You are considering filing bankruptcy in New York and understand that you can qualify by passing the Chapter 7 means test. You can qualify for Chapter 7 bankruptcy in New York in two different ways, so the purpose of this article is to share how to pass the means test for Chapter 7.
The New York bankruptcy means test calculators below will help you estimate qualification for either scenario. You may only have to take one calculator if your income level is lower than the New York Chapter 7 bankruptcy income level.
The means test is a standardized bankruptcy form that you complete to file for bankruptcy. You can think of it as an income test. The bankruptcy forms calculate your average monthly income. It then annualizes that figure to calculate your average annual income.
Here are some important things to note:
Below are the household income levels for New York for bankruptcy cases filed on or after May 15, 2021. The figures change every 6 months or so. If your household size is greater than 9, you would add $9,000 for each additional family member.
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You may have taken the calculator above and your income is above the household income level for New York. If so, you may still qualify based on the next two means test forms: 1. Statement of Exemption from Presumption of Abuse Under §707(b)(2) and 2. Chapter 7 Means Test Calculation. The second portion of the means test allows you to deduct allowable monthly expenses from your current monthly income (CMI) to calculate your disposable income. The expenses used are a combination of national and New York expenses.
As a note, disposable income is the income available after expenses that may be used to repay your debts. If your disposable income is below a specific amount, you may still qualify for a Chapter 7 bankruptcy.
The New York above-median bankruptcy means test calculator below uses both forms to help you determine allowable expenses to estimate Chapter 7 qualification.
Here are the certain expenses that you may deduct actual expenses on the second part of the bankruptcy means test.
You may also deduct other expenses for special circumstances. For this, you may want to speak with a local bankruptcy attorney in New York with a free evaluation.
If you fail the bankruptcy means test, you may still have options. For example, you can consider a Chapter 13 bankruptcy in New York. You may also consider bankruptcy alternatives such as debt settlement, debt management or debt payoff planning.
A Chapter 13 bankruptcy is known as a wage earner’s plan. In many cases, you will pay back a portion of your unsecured debts in a payment plan. You are often able to keep your assets, and there’s no qualification as long as you are under the debt limits. It’s also on your credit report for 7 years instead of 10 years. It can take 36 or 60 months. If you are in a 100% Chapter 13, your payment plan may be shorter.
Debt settlement is when a company or you negotiate to lower your debt balance less than what you originally owe. That way a portion of what you were supposed to pay back will be forgiven. For example, if you owe in debt $50,000, debt settlement is able to negotiate the amount down to $25,000. The debt settlement program is often a payment plan that could be between 12 - 60 months.
Debt management (also known as credit counseling) is when a company negotiates to lower the interest rate of your debt. For example, if you owe a blended interest rate of 22%, a debt management company may be able to negotiate the interest rate to 9%. Many companies work with credit cards, but may not work with unsecured personal loans. The debt management program is often a payment plan that could be between 36 - 60 months.