Written by Attorney Karra Kingston.
Updated September 3, 2020
Filing a Maryland bankruptcy is a big decision. If you are overwhelmed with debt, bankruptcy can be a great tool to help you start over. To file a Chapter 7 bankruptcy, you must pass the Chapter 7 Means Test. The Means Test came into being when Congress passed the Bankruptcy Reform Act in 2005. At that time, there was a concern that people should not be able to file for relief under Chapter 7 and get their debts wiped out if they could afford to pay back at least some of their debts. Congress implemented the Chapter 7 Means Test to put a cap on income - basically, you can’t make too much money and file Chapter 7. If you are considering filing a Chapter 7 bankruptcy you will need to pass the bankruptcy Means Test in Maryland to do so. There are two ways to do so - first you can qualify based on your income. If your current monthly income is lower than the median income in Maryland for a family of the same size then you pass the bankruptcy Means Test in Maryland. If you do not qualify under the first part, you can complete the second part of the Chapter 7 Means Test calculation, which involves examining your income and monthly expenses. If at the end of this assessment you have little or no disposable income remaining to pay your bills, you pass the Bankruptcy Means Test in Maryland and can move forward with filing a Chapter 7 bankruptcy.
Maryland Median Income Levels
Maryland Median Income Standards for Means Test for Cases Filed On or After May 1, 2020
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Discharge in Bankruptcy for Maryland
The objective in your Maryland bankruptcy is for the Bankruptcy Court to enter your order of discharge. Once your Maryland bankruptcy discharge is entered you are no longer responsible for the debt. This means that your creditors can never go after you because you are no longer personally obligated to pay them. Some types of debts are non-dischargeable, like child support and student loans, so you have to continue to pay them. Most unsecured debts, like credit cards and medical bills, are dischargeable, so bankruptcy relief can truly offer you a fresh start. Since getting your discharge is your ultimate goal, you want to make sure that you are on the right path to getting it. To get your Maryland bankruptcy discharge, it is important to make sure all the proper paperwork is filled out and answered honestly. After completing the necessary paperwork, you will have to attend your Meeting of Creditors and cooperate with your bankruptcy Trustee. If everything goes smoothly, you will receive your Maryland bankruptcy discharge approximately 60 days after your creditors’ meeting. It is important to know that you are not automatically guaranteed a discharge as soon as your Maryland bankruptcy case is filed. Bankruptcy Courts have the power to deny a discharge based on fraud, for example. It’s important you review the steps and process before you proceed to ensure your case moves along smoothly.
Maryland Means Test Calculator
Since qualifying under the Chapter 7 Means Test is so important, you need to make sure you understand how to calculate your income. If you do not immediately qualify for a Chapter 7 bankruptcy because you seemingly make too much money, you will need to go through the second part of the Chapter 7 Means Test to determine whether you qualify. To see if you qualify, you will have to gather all sources of income and documentation of your monthly expenses. It’s important to note that expenses have to be “reasonable” so you may not be able to include all of your monthly expenses. You can use a Maryland Means Test calculator to help you with your calculations. If you do a simple search online, you will find that many calculators pop up. It’s key that the calculator you use is up-to-date and accurate. If the calculator is outdated, it can look like you failed the Chapter 7 Means Test even though you didn’t. The Upsolve Means Test calculator is always kept current. This dependable calculator will ensure you have the most accurate information, which is vital so that you can rest assured knowing that you can file your Maryland bankruptcy as a Chapter 7. Upsolve is a free nonprofit that can help you with the bankruptcy process, help you make sure that you get your debt discharged, and walk you through the process step by step.
What Happens If I Fail The Means Test for Maryland?
If you do not qualify under the Chapter 7 Means Test it is a good idea to go back through the full Means Test calculation and confirm that all of your information is accurate and complete. Make sure that you included all possible expenses. You can look through your bank statements and bills to make sure you did not leave anything out. If your income is still too high, then you may want to wait to file. If your income will change soon, it may be beneficial to wait until you have less income to qualify. Perhaps your work is seasonal and the bulk of your annual income is made only during the summer; if so, it can make sense to wait until the change occurs since your current monthly income is averaged based on the previous 6 months. Upsolve’s bankruptcy guide for Maryland can prepare you and help you move forward with your Maryland bankruptcy once you qualify. If after re-checking your figures you still don’t qualify, you may want to talk to a lawyer to explore your options in a Chapter 13 bankruptcy.