Jump to navigation Jump to content

The “Should I File for Bankruptcy?” Test

Blog Category:
Tobias Licker, Esq.
Comments (0)
Before anyone decides to take action on whether or not bankruptcy is the solution to their financial solution, a true gauge of their financial situation must be taken into consideration. While a high amount of debt on say, a mortgage, may be daunting, depending on the payments and length of terms versus a smaller amount of short term, high interest debt, $20,000 of credit card debt may be a more difficult slope to climb than $200,000 in a mortgage.

How does one determine if a bankruptcy may be their best option? Rather than focusing on your long-term debt-to-income ratio, take a monthly snapshot of the following - your net monthly income, your monthly debt payments, and your necessary living expenses.

If your net monthly income is less than your monthly debt payments, this is an immediate red flag that action needs to be taken. However, if you are in a situation where an adjustment to your living expenses or lifestyle can alter your monthly balance, lifestyle choices may be able to fix your budget.

Debt Settlement Company

Consider that when filing for bankruptcy, alternative forms of income, albeit non-taxable, such as child support, alimony, gifts, and annuities, may count as income when filing.

Another way to check if bankruptcy may be an option is the "Chapter 7 Bankruptcy Means Test". This test was designed to allow individuals who truly have a need to file bankruptcy under Chapter 7 instead of Chapter 13 the ability to do so. If your median income falls below the state or regional average based on your household size over a six month time span, you automatically pass. However, if your income is above this number, a series of financial factors based on your basic needs and adjusted cost of living take into effect.

Speaking with an attorney will give you a better idea of what the law sees as income and what your local and state laws translate into for your situation. The means test can be found at www.bestcase.com.

Category: Bankruptcy

2 Comments to "The “Should I File for Bankruptcy?” Test"

I think if bankruptcy would be considered , Chapter 13 would be better..
Posted by Las Vegas Foreclosures on November 22, 2011 at 01:28 PM
When someone has more than 3 K in debt and qualifies to file bankruptcy, wiping out the debt within 4 months is always better than struggling over the next 15 years.
Posted by Rex Stoll on November 15, 2011 at 11:22 AM

Post a comment

Post a Comment to "The “Should I File for Bankruptcy?” Test"

To reply to this message, enter your reply in the box labeled "Message", hit "Post Message."


Email:* (will not be published)


Notify me of follow-up comments via email.

For Current Clients

Our Locations

St. Charles Office

1861 Sherman Drive
St Charles, MO 63303
Phone: 636-916-5400

At Hwy 94 and Hwy 70.

Get Directions | See Detail

St. Louis Office

3470 Hampton Ave, Suite 101
St. Louis, MO 63109
Phone: 314-353-0834

Close to the corner of Hampton Ave and Chippewa. By appointment only.

Get Directions | See Detail

South & Jefferson County office

7321 S. Lindbergh Ave., Suite 222
St. Louis, MO 63125
Phone: 636-916-5400

Across the South County Mall.

Get Directions | See Detail

Florissant Office (North County)

1281 Graham Rd, Suite 300
Florissant, MO 63031
Phone: 314-921-1880

At North Hanley and Hwy 270.

Get Directions | See Detail

Belleville Office (St. Clair county)

2 Park Place Professional Centre
Belleville, Illinois 62226
Phone: 618-977-9560

On Hwy 159, next to Schnucks.

Get Directions

Granite City Office (Madison County)

3600 Nameoki Rd, Suite 201
Granite City, IL 62040
Phone: 618-977-9560

Across Shop'n Save, by appointment only.

Get Directions | See Detail

Follow Us On