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Written by Attorney Eva Bacevice.
Updated September 3, 2020
The Means Test is a qualifying step in the bankruptcy process which came into being when Congress passed the Bankruptcy Reform Act in 2005. At that time, there was a concern that the bankruptcy system was being abused by people filing for Chapter 7 relief who could otherwise afford to pay back some or all of their debts. Congress implemented the Chapter 7 Means Test as a method to help people show that they are not abusing the system (by overcoming the so-called “presumption of abuse”) thereby ensuring that people filing Chapter 7 cases were those who truly needed such extensive relief. If you are considering a Chapter 7 case you will need to pass the bankruptcy Means Test in Virginia in order to file. There are two ways to do so - first you can qualify under income limits if your current monthly income is lower than the median income in Virginia for a family of your size. If you do not qualify under this initial threshold, you can complete the full Chapter 7 Means Test calculation, which involves an in-depth analysis of your income and reasonable monthly expenses. If at the end of this calculation you have no or little disposable income remaining to pay your bills, you pass the bankruptcy means test in Virginia and qualify to file a Chapter 7 Bankruptcy.
Virginia Median Income Levels
Virginia Median Income Standards for Means Test for Cases Filed On or After May 1, 2020
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Discharge in Bankruptcy for Virginia
The goal of your Virginia bankruptcy is for the Bankruptcy Court to enter your order of discharge. This is the point in the bankruptcy process when your debts are eliminated and you are no longer personally obligated to pay them. Keep in mind that certain types of debt are non-dischargeable, like child support, and you remain obligated to pay them. For most people, however, the bulk of their debt is unsecured debt, like credit cards and medical bills, so bankruptcy relief can truly offer them a fresh start. To obtain your Virginia bankruptcy discharge, it is important to file all of your completed paperwork, take both credit counseling education courses, attend your Meeting of Creditors and cooperate with your bankruptcy trustee. If all goes smoothly, you can expect to receive your Virginia bankruptcy discharge approximately 60 days after your creditors’ meeting.
Virginia Means Test Calculator
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 full Chapter 7 Means Test analysis to determine whether you qualify. This is a deep dive into your finances to fully account for all of your monthly expenses. These expenses have to be “reasonable” according to the government so it is very important that your Virginia Means Test calculator is accurate and up-to-date with this information. The Upsolve Means Test calculator is current to the day for Virginia and all other states, so you can rest assured you are using the most accurate information. This can be of vital importance in the calculation since your ability to file your Virginia bankruptcy under Chapter 7 of the Bankruptcy Code depends on the result.
What Happens If I Fail The Means Test for Virginia
If you fail the Chapter 7 Means Test there are some steps that you can take to explore your options. First, 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 certain that you fully included all possible expenses. This includes items like school supplies that you might only buy a few times per year, so long as you average it out to a monthly expense. It is also important to look ahead, in case there are any major changes to your life coming soon. What if you are considering a separation or divorce? It could be that you do not qualify for a Chapter 7 Bankruptcy in your current situation but you might both qualify separately under the bankruptcy means test in Virginia. Perhaps your work is seasonal and the bulk of your annual income is made only during the summer months at Virginia Beach. If so, it can make sense to wait until the change occurs (or a few months after) since your current monthly income is always tied to the previous 6 months. In the meantime, check out Upsolve’s bankruptcy guide for Virginia so you can prepare and be ready to move forward with your Virginia bankruptcy once you qualify. If, after re-checking your figures and expectations for the near future, you still don’t qualify, it is a good time to explore Chapter 13 bankruptcy as another way to get relief.