December 2, 2010

Passing the California Means Test

A Sacramento bankruptcy attorney writes about the California means test.

Question: How do I know if I pass the California means test?

Answer: The means test California is designed to limit the use of Chapter 7 bankruptcy to people who truly qualify. The first qualifier is income. If your current income per month is less than the average income for the state, then you pass. If you fall below the average income for the state of California then you do not have to complete the rest of the California means test. You are eligible to file for Chapter 7.

For those individuals who exceed the state average, the means test will get a little more complex. Individuals should calculate their disposable income or income that is left over after “allowed” monthly expenses. If the disposable income adds up to more than the California state means test standard, then you cannot file for Chapter 7 bankruptcy. There are California means test available online.

If you have a question regarding bankruptcy in the greater Sacramento area please contact us at 916.792.6025 or for a free consultation or visit consumers in debt can assist you with all aspects of your bankruptcy or bankruptcy litigation case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about ankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, Sacramento and Roseville!

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August 9, 2010

The Role of the Means Test In Bankruptcy

A Sacramento bankruptcy attorney defines The Role of the Means Test In Bankruptcy

Line 50, on Form 22A, commonly known as the Means Test, is your Disposable Monthly Income. This test determines whether you qualify for Chapter 7 or not. People not qualifying either do not file at all or file Chapter 13.

The first thing I determine is whether your debts are primarily consumer debts. So if more than ½ of your debts are related to your business (if you have one) then there’s no need to fill out Form B22A that is the means test.

Most people filing have debts that are primarily consumer debts which calls for your calculation of your gross income for the six months preceding and not counting the month you file. Those year to date figures listed on your pay statements are useful. If you’ve earned income from any other job or any other source for that matter then it’s income and has to be include. Talk to an attorney about any income derived from the Social Security Act.

After deriving your six month average income and then taking all the allowable deductions under Form 22A the monthly income for 5 years is less than $7025.00 or $117.08 per month Chapter 7 is not presumptively barred due to your income. If the monthly income based on the past 6 months of earnings before the month of filing is $11,725 or more (alternatively $195.42/month) then a Chapter 7 filing is income barred.

Disposable income more than $7025 and less than $11,725 (more than $117.08 and less than $195.42) is then compared to 25% of the total amount of your debts listed on Schedule F (where your credit cards, loan obligations, medical debt, and repo debt are listed). A disposable income that can pay 25% of your total Schedule F debt or more over 5 years will prevent a Chapter 7 filer from getting a discharge. If for example Line 50 comes out to $150.00 or $9000 over 5 years and all the debts on Schedule F total less than $36,000 then your Chapter 7 filing is presumptively income barred.

If you have questions regarding Bankruptcy in Sacramento please contact us at (916) 492-6020 in Sacramento or (916) 724-1690 in Roseville for a free consultation or visit www.bkanswers.com and we can connect you with one of our experienced Sacramento Bankruptcy Attorneys. After you have spoken with one of our Sacramento bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Sacramento Bankruptcy Lawyers can assist you with all aspects of your bankruptcy or legal debt settlement case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, Sacramento and Roseville!

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August 2, 2010

The Role of the Means Test In Bankruptcy

A Sacramento bankruptcy attorney discusses the Role of the Means Test In Bankruptcy...

The means test arises if the income for the six months before the month of filing is higher than the median income for a household size that is claimed in bankruptcy. If that income is higher than the means test must be undertaken. This six month average is called current monthly income.

The means test starts out with current monthly income and standardized expenses are taken out for living and transportation. Deductions for variable expenses such as taxes, installment amounts for secured property, insurance, necessary telecommunications, and childcare are taken. If the amount if less over 5 years is less than approximately $6000 then the you’ve passed the means test. If the amount if less over 5 years is over approximately $10,000 then you’ve failed the means test and do not qualify for Chapter 7. Chapter 13 is an option. If the amount is in-between $6000 and $10,000 and is less than 25% of your credit card type debt you’ve passed.

If you have questions regarding Bankruptcy in Sacramento please contact us at (916) 492-6020 in Sacramento or (916) 724-1690 in Roseville for a free consultation or visit www.bkanswers.com and we can connect you with one of our experienced Sacramento Bankruptcy Attorneys. After you have spoken with one of our Sacramento bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Sacramento Bankruptcy Lawyers can assist you with all aspects of your bankruptcy or legal debt settlement case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, Sacramento and Roseville!

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