There are a few different reasons to file for Chapter 13. Probably the first one is if you are not qualifying for the Chapter 7.
Jan. 12, 2023
U.S. Trustee’s Office Releases Updated Bankruptcy Means Test Numbers
The U.S. Trustee’s Office, which is the governmental agency that oversees the administration of bankruptcy cases, has released the latest numbers for means test qualifications used in Chapter 7 and Chapter 13 bankruptcies. The new numbers will to be used in all consumer Chapter 7 bankruptcies filed after November 1, 2017.
The means test calculates gross annual income based on the previous six months of gross income for the household, to determine if an individual or couple qualifies for chapter 7 bankruptcy. The projected annual gross income is then measured against the Median Family Income for the household size and state in which the filer resides. If the projected annual gross is less than the applicable Median Family Income, the filer qualifies for Chapter 7 bankruptcy protection. If the projected annual gross is more than the Median Family Income, the filer must complete the second half of the means test to determine if the filer has the “means” to afford a Chapter 13 bankruptcy plan payment in which the filer pays a portion of his/ her debt to the creditors.
The three common triggers for bankruptcy are unemployment, medical expenses, and divorce. Unemployment can trigger bankruptcy, which is pretty straightforward.
The trustee has a duty to conduct due diligence, and that basically means reviewing the documents that are filed by the debtor and then holding a hearing called a Section 341 hearing in which the trustee asks some standard questions of the debtor.