When deciding to declare bankruptcy, individuals need to complete a means test to determine their eligibility for a complete debt elimination (Chapter 7) as opposed to a debt reorganization (Chapter 13). The means test was established along with the Bankruptcy Protection Act of 2005 as a way to ensure that those who file for Chapter 7 truly need an elimination of all debts.
Gardena Bankruptcy Means Test Attorney
The first step in the means test is to determine your average monthly earnings for the six months prior to filing for bankruptcy. If your average income is less than your state's median, you will qualify for Chapter 7. Even if your monthly earnings are above the state average, you may still be eligible for Chapter 7 by qualifying through the second step of the means test.
The second part of the means test looks at the debtor's income, minus standard allowable deductions. If your adjusted income is enough to allow for full or partial repayment of your creditors, you do not qualify for Chapter 7. Instead you have the option of filing for Chapter 13, where you will repay creditors fully or partially over a period of three to five years.
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The means test, especially the second step, is a complex measurement of your income. It is highly advisable to go through a qualified lawyer such as Cynthia Gibson to help you determine if you qualify for Chapter 7.
Chapter 7 Bankruptcy · Chapter 13 Bankruptcy · Small Business Bankruptcy
The Law Offices of Cynthia Gibson provides legal advice and representation for bankruptcy clients in Gardena, Pasadena and Seal Beach, California, and communities throughout Los Angeles County, Orange County, South Bay, San Gabriel Valley and Southern California. Contact attorney Cynthia Gibson for comprehensive bankruptcy services and to schedule a free initial consultation. Our Gardena office is located just off of highways 110 and 405. Our Seal Beach office can be found at the crossing of highways 405, 22 and 605.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.