Why the Chapter 7 Means Test Can Help You Budget after Bankruptcy
Everybody who wants to file a Chapter 7 bankruptcy must first qualify by passing the Chapter 7 means test. The first section of the test compares your income to the state median. If your income is higher than the state median, then you can determine how much disposable income your family has by comparing your expenses with the IRS national standards.
The IRS national standards tell you how much you should be spending on different expenses depending on your family size, such as food, clothes, personal items, and so on. Here's an example of the national standards: a family of four is given a budget of $752 for food a month.
If you're saying that's a really small number, you're right. It probably isn't as much as most Americans probably spend in a month, and you probably spend more than the national standards. But this number given by the IRS can serve as a baseline for you to start planning a budget that stays within your family's means. With a good budget in hand, you can get a second chance. A Chapter 7 bankruptcy is able to get you credit card debt help, protection from creditor calls, and protection from repossession for you to have a clean slate to begin again--finally being able to sleep at night without thinking about what you will have to do if your car is repossessed or you lose your home to foreclosure.
After you finish a Chapter 7 bankruptcy, you will have the opportunity to rebuild your credit. In order to avoid ever having to file bankruptcy again, it's important to make the most of your fresh start and make sure to live within your means. The IRS national standards are really just a good guideline for what you should budget for. As long as you stay within your means, you shouldn?t have to seek out credit card debt help, wage garnishments, or protection from creditor calls ever again. Bankruptcy is a strong first step towards lifelong financial security.
You must come up with a working budget and follow it! Bankruptcy is a process that can help a lot of people get the fresh start they deserve.
About the Author
Jim Brown is a bankruptcy attorney based in St. Louis, Missouri. He has spent 15 years fighting an industry that consistently takes advantage of hard-working Americans.He started his firm, Castle Law Office, with his wife and best friend, Sherrie. In his spare time, he enjoys coaching youth hockey, golfing, and spending time with his three wonderful children.For more information, visit http://www.castlelaw.net
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