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.
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Amazing law firm to work with, very knowledgeable, & very kind. They made filing for bankruptcy easy. Kevin is a amazing lawyer, would definitely recommend to friends and family.- Evelyn V.
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Kevin is the best! He made us feel at ease during a very stressful time in our lives. His upbeat personality and thorough explanations made this whole process effortless. His communication was on point and the cost for his services was absolutely reasonable. If I ever need legal service again in the future, he is my go to guy. Love him!- Elizabeth C.
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Nobody ever hope to find themselves filing for bankruptcy but when I did, my first call with Kevin put me in such ease that I knew I found the right person to help me.- Leslie I.
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Kevin was absolutely fantastic to work with. He made the entire process of filing my case approachable and much less stressful than I anticipated. He was responsive, professional, and direct throughout the entire process, and personally accompanied me at my hearing. I would highly recommend his services.- Ashley T.
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Kevin Kunde was one of the best bankruptcy attorneys to work with. He was kind, informative, courteous and very knowledgeable. I would recommend 1st California Law and Kevin Kunde services to anyone seeking debt relief assistance. Bankruptcy can be a very scary situation and I through out the entire process I felt well guided and taken care of by 1st California Law. Thank you for everything.- Melissa L.
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I recently filed for my Chapter 7 through Mr. Kevin’s law firm and I could not be happier with his services. All of my concerns and worries were eliminated when Mr. Kevin thoroughly explains the process of bankruptcy filing and court hearing. The actual court hearing is very simple and to the point, just as Mr.Kevin said. In all, i highly recommend Mr.Kevin as an attorney for anyone who is in need of financial debt relief. He is kind, transparent, and dedicated to his profession. I'm glad i have had a chance to work with Kevin.- Bruce
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It was the best experience ever with Kevin, I consulted several attorneys regarding my bankruptcy before I went to Kevin, and Kevin was very helpful and also the fees is very good. It was so easy to prepare my filling with him and he kept me updated with everything and tell me everything I need to know even if I didn't ask for it. Kevin show up with me in court and he was very helpful in getting over this stressful situation easily and smoothly, highly recommended him and his office if you look for any financial relief advice or help. Thanks Kevin.- AA
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