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Irvine Bankruptcy Lawyer / Means Test Bankruptcy

The means test is a critical part of the bankruptcy process. In Chapter 13, the means test determines whether your repayment plan will last three years or five years, after which your remaining unsecured debts are discharged. In Chapter 7, the means test can determine whether you qualify to file at all. In either case, it is pretty important to understand the means test and go through it with a competent attorney who will make sure it is being conducted properly and to your maximum benefit. You will find that help at The Law Office of Charles A. May. We help people struggling with debt in Orange County, Los Angeles, and all of Southern California find effective debt relief through Chapter 7 or Chapter 13 bankruptcy. Learn more about the means test below, and call our office for personalized assistance with a skilled and knowledgeable lawyer.

How the Means Test Works

The means test has a short form and a long form. The short-form test simply looks at your household income. Generally speaking, if your income is below the state median for your household size, then you have passed the test and could potentially qualify for Chapter 7 bankruptcy. According to California’s Health and Human Services, the gross median income for a single-person household for FY22 was $51,295, $67,076 for a two-person household, $82,860 for a three-member household, and $98,643 for a family of four. Your own household income is determined according to your income in the six months before filing your Chapter 7 petition. Your attorney will work with you to calculate your income properly and determine whether you satisfy the means test.

If your household income is above the state median level, you might still be eligible for Chapter 7, but the means test becomes more involved. Here, you gather all of your income plus all of your expenses to determine your “disposable income,” i.e., money left over that you could use to pay your debts. This means test starts with all of your gross income from every source (with a few exceptions, including social security) and deducts all of your household expenses, such as the costs of housing, utility bills, taxes and insurance, childcare, medical expenses, tithing, and more. If after going through this complex calculation, you do not have any disposable income or have negative income, you qualify for Chapter 7. Again, expert assistance from a knowledgeable bankruptcy attorney is key to completing this complicated task correctly.

Contact The Law Office of Charles A. May for Help With the Bankruptcy Means Test

Charlie May is a seasoned tax attorney with a Master of Laws in Taxation over and above his Juris Doctorate law degree. Charlie has years of experience helping clients through complex financial calculations and is well-equipped to guide you through the means test in your Chapter 7 or Chapter 13 bankruptcy. For help with the means test and other critical aspects of the bankruptcy process in Orange County, Los Angeles and throughout all of Southern California, call The Law Office of Charles A. May for dedicated assistance.

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