The Bankruptcy Means Test and Eligibility to File a Chapter 7 or Chapter 13 Bankruptcy Case

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There are certain limitations on a person's eligibility to file a bankruptcy case under Chapter 7. One limitation is related to the amount of household income for a debtor. The calculation of household income can be complicated. A separate schedule is required to be filed with the Chapter 7 bankruptcy petition and is called a Form 22 (A). It is important for a client to obtain the past 6 months of payroll information, business income information ( for self employed persons), and the past two (2) years' federal and state income tax returns. Every bankruptcy attorney will be required to review this information to determine whether the client is eligible to file a Chapter 7 bankruptcy case.

In addition to your basic household income, it is equally as important to work with an attorney to determine your household expenses ( your “budget”) Documentation of your payroll deductions for taxes, retirement plan contributions, health insurance, union dues, etc. can often be found on your pay stubs. There are many expenses that do not appear on your pay stubs that need to be provided to a lawyer. This would include a client's expenses for items such as an auto loan, auto insurance, mortgage payment, real estate taxes, utilities ( including electric, gas, cable television, satellite television, internet, cellular phone, etc). Other expenses such as contributions ( “tithes”) to church, charitable gifts, food cost, daycare, fuel, vehicle maintenance, school tuition, school-related expenses (uniforms, school supplies), school activity fees ( sports fees, equipment, travel expenses) should be determined on a monthly basis for a bankruptcy attorney. Expenses for other items like auto insurance, home insurance, professional insurance, license fees, etc should also be determined.

Self employed individuals should provide a bankruptcy Attorney with an Income and Expense Statement which sets out gross income and expenses on a year to date basis (for current year). it is usually most helpful if the client consults with a Certified Public Accountant or a reputable software provider such as Quickbooks to complete these reports. Accurate, professional looking financial reports for a small business are important. Financial information in a Chapter 7 bankruptcy case is always examined by the panel trustee and sometimes the Bankruptcy Administrator. In rare cases, bankruptcy cases can be referred to an accounting or law firm for an independent audit. This means that the information provided to the attorney by the client should be as accurate and complete as possible.

At Ryan Legal Services, Inc, we have been representing individuals in Chapter 7 and Chapter 13 bankruptcy matters since 1998. We represent individuals in Baldwin, Mobile and Washington Counties.

Kevin Ryan is an experienced bankruptcy lawyer who will be there for you. Call us to set up a free telephone or office consultation.


We serve the following localities: Choctaw county, Washington county, Clarke county, Monroe county, Escambia county, Mobile County including Eight Mile, Grand Bay, Irvington, Mobile, Prichard, Saraland, Semmes, Theodore, and Tillmans Corner; and Baldwin County including Bay Minette, Daphne, Fairhope, Foley, and Robertsdale.

I'll BE there for you.

I'll never be the kind of attorney your creditors want me to be. I'll always be the kind of attorney you NEED me to be. Call me. I'll BE there for you. - Kevin Ryan, Attorney at Law