Long-lasting financial struggles can seem hopeless. It may feel like you can never recover from your hardships, especially when creditors ask left and right for the money you owe them. Fortunately, not all hope is lost. Chapter 7 bankruptcy exists for a reason. You can qualify for it if you consider how the state of Georgia determines eligibility for individuals looking for relief under this type of bankruptcy.
Median income comparison
Initially, you need to figure out your current monthly earnings and compare this with the average income for a household of your size in Georgia. If your income is below the median, you may qualify for Chapter 7. If your income is above the median, you then proceed to the means test.
The means test after exceeding the median income
Georgia requires you to complete the means test when your income exceeds the median. This test determines your disposable income by subtracting specific monthly expenses from your current monthly income. For instance, if you’re a single person in Georgia earning $5,000 per month, above the median, you will proceed to the means test. After subtracting allowed expenses of $3,000 from your income, your disposable income is $2,000. If this disposable income is below a certain threshold, Chapter 7 bankruptcy could still be an option. However, you might not qualify for Chapter 7 bankruptcy if it’s above this threshold.
Failing the means test
As in other states, Georgia’s bankruptcy eligibility is determined by the U.S. Bankruptcy Code, and each step of the process hinges on approval from the previous step. Don’t lose hope if you fail the required Chapter 7 means test. You still have the option to file for Chapter 13 bankruptcy. Dealing with debt settlement can be overwhelming, so it’s crucial to approach each stage of the eligibility process with diligence.