Am I Eligible To File Bankruptcy?
Last updated on April 3, 2025
It makes no sense to muse about whether bankruptcy might be a good option for you if you don’t even know whether you would qualify. One of the first questions you must find the answer to if you are facing serious financial problems is:
Am I eligible to file for bankruptcy in North Carolina?
Our lawyers have more than 40 years of combined legal experience. We can help you determine whether bankruptcy is the right choice for you and whether you should file for Chapter 7 or Chapter 13 bankruptcy.
Call 919-794-8660 or email us to talk to an attorney from Wootton & Wootton
Determining Eligibility For Bankruptcy
You have the right to file. It is provided for in the Constitution. But you can only get bankruptcy relief if you qualify. If your debts are higher than your income every month, you most likely qualify for bankruptcy. In fact, for most people, it is more a question of which type of bankruptcy they qualify for rather than whether they qualify at all.
- Do you qualify? You most likely do. Our lawyers will look over your financial details with you to be sure.
- Which type of bankruptcy? Our attorneys will help you determine whether Chapter 7 bankruptcy or Chapter 13 bankruptcy would be a better choice for you. The means test is one of the most important first steps to determining which chapter is best.
- How to file for bankruptcy? We will help you through the entire process, from the free initial consultation to the final discharge of your debts.
At Wootton & Wootton, we pride ourselves on giving our clients straight, honest answers to their bankruptcy concerns. When you work with our experienced Durham bankruptcy lawyers, we will not push you into bankruptcy. We will tell you honestly if bankruptcy is the right solution for you, and we will provide you with sound legal counsel regarding your alternatives.
What Is The Bankruptcy Means Test?
When one is looking into filing for bankruptcy, the term “means test” will undoubtedly come up frequently. However, many of the articles on the web often skim past what the means test is and why it matters.
Simply put, the means test is what determines whether one can file for Chapter 7 bankruptcy. Those who fail this test or who do not want to forfeit certain assets, like antique cars, can choose to file Chapter 13 bankruptcy, which means debts will be restructured, not eliminated.
One’s income and expense information goes onto the means test forms (i.e., the 122A Forms or the 122C Forms). This includes current monthly income, family size and expenses. This calculation determines whether one has enough income to pay off debts. While this may sound scary, the majority of people filing for bankruptcy pass the test.
The First Test – Income
This initial assessment in determining eligibility involves a meticulous evaluation of the filer’s household income. This involves a thorough review of income documentation over the past six months, accounting for any fluctuations or significant changes. For instance, if the filer has recently gained employment or experienced a layoff, these adjustments factor into the income analysis.
The income threshold is set against North Carolina’s median income, as determined by the latest census data. If the filer’s income falls below this median, they successfully pass this test, allowing them to proceed with further evaluations or applications.
The Second Test – Expenses
In the second phase of evaluation, the focus shifts to a detailed analysis of the filer’s expenses, particularly for those whose income exceeds the median threshold. This involves compiling a comprehensive record of all expenses over the previous six months. The list of allowable expenses, as guided by the IRS, includes essential costs such as medical bills, clothing, groceries and rent.
The goal is to determine the filer’s disposable income, which is the remaining income after subtracting these necessary expenses from their total income. This disposable income is crucial, as it indicates the amount available to address outstanding debts. If this amount remains sufficiently low, the filer qualifies to file for Chapter 7 bankruptcy.
Accurately calculating these expenses is vital, as errors can lead to the dismissal of the case. Given the complexity and the mathematical precision required, it is strongly advised that individuals seek the expertise of a bankruptcy attorney to navigate this process effectively.
Contact A Durham Bankruptcy Eligibility Lawyer ∙ Free Consultations ∙
We offer free initial consultations for potential clients in North Carolina. Call 919-794-8660, text us at 919-382-3065 or email us to learn more. Consultations are available in person, over the phone or through video conferencing.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.