Chapter 7 Bankruptcy And The Means Test

Mounting debts can become frightening when there is little hope you will be able to pay them off on the horizon. Could bankruptcy be an option? Chapter 7 bankruptcy can offer the quickest route and become a financial restart button.

At the Law Offices of Brian A. Barboza, we understand these fears. Our attorney will meet with you to determine whether you qualify for Chapter 7. Then we will work closely with you throughout the bankruptcy filing process.

Chapter 7 Means Test Basics

The filing process starts with completing a means test to determine whether you qualify. Your income over the past six months (excluding Social Security benefits) is calculated and compared to the median income of a similar-sized household. If you fall below the median line, you automatically qualify.

Income above the median requires a second step. Deductions (child care, food and other actual expenses) are applied against income to determine your monthly disposable income. When this is above a certain threshold, you will not qualify for Chapter 7, but you could still file for Chapter 13 bankruptcy protection.

Chapter 7 Bankruptcy Benefits And The Filing Process

Once you file, creditors must stop harassing you. Your debt is liquidated allowing you to rebuild your life and credit. You also generally get to keep your vehicle, equity in your home and personal property (e.g. a wedding ring or antique furniture).

Here is what the process looks like:

  • Initial paperwork is completed and filed on your behalf.
  • A creditor meeting will be scheduled (usually a trustee, you and your attorney will be the only ones at the meeting).
  • After 30-45 days, qualifying debts will be discharged.

When Chapter 7 bankruptcy is the best possible option in your circumstances, we will walk you through each of these steps. As you can see, this process can be completed relatively quickly when you work with an experienced bankruptcy attorney.

Schedule A Free Initial Consult

With office locations in Santa Rosa, San Rafael and Ukiah, we serve clients throughout the North Bay and across Wine Country. Call us at 707-304-5251 or toll free 866-965-2831. You can also easily reach us online to get started.