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Qualifying for Chapter 7: The Means Test


In order to qualify for Chapter 7, you must pass the "means test"-a formula used to determine whether you have enough money to pay creditors.  The purpose of the means test is to reserve Chapter 7 for those of us who really need it.  If you do not pass the "means test" you can still file a Chapter 13 bankruptcy.

The "means test" is a two-step process:

  1. Compare Median Income
If your income is lesser than your state's median income for a family of the same size, then you qualify for Chapter 7.  If your income is greater than the median income, then you can still qualify if you pass the second step.
  1. Calculate Disposable Income and Unsecured Debts

This process is rather complex and it is recommended that you hire an attorney who can help you with this process.  Failure to do this right can result in getting your Chapter 7 petition rejected by the court.

If you have any questions about bankruptcy, please call 1st California Law at (949) 735-8499 for a free attorney consultation.

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