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As an Ohio resident who is looking to regain control over your finances, you may be wondering whether filing for bankruptcy may help give you the fresh start you desperately need. You may, too, be familiar with the various types of personal bankruptcies, including Chapter 7 and Chapter 13 filings, but you may not fully understand how they differ or which type might better suit your needs. At Debra Booher & Associates CO LPA, we have a comprehensive understanding of the various consumer bankruptcy processes, and we have helped many clients facing similar circumstances find solutions that meet their needs.

According to NerdWallet, you may not be eligible for both types of consumer bankruptcies. Generally, Chapter 7 bankruptcies typically help those with lower income levels get back on their feet financially, while those with higher income levels may have to pursue Chapter 13 filings. Ultimately, whether you will be able to move forward with a Chapter 7 bankruptcy, if preferable, depends on whether you are able to pass the bankruptcy means test.

The means test, which has two parts, assesses your income and expenses in an effort to determine whether you have enough money at your disposal to pay back part of your debts. The first part of the test involves comparing your household income against that of the median household income in Ohio. If yours falls below Ohio’s median income, you automatically pass and can move forward with a Chapter 7 filing without taking the second part of the test.

If you do not pass the first part of the bankruptcy means test, but you still prefer to pursue a Chapter 7 filing, you can take the next part of the test. This involves producing documentation about your expenses to find out how much “disposable income” you have after paying them. The amount of disposable income you have each month will then determine whether you can pass part two of the means test and move forward with a Chapter 7 filing. If not, you may have alternative options available to you. You can find more about bankruptcy on our webpage.