The Chapter 7 Means Test and Chapter 13 Means Test
With the changes to the bankruptcy law that were made in 2005, the means test was introduced. Essentially, this test was designed as a method of filtering out people who had enough money to pay off a portion of their debts and had no need to file chapter 7 bankruptcy. However, if you are overwhelmed with debt to the extent that you are considering bankruptcy, you will most likely be able to pass the means test and use the process to get a fresh financial start.
At the Law Offices of Brian A. Barboza in Santa Rosa, California, we will educate you about the means test and assist you with this initial step in the bankruptcy process. Contact the law firm to schedule your free initial consultation.
The Basics of the Bankruptcy Means Test
The means test starts with adding up all of your income from the past six months, including all income from jobs, as well as unemployment benefits if you have received them. Social Security benefits do not count as income.
Once your income is calculated, it is compared to the median income of a household similar in size. If your average income is less than the median income you automatically qualify for Chapter 7 bankruptcy. If your income is greater than the median income you must complete the entire means test to determine if you qualify. At this point certain deductions are applied to your income. There are standard deductions for things like food and utilities, in addition to deductions for actual costs, such as child care and other expenses.
Your average income, minus deductions, is then calculated to determine how much disposable income you have each month. If the amount of disposable income is between $175.00 to $125.00 you most likely qualify. If your monthly disposable income is less than $125.00 you qualify for Chapter 7 bankruptcy. If you have more than $175.00 disposable monthly income you can file Chapter 13 bankruptcy.
If you do qualify for Chapter 7 or need to file Chapter 13 bankruptcy, we will help you file immediately. From the very start, you will have lawyer Brian Barboza on your side, ready to answer your questions and make certain that your case gets the care and attention necessary during this stressful time in your life.
Contact Us for a Free Initial Consultation
Schedule a free consultation about the bankruptcy means test by calling our Santa Rosa attorney at 707-304-5251 or toll free at 866-965-2831, or send us an e-mail.
