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Written by Attorney Karra Kingston.
Updated November 18, 2019
If you are thinking about filing an Alabama bankruptcy, you are certainly not alone. Hundreds of people in Alabama file bankruptcy every month to help them start over. For example, even former Alabama Law Enforcement Secretary, Spencer Collier, had to seek bankruptcy protection after his employment was terminated. In 2016, Houston County, Alabama had the third highest filings of any county in the nation. Once you have determined that you want to move forward with filing bankruptcy, you will need to see if you qualify for a Chapter 7 bankruptcy in Alabama. In 2005, Congress reformed the Bankruptcy laws to prevent people from taking advantage of the system. The Means Test was implemented as a prerequisite to filing bankruptcy. The Chapter 7 Means Test requires that every person must pass in order to qualify for a Chapter 7 bankruptcy in Alabama. The implementation of the Means Test made it more difficult for people to qualify for bankruptcy because they had to be below a certain income to qualify for a Chapter 7 bankruptcy. This was a way to prevent people who earn a “high” income from wiping out all of their debt in a Chapter 7 bankruptcy without having to pay anything back.
Alabama Median Income Levels
Alabama Median Income Standards for Means Test for Cases Filed On or After May 1, 2021
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Discharge in Bankruptcy for Alabama
An Alabama bankruptcy discharge is the result you want in your Alabama bankruptcy case. Once a debt is discharged, you are no longer required to pay your debts. In a Chapter 7 case, the Alabama Bankruptcy Court usually grants the discharge 60 days after the date first set for your 341 meeting. Not all debts are dischargeable. Some of these non-dischargeable debts include child support, student loans, and most tax debts. This means that you will be obligated to make payments to these creditors even though you received your Chapter 7 bankruptcy discharge. Since an Alabama bankruptcy discharge is your ultimate goal, it is important to make sure that you are on the right path to achieving your Chapter 7 discharge. To ensure your case moves smoothly, you must demonstrate to the Court that you are honest and provide the Court with accurate paperwork. You also must show the Court that you qualify for your discharge by completing the bankruptcy Means Test in Alabama.
Alabama Means Test Calculator
In order to determine whether your income is below Alabama’s median income level, you will need to calculate your family’s gross income within the last six months. If you fall below the average, there is a presumption that you pass the bankruptcy Means Test in Alabamaand are eligible to file a Chapter 7 bankruptcy. However, if your income exceeds the limit, then you will need to complete the next portion of the Means Test. To help you with your calculations, you can use an “Alabama Means Test Calculator”. If you enter those words into your search engine, you will find a significant amount of calculators that you can use. Make sure that you understand how to use these free Chapter 7 means test calculators and that the information being provided is accurate. It is important to note that figures for the Means Test are updated every few months and as a result, some online means test calculators may be outdated. You can use the Alabama Means Test Calculator from Upsolve to provide you with the most accurate information, as it is up-to-date, always.
What Happens If I Fail The Means Test for Alabama?
If you fail the Chapter 7 bankruptcy Means Test in Alabama, then you may want to start by reviewing your expenses on the second part of the Means Test to make sure you did not forget anything. Some of the most common deductions on the Means Test that you may have forgotten include taxes, involuntary deductions, disability, term life insurance, mortgage payments, car payments, other secured debt payments, court-ordered payments, child care, health care, and charitable contributions. If you still fail after reviewing your deductions, but you expect your income to decrease in the near future, then you may be able to wait a few months to see if you qualify. If you believe that you have “failed” the bankruptcy Means Test in Alabama thenyou may want to speak with a local bankruptcy lawyer. A bankruptcy lawyer can provide you with a professional evaluation to see if you qualify for a Chapter 7 bankruptcy and how it generally works. Often times, bankruptcy lawyers give free consultations. Take advantage of these free consultations so that you can see if you qualify and to learn more about your Alabama bankruptcy options.