cell phone expenses in your spouse’s name
• Recreation expenses including vacations, hobbies, memberships, and other entertainment expenses
• Property expenses for real estate in your spouse’s name

Overall, you can deduct a significant portion of your income through the marital adjustment deduction and possibly qualify for Chapter 7 bankruptcy even with a high income. To learn more about filing for bankruptcy in Jackson, MN, contact Behm Law Group, Ltd. today at (507) 387-7200.