The Bankruptcy Means Test

By Peter Rasla & Associates, P.L.C.  Jan. 8, 2011 5:35p

The bankruptcy "means test" is used to determine if a debtor's income is low enough to file for chapter 7 bankruptcy. In addition, the means test is designed to keep individuals with high income from filing for chapter 7 bankruptcy. Those debtors who fail the means test because their income is too high are then diverted to filing a chapter 13 bankruptcy instead. In a chapter 13 bankruptcy, their debt will be reorganized into a simple 3 to 5 year repayment plan. In this case, they will be able to pay off either a portion or all of their debts over the term of the bankruptcy as opposed to having them wiped out in a chapter 7 bankruptcy.

You don't have to be broke in order to qualify for a chapter 7 bankruptcy. You can have a decent income, and if you have a significant debt to income ratio, you may qualify for a chapter 7 bankruptcy. A competent bankruptcy attorney can help you calculate whether or not you qualify for a chapter 7 bankruptcy through using the bankruptcy means test.

Individuals with predominantly consumer debts are required to take the means test, not businesses. Before you determine if you qualify for a chapter 7, you will first have to find out what the median income is for your state. It's fairly simple, if your income is less than the median income for your household size, for your state, then you pass. It is not necessary for you to complete the means test and you can move forward with a chapter 7.

Bankruptcy Attorney in Irvine

If you are considering filing for bankruptcy, or have already made the decision to do so, an Irvine bankruptcy attorney from Peter Rasla & Associates, P.L.C. can help you with the means test. The process is relatively simple, and we can give you a definitive answer as to which type of bankruptcy you might qualify for. We are well versed in all aspects of California bankruptcy laws, and we can use our knowledge and experience to help you with your case.

Contact an Irvine Bankruptcy Lawyer from our firm today for a free consultation.

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