Means Testing – Which Form of Bankruptcy is Right For You?

Means testing often determines your bankruptcy filing. Means testing will or will not qualify you for Chapter 7 bankruptcy. Your income must be low enough to qualify for Chapter 7. Otherwise you must file under Chapter 13. Chapter 7 is usually preferred because it provides for the complete liquidation of most debt rather than creating a repayment plan like Chapter 13.

You can still earn significant income under Chapter 7 means testing of you have relatively high living expenses.

Means testing derives your monthly disposable income. The higher your disposable income, the less likely you can qualify for Chapter 7.

How to determine your qualifications

Is your income more or less than your state median income (in California, you will qualify for Chapter Seven bankruptcy if your median income is below $48,140 for one household member, $64,878 for two household members, $70,890 for 3 household members or$79,477 for four household members. You will need to add $6,900 for each additional household member above four household members. If your family income is above state median, you may still qualify under the second portion of the Means test which takes into consideration your exemptions and household expenses. If you do not meet the income part of the means test, I highly recommend that you consult with a local attorney to fully determine your eligibility. Remember, the above figures are for our office’s local median income figure. Your states’ median incomes may be different. Check with a local attorney.)
If it is less than the median, determined by household size, you are qualified
If not, you must determine your disposable income
It is determined by allowing some monthly expenses and seeing if you have enough to pay off some unsecured debt
If your income adds up to a certain amount, you fail and must file Chapter 13
One way to find out where you qualify is using an online calculator
The best way is to consult an attorney.
To find which form of bankruptcy is best for you, call a Glendale Bankruptcy Attorney today at the Law Offices of Raffy Boulgourjian!