Question:
I am an attorney and I have a client that makes too much money for standard Chapter 7 even with the Means Test. I recalled that if debts are over 50 percent, one does not need to employ the Means Test at all. Is that correct?
Answer:
If debtors don't qualify for Chapter 7 under the means test, there is one other way to qualify. This occurs if your income is insufficient to pay your debts over a five-year period. Under Chapter 13, you can deduct certain necessary expenses from your average monthly income. What's left over is your discretionary income, which, when multiplied by 60, is the amount you'd be expected to pay toward your debts. If this amount is less than 25 percent of the total debts that can be discharged in bankruptcy, you fail to qualify for Chapter 13 and are thus able to file under Chapter 7.
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