Means Test Start Your Path to Financial Freedom

The Bankruptcy Means Test

Qualifying for Chapter 7 Bankruptcy

If you have been looking for a way to discharge your unmanageable debt and move forward with a fresh start, you have likely explored the many benefits of filing for Chapter 7 bankruptcy. Under this chapter of the U.S. Bankruptcy Code, those that qualify will have the opportunity to liquidate non-exempt assets and pay off creditors with the proceeds. From there, most additional debt will be discharged and the individual will no longer be responsible for paying them off.

Although obtaining debt-relief is not as simple as snapping your fingers, it is much easier to do so when you explore your legal options. As such, the only catch is that you must qualify to file for Chapter 7 bankruptcy by submitting to, and passing, a "means test." If you are not eligible, however, you may still file under Chapter 13 which would allow you to restructure your debt into more manageable payments, so that you can pay off creditors over a three to five year period of time.

Because filing for Chapter 7 bankruptcy allows individuals to virtually discharge all of their debt overnight, it is important to make sure that the process is reserved for those in a dire financial situation. This means that a debtor should not have any disposable income that they could be contributing to paying back creditors, but rather that they have run out of options.

When you are struggling to stay on top of day-to-day expenses and mounting bills, you should not waste any time in retaining the help that you will need to successfully move past your debt. Contact our office today for a free consultation!

In order to generally understand who is eligible under these circumstances, a means test was developed. By evaluating a debtor's financial situation at a glance, it limits the amount of people that are eligible and reserves this form of debt-relief for those that are truly struggling to manage their expenses. Based on your answers to the test, it will be determined whether or not you qualify to file for bankruptcy.

The means test takes several factors into consideration, including:

  • The comparative size of your house in the state in which you reside
  • Your total monthly income
  • The amount of disposable income you are left with each month after paying off necessary expenses

Understanding How the Means Test Works

Simply put, a means test utilizes a calculation to determine whether or not you are eligible to file for Chapter 7 bankruptcy. First, your current monthly income will be examined. If it "is less than the median income for a household of your size in your state, you pass," and you do not have to complete the rest of the test. If, however, your income exceeds the state median, other factors will be taken into consideration.

Next, your required monthly payments—including credit card bills, costs of living and transportation, etc.—will be subtracted from your total monthly income, and it will be determined how much disposable income you have left over. If it exceeds a designated amount, you will not qualify to file for Chapter 7.

This number will vary depending on where you live, as well as the size of your household, however, so it is important to make sure that you take this into consideration when exploring your legal options. To find out if you qualify, use an online means test calculator here.

Still have questions about Chapter 7 eligibility?

If you still have questions about whether or not you qualify to file under Chapter 7 of the U.S. Bankruptcy Code, 1st California Law prompts you to speak to an experienced Santa Ana attorney at our firm.

By calling our office today and taking advantage of a free initial consultation, you will have the opportunity to consult with a legal professional about your financial circumstances. Contact our office today to get back on the road to financial recovery.

Our Top Priority Is you

Check Out Our 5-Star Reviews
  • Kevin is a great attorney he helped us every step of the way.

    “Quick response to any question. Will definitely recommend him.”

    - Cesar C.
  • A man like Mr. Kunde who has a strong character would undoubtedly be a very good attorney. So I'm going to recommend him very highly!!

    “From the bottom of my heart, THANK YOU Mr. Kevin Kunde!”

    - Abhijeet N.
  • They are very affordable, Professional and care about their clients.

    “They were always available to answer my questions and made the whole process go by smoothly.”

    - Former Client
  • Kevin took the time to explain my options and really helped to put me at ease.

    “I would not hesitate to refer any friends and family to Kevin if there was a need.”

    - Former Client
  • These guys are caring and take their job seriously.

    “Thank you guys so much for making this process smooth.”

    - Former Client
/

Why 1st California law?

Our Promise to You
  • Thorough Communication with Our Clients
  • Passionate Service, Personal Help, Practical Solutions
  • Available 24 Hours a Day, 7 Days a Week
  • Free Initial Consultations

Need Financial Counsel?

Our Firm is Here to Help. 
  • Please enter your first name.
  • Please enter your last name.
  • Please enter your phone number.
    This isn't a valid phone number.
  • Please enter your email address.
    This isn't a valid email address.
  • Please make a selection.
  • Please enter a message.