San Diego Bankruptcy Lawyer

What is the "Bankruptcy Means Test"?

The Bankruptcy Means Test is a 2005 addition to bankruptcy law. Created as a way of disqualifying petitions for Chapter 7 bankruptcy protection, the bankruptcy means test takes into consideration a lot of complex factors to force more people into a Chapter 13 than Chapter 7. The creditors’ lobby loves the bankruptcy means test, because it means they get paid more, and more often than they used to.

First, the bankruptcy means test measures your income against median income in the area. If you earn below the median income, there is a better chance the Chapter 7 will work. However, if your income is higher than the median, the bankruptcy means test becomes much more challenging. Don’t try to figure it out on your own. I take the time to go through the bankruptcy Means Test with each person who sits down with me to do a Fresh Start Planning Session. For free. It takes me about an hour, and I do it every day, four times a day. An online bankruptcy means test calculator will not give you the answers you need.

The bankruptcy Means Test is also supposed to help determine if you would be able to pay off your debts under Chapter 13 bankruptcy protection. Using the bankruptcy means test, and a couple of other forms and formulae, the court will calculate your disposable income. This is done by mixing fixed expenses and estimates for variable other expenses. If it looks like you can pay off the debts within a three to five year time frame, you’re in a Chapter 13, not a 7.

Call me at 1-877-261-2217 to schedule your Fresh Start Planning Session. You’ll get the answers you need, all you have to do is ask.