If I file Bankruptcy can I lose my job 

Clients often ask whether their job may be in danger if they file bankruptcy and / or whether the employer will know if I file bankruptcy. The short answer is generally no. In fact, usually the fact that you have filed bankruptcy is not even known to your employer. The bankruptcy court doesn’t routinely send notices to an employer when her employee files bankruptcy.  There are very rare exceptions. One occurs if you owe your employer money. If you do, you’re required to list him or her as a creditor and s/he DOES get a notice from the Court. Another exception occurs where one’s professional license is directly connected to his / her credit profile. I know of one client whose license as a professional certified financial planner was revoked after he filed bankruptcy, a risk he knew of prior to filing, but in the face of which needed to file anyhow. 

Will employer know If I file bankruptcy and fire me?

Thankfully, these exceptions are extraordinary. Now to the question of whether you can be fired for filing bankruptcy. I cover this in greater detail in my article about security clearance and bankruptcy. Generally an employer is not permitted to fire an employee just because the employee files bankruptcy. As a practical matter, for most employers the occurrence of an employee filing for bankruptcy would be much more information than he/ she wants. For the vast majority of employees, filing bankruptcy is not even relevant to their occupational responsibilities. 

I don’t want to minimize the invasion of privacy one would feel IF one’s employer learned of his employee’s bankruptcy filing. There is a very good reason I qualify this with a big “IF.” That reason is that in my twenty-one years in practice the only time I know of a client’s employer learning of the bankruptcy was when a client informed his boss that he needed to file. That employer so highly valued his employee that he paid the client’s fee in order to expedite the bankruptcy and free his employee of the distraction of creditors calling. We should all have a boss so generous;)

Military employment  and Security clearances 

Military service members especially and also many other government employees have unique risks when it comes to finances. The folks up the chain of command expect their subordinates to have their finances in good order. Otherwise – and this is the conventional, but proven wisdom – the employee may be tempted to do something unethical, illegal or downright treasonous in order to avoid the worst consequences of being in debt. Many military service members and those in the intelligence services risk losing their security clearance if their finances aren’t sound enough for the commander’s / supervisor’s criteria. Often as not, the employee’s work requires that security clearance so losing the clearance = losing the job. Please also read my article on “Security Clearance and Bankruptcy.”  

It may seem ironic, but I’ve represented clients whose security clearance came up for review and their supervisor’s advice was to consider bankruptcy. In one such case, the supervisor actually gave the employee – who was working for a defense contractor – an ultimatum: file bankruptcy or you’ll lose your clearance and, therefore, your job. All is well with her now, having gotten her bankruptcy discharge (which, by the way, the supervisor also demanded to see.)

 Bankruptcy during  the Coronavirus shutdown

In San Diego the Coronavirus is growing and the number is likely to grow as more people are able to be tested. While the public health threat is the priority, there are also  the economic impact it will have. Businesses around the world are shutting down to the public, and the stock market has dropped to historic lows. Uncertainty causes panic.  This in turn causes a snowball effect – or an avalanche, depending on which event we mean. As serious as it is, it is looking like it has a finite shelf life. So, does the pandemic create the needto file bankruptcy during the Coronavirus shut down? If you find yourself unemployed or with medical bills that are out of reach timing has never been more key.corono virus bankruptcy
DO MOUNTING BILLS AND A DROP IN INCOME SIGNAL THE TIME TO FILE BANKRUPTCY?
Bankruptcy in San Diego is a powerful weapon against creditors. But filers typically only get one shot at it. It’s crucial that filing bankruptcy during the Cornovirus shutdown to make it count. For some, things are inevitably going to get worse before they get better. Take care of the family and those around you . Those that consider bankruptcy during the Coronavirus shut down may be wise to wait until you have reason to believe that at least the worst is past. The hard truth is there is a limit to what creditors can do, during the next few months.  One can only file Chapter 7 (the most common chapter of bankruptcy) at eight-year intervals. (*/For the vast majority of filers, it’s a once in a lifetime experience.) 
Current income shortfalls may last months, though. That means more and more unpaid bills will pile up, for many. But consider this one brief example. Let’s say John and Jane Deer worked in a restaurant and hotel, respectively, but were laid off. They filed bankruptcy today. That’s because even though they are current on their car payments and rent, they can no longer pay their credit cards, student loans AND all their other expenses.  But if one of them became ill due to the Coronavirus  and became hospitalized, they will have big medical bills. Until we see some light that this is ending, waiting though difficult,it is to your advantage.

EVICTIONS, BANKRUPTCY AND THE CORONAVIRUS?

Governor Newsome has proclaimed that California cities may enact local their own local rules on evictions. The City of San Diego has done that by unanimous city council vote. It imposed a moratorium on evictions related to the coronavirus outbreak. An article in the San Diego Union Tribune published online March 17, 2020 reports that a renter must show “proof of loss of income or burdensome medical bill” in order to qualify for this local relief. The  city will “work to make sure” [landlords] “were financially shielded” from the effects. (Ibid.) The council apparently did not provide the SDUT any further details. Landlords have no protection from foreclosure if they cannot collect enough rent to pay their mortgaged properties. Landlords may find themselves eligible for and in need of bankruptcy services.
Not all eviction proceedings will be covered by a local exception. These will slightly complicate a bankruptcy proceeding, but landlords have a bit of an advantage in bankruptcy court.
FORECLOSURES AND THE CORONAVIRUS
Here is a bit of good news. Federally-backed mortgage lenders (that’s HUD, FHA, FREDDIE MAC and FANNIE MAE), as of March 19,2020, have declared a sixty-day moratorium on foreclosures. (Credit: articles released by the Associated Press March 19, 2020 and articles appearing in the Wall Street Journal, Politico and USA Today on March 18, 2020.)
WHO SHOULD FILE BANKRUPTCY NOW?
Those whose assets are in immediate danger of being seized by creditors probably cannot wait. They should take care, though. Some (not my clients, of course) file bankruptcy and get only a brief reprieve. All they do is set up a temporary roadblock to creditors. For example, secured creditors like auto and mortgage lenders can still repossess or foreclose even during a Chapter 7 bankruptcy. (It’s different in a Chapter 13 with an approved plan.) The lender just has to jump through an additional hoop to get it done. If you have significant cash savings and / or other non-exempt assets (not retirement accounts) AND a creditor sues you, your assets could be in jeopardy.
 

WHAT CAN I DO SHORT OF FILING BANKRUPTCY WHILE THE  PANDEMIC AFFECTS ME?

Reach out to ALL of your lenders – credit cards, mortgage, auto and student loan. When you are able to get through, explain your situation and request lender(s) defer your payments. Lenders are sensitive to the pressure to accommodate borrowers as sort of a carrot-and-stick strategy by the government. If you’re successful, you can ride out the temporary hardship with a bit less anxiety, a little more cash in your pocket and your credit score unaffected. (You will have made your payments “as agreed” if they are deferred.)
HOW TO CONSULT WITH A BANKRUPTCY ATTORNEY DURING THE “SHELTER IN PLACE” ORDER?
We can schedule for IN-PERSON MEETINGS. We’ll  just have to make sure we calendar yours on a later date than the governor lifts the “shelter in place” order. OR, we can conduct the consult via video chat / screen-sharing services like ZOOM, GO TO MEETING, FaceTime and SKYPE.

san diego bankruptcy attorneys

San Diego bankruptcy law firm – The first step is the call

When you make an appointment with the Law Office of Paul Staley, you’re making an appointment with Paul himself. Not a paralegal or legal assistant with a questionnaire and a clipboard. You’ll be meeting with the only one among San Diego bankruptcy attorneys who “wrote the book” on bankruptcy. Paul’s book “The Bankruptcy Lifeline: What Your Creditors Hope You Don’t Know” is available for download at Amazon.com.
A client considering bankruptcy need not wonder whether his or her case is a good one. Yet seventy percent of all Chapter 13 cases end in failure. Paul has what he refers to as a “zero failure rate.” He backs up his professional analysis with a common sense guarantee. Paul’s outlook is straightforward. The client gets a Discharge. Every client, every case. Or the client gets a refund. You’ll find that outlook goes to a radical extreme. And Paul says “It’s about time.” Paul has been in practice for over twenty-five years now. He’s never had to issue a refund for a failed case. Among San Diego bankruptcy attorneys, Paul Staley is the first to guarantee his clients’ results.

Choosing the Right Chapter Can Make All The Difference.

Paul is convinced that too many cases are filed under the wrong Chapter.  That, in turn, results in too many cases failing. About twenty-five percent of all bankruptcy cases filed are filed as Chapter 13s.  He has described Chapter 13 proceedings as “the three-to-five-year poverty plan.” That’s because the Chapter 13 trustee becomes a stand-in for the creditors.
He [the trustee] (yes, we still have no female Chapter 13 trustees) becomes the surrogate for creditors. And the Code demands that ALL of the debtor’s disposable income go toward paying the creditors. Oh, and the trustee’s administrative fee of ten percent. These guys don’t work for free. (Yes, they’re both “guys” as of this writing.) In Paul’s practice over the past twenty-one years, he has put fewer than one percent of his clients in Chapter 13s. That’s not to say he thinks no one belongs in Chapter 13.

Among San Diego bankruptcy law firms, Paul conducts the free consultation differently. Differently how?

1 – Different, firstly, because he conducts the free consultation in person rather than delegating it to a non-attorney. He believes he is uniquely qualified to do what’s most important during that meeting – effective legal thinking.  And legal thinking requires applying a complex Bankruptcy Code to your unique situation. He respects other San Diego bankruptcy attorneys’ choice to delegate that meeting. Often that’s done by having an “interviewer” conduct the “intake interview.” That means the interviewer is not an attorney but at a minimum (a) speaks English (or the client’s language) and (b) can use a calculator. Paul has a lot of experience doing damage control after plenty of cases initiated in high-volume “mills.” One such typical scenario looks like this. A different attorney crams a case through based on information that an interviewer either missed or misunderstood.

How else is my consultation with Paul different?

Different – secondly – in that Paul devotes a full hour to the initial interview, sometimes longer. Real talk: he’s found that it’s impossible to collect enough information, analyze it and give the client a certain opinion any faster than that. Clients who come to Paul from other San Diego bankruptcy law firms confirm that Paul’s is the San Diego Bankruptcy law firm which does this process best. He’s a believer in the old adage that “You can do it right or you can do it over.”
Paul does a complete Means Test work-up, digs deep into the client’s unique situation. He frequently, talks about “what if?” scenarios with the client. Paul makes sure that by the end of that first meeting, the client knows the best way forward.

Complete legal analysis.

When you make your appointment for your fresh start plan Paul will do a complete legal analysis of your financial situation. He will not cut corners. You will speak to a lawyer who has experience in bankruptcy law, not a paralegal.  Expect to spend about (or maybe we should say at least) an hour with Paul. In this meeting, Paul performs a complete means test not just an overview. You can ask questions about different solutions to your problems. This test is the only way to truly determine if you qualify for bankruptcy. A fair and reasonable price for this much time and expertise is about $300-$400. But Paul provides this comprehensive analysis at no charge. Why? Because it is truly the only way he can give you the real facts about your financial situation.

Complete confidentiality.

Paul guarantees that when you come and speak to him about your financial situation, he provides receive complete confidentiality. What you say to him stays with him. There is no reason to be embarrassed or worried about any of your information ever leaving our San Diego bankruptcy law firm. If you do decide to go forward with filing bankruptcy (then financial information will become public record). More on just how “public” public really is we discuss elsewhere.
It’s time to call. Lower your blood pressure, ease your stress. Get some peace of mind. Stop wondering if picking up the phone means admitting failure. It doesn’t. You’ve done all you can on your own. It’s time to let someone with bigger shoulders than you help take that burden. Should you file bankruptcy or hold out? When you meet with Paul, you get clear, certain and thoughtful answers. Then you can make an informed decision about what to do next. Paul’s direct line is 619-235-4095. Call today to speak to Paul about meeting with him to discuss one of the most important next steps in your life.

Chapter 7 bankruptcy requires detailed planning

Chapter 7  bankruptcy is what most of us think of when we think about bankruptcy – even if we don’t know it. 72% of all bankruptcies filed are filed as a Chapter 7 bankruptcy. It’s also called the “fresh start” and alternatively “clean slate” bankruptcy. It is all of that.
Chapter 13 filings comprise about 25% of all bankruptcy cases filed. It used to be called a “wage-earner plan.” The person who filed the Chapter 13 had to have a pretty static monthly income. That way, s/he could maintain a consistent payment into the plan.
Chapter 7 is usually simpler, pretty much always faster and less expensive than a Chapter 13. There is much about this type bankruptcy that depends on how you “package” your financial situation. In order that gets to keep  assets you are entitled to it is important that you have a bankruptcy lawyer that will dive deep into exactly your financial situation   Understanding this completely requires a sit-down meeting between you and the attorney.  During that meeting that attorney should be asking you many detailed questions. Questions about your cars, home, your childcare, insurance, and personal assets like jewelry.  Now back to your education…

Chapter 7 bankruptcy cliff notes

A “fresh start” or “clean slate”, Chapter 7 is the simplest form of bankruptcy. It is designed to let people (and sometimes businesses) get out of debt without repaying any of the “unsecure” creditors.  Chapter 7 also requires the person(s) filing go turn over to the bankruptcy trustee all “non-exempt” assets. But skilled planning with an experienced bankruptcy lawyer in San Diego can usually make sure to exempt the property. (i.e., the filer gets to keep the property.)

Chapter 7 bankruptcy is part art and part science

With Chapter 7 bankruptcy , the Court, not the creditors, decides whether any assets should be sold to pay creditors. There is both an art and a science to actually completing the documents to be filed in a Chapter 7. Much greater skill is needed to plan for minimum loss to the person filing. Ideally, Paul likes to present the client’s scenario to the Court and trustee as a No-brainer. “If my client can’t pay reasonable living expenses and have some money leftover, it’s pretty smooth sailing.”

Paul must file his clients’ Chapter 7 case in the right venue – physical location. That’s identified by where the client(s) have lived for the better part of the last 180 days. Not surprisingly, the process requires the person(s) filing to bare his / her / their financial soul to the court and the creditors. All income, assets, debts and creditors must be disclosed. Again, careful and skillful planning is essential!

If you are considering Chapter 7 it is important to get real attorney advice. So many people wait too long to get the advice that is a free bankruptcy consultation.   A “fresh start planning session” with Paul Staley will give you the answers to the questions you have about bankruptcy, Chapter 7 or 13. Paul has practiced bankruptcy law in San Diego for the last 20 years serving people like you. In this meeting you and Paul will go over all your legal options and your financial situation. You will know at the end of the meeting what you need to do next, and how to go about it.

mortgage after bankruptcyBuying a Home After a Bankruptcy:

Facts About Home Mortgage after Bankruptcy Case
Historically, it was difficult to impossible for a person to obtain a mortgage after  bankruptcy. All of this has changed in recent years. Now, even a person who has a bankruptcy on his or her record is able to get a home mortgage. Usually, he or she is eligible within just a couple years after the  bankruptcy.
Are you thinking about filing bankruptcy? Do you have concerns about later purchasing a home and qualifying for a home mortgage? Then here are some facts that you do need to keep in mind.

Realities of a mortgage after bankruptcy and lenders

There are many misconceptions about the aftereffects of a bankruptcy case. Many people assume that once you file for bankruptcy, you will never be able to access credit again in the future .  Or at least anytime in the foreseeable future. In point of fact, this is one of many misconceptions that surround bankruptcy. I find in my bankruptcy practice in San Diego County that about  two to three years after bankruptcy filing that my clients call to get a new home mortgage after bankruptcy.
In fact, a growing number of lenders are willing to work with people who have been through a bankruptcy case. There are a number of reasons why a lender is willing to deal with a person who has been through a bankruptcy case.
MISCONCEPTIONS VERSUS FACTS
Once a person has been through a bankruptcy case, that person’s debt is usually eliminated. Of course, (depending on the type of bankruptcy that a person has been through). A person may end up with some creditors to which he or she is still responsible.  But for the most part a person no longer has any financial obligations to creditors.
Misconception: “After a person files for bankruptcy, that person cannot turn around and file for bankruptcy again any time.” FACT: In fact, recent changes (well, 2005) in the bankruptcy code have made it far, far harder to file subsequent bankruptcy cases.
When it comes to a home mortgage loan, a lender at least has collateral in the form of the real estate that is subject to the loan. A mortgage is what is called a “secured debt.” The home is “security” for the loan. So lenders feel and actually are safer with secured debt. As a result, lenders are more willing to become involved in a secured loan. Even if  a borrower or applicant who has been through bankruptcy.
Unsecured debt like credit cards are a bit different. But even that has changed dramatically, too.

Lenders Who Specialize in Post-Bankruptcy Home Mortgage Loans

The home mortgage market has become extremely competitive in the 21st century. As a result, lenders are having to reach out to a wider range of consumers than at any other point in time in history.
In the 21st century, lenders are more willing to extend financing to people who have been through a bankruptcy case. Indeed, there are now lenders who cater specifically to people who have been through a bankruptcy case. This is especially true of borrowers in need of mortgage loans.
Here are a few key facts to keep in mind.
Generally, the interests rates associated with a post-bankruptcy home mortgage loan will be higher than what will be in place in a more traditional or conventional home mortgage loan. But this practice is changing fast. It may be less so when you read this than when Paul wrote it.
Post-bankruptcy, you may have to search harder to avoid higher interest rates and transaction fees. Supply and demand dictates that those whose credit is not as good will have to compete for a smaller pool of available loans.
Higher interest + higher closing costs and / or transaction fees translate to higher monthly payment. In addition, the length (term) of the loan offered may be a shorter than would be otherwise available through a more conventional lender.
Happily, the trend is toward a rapid normalization of lending to those who have endured bankruptcy.

Avoid the Sharks

In your own search for  a mortgage  after bankruptcy home loan, you need to make very certain that you only deal with a reputable lender. Unfortunately, in this day and age, there are many less than honorable operators. This is true whether you’re shopping for a loan in the “brick and mortar” world or on the Internet. There will always be unscrupulous merchants ready to prey on people who have less than perfect credit.
Make sure that you deal only with a reputable lender. By doing so, you will make certain that you do not make your financial situation worse.

 Will my creditors come to the court if I file bankruptcy ?

What many of my bankruptcy clients worry about is that their bankruptcy creditors  will be at the creditors meeting if they file bankruptcy in San Diego  and it will be embarrassing for them.The good news is, bankruptcy creditors rarely attend bankruptcy meetings of creditors (also called 341 hearings).  However, this does not mean that your creditors are giving up their right to object to your bankruptcy discharge.

Bankruptcy Creditors are not required to go to the  meeting of creditors

When you file for bankruptcy in San Diego, your creditors receive notice of the date and time of your meeting of creditors. But this does not mean that they will show up. Your creditors are invited, but not required, to attend your hearing. In 98 percent off all  bankruptcy cases, no creditors will appear at the meeting of creditors. If a creditor does show up , your attorney will usually know about it and so will you.

Most Bankruptcy Creditors will not appear at the meeting of creditors

Creditors are not allowed to conduct an extensive examination of you and your situation  at the meeting of creditors. Mostly creditor questions are limited to the nature and location of the debtor’s assets. In San Diego most creditor meetings are very short over in 5 to 10 minutes  so, the  bankruptcy trustee only has a few minutes to devote to each case.

As a result, unless a creditor believes that you are committing fraud or hiding assets, it will not benefit from taking the time to come to your hearing. However, even if a creditor does not attend your meeting of creditors, it can still object to your discharge

 

Can I Stop My Bankruptcy Once I Have Started It?

 
There are debtors who change their minds after filing bankruptcy . They will ask their bankruptcy attorney   if they can cancel or stop their bankruptcy filings. Particularly, after whatever emergency that precipitated the bankruptcy has been averted like foreclousre or a lawsuit .
In a Chapter 13, the borrower, the person who has filed for bankruptcy, can actually file a voluntary a request for voluntary dismissal. In a Chapter 7 there isn’t any such process. So, if you’re in a Chapter 7 bankruptcy and um, you just won the lottery, or you know, for some reason, uh, whatever reason, you change your mind um, you’re kind of locked in. However, there’s a there’s a sort of unofficial way to maybe get your Chapter 7 dismissed. And that is to just simply not show up for the Meeting of Creditors. Um, now this is not something that I could ever actually, um, advise someone to do um, but the fact of the matter is that if someone fails to appear for their Meeting of Creditors the great likelyhood is that the Trustee is going to dismiss the case. So, it’s sort of a back door way of doing it and uh, something that I couldn’t really recommend.
 
 

“Bankruptcy represents a long-standing commitment in this country to helping people get a fresh start. This principle has never been giving only certain people a fresh start.”– Tim Johnson

For the person having financial trouble, there’s a constant loss of money. As each month passes, they tend to fall farther and farther behind. Have you ever been in a situation where you don’t have any money, but the rent has to be paid? The cell phone payment is due and you’ve just received notice that your car is about to be repossessed? How will you have enough money to pay for your child’s daycare while you’re at work? How will you get to work without a car? Sometimes the same creditors will call multiple times in one day. You can’t have peace in your own home because the phone keeps ringing. If you answer the phone, the bill collector is rude and demanding. If you ignore the phone, your children ask why you won’t pick it up. If this is how you’re living right now, don’t despair. Bankruptcy can “stop the bleeding.” As soon as a bankruptcy petition is filed, the court enters what is called an “automatic stay.”

WHAT IS AN AUTOMATIC STAY?

An automatic stay puts all the actions of creditors (people you owe money) on hold while the  bankruptcy court determines what type of  debt relief is appropriate for you. When the automatic stay is in place,
creditors can’t harass you, and they can’t proceed to sue you for debts listed in your bankruptcy petition. If a creditor already has a judgment against you and is about to garnish your wages, the automatic stay will protect your wages from this as well. Here’s how that works: once your bankruptcy case if file, the Court generates a Notice of “Filing of Bankruptcy Case and of Meeting of Creditors.” The Court EMAILS this notice to your attorney so he or she gets it right away. Armed with this document, your attorney can then file in the court case where the judgement against you was entered  a “Notice of Stay of Proceedings.”  I typically serve that notice on the judgement creditor, his / her attorney, the court clerk and the Sheriff’s office (since they usually enforce the wage garnishments). That’s the end of all my client’s troubles from that case. Once a bankruptcy petition is filed and the automatic stay is in place, you and your bankruptcy attorney are free to devise a plan to put you back on the path to financial freedom. You no longer have to worry about financial bleeding.

 

If we can help you change financial direction call us at 619-235-4095 

 

What are bankruptcy costs?

Many people who call our  San Diego bankruptcy office will ask us about bankruptcy costs, before they even have been  set up to meet.They see bankruptcy lawyer after bankruptcy lawyer telling  how much less expensive their bankruptcy cost is compared to the next bankruptcy lawyer. It is terrible confusing and hard to make sense of .
We’ve also seen our competitor’s advertisements on TV or heard them on the radio spouting bankruptcy cost  prices, so we completely understand “Call us now, no money down.” “We can do your bankruptcy for $995.” “$300 to start your bankruptcy.”   As a firm we think quoting prices without really knowing the  specific situation  leads to huge misunderstandings and dis-trust.

There is no “one size fits all” in bankruptcy costs

If giving our clients a “one size fits all” pricing for bankruptcy legal representation worked, we certainly would do it! You wouldn’t have to come in to speak to a lawyer. It wouldn’t require the one hour of meeting time to discover exactly what your situation is and how the law might apply to you. If we did a one size fits all pricing you might not even have to talk to a lawyer – you could talk to a paralegal and never even see a lawyer.
 We look at it this way: If I were on the other side of the desk and coming to see a law firm for a problem that was making me lose sleep, I would want to see a lawyer — not a paralegal. Paralegals are forbidden, by law from offering legal advice and that’s what I’d be seeking. And, we know that if it’s bad enough for you to be reading this website, then, truly, it’s bad for you. 
So back to the initial point: the only way we can know how much to bankruptcy  costs for you is for you to come in, sit down face to face and discuss your individual situation. That meeting is free, and you will speak with Paul.
One’s financial situation is kind of like weight loss: sometimes they need to lose 10 pounds, sometimes they need to lose 150 pounds. You’ve probably had lose weight at one time or another. The plan of attack varies from case to case. Sometimes all you need to do is cut out the sodas, other times well, Jenny Craig….to surgery. When you have a consultation with us, we can promise you is that the price that we quote for you will be fair. We are not the most expensive  bankruptcy law firm in town nor are we the cheapest. But we’re certainly one of the most thorough firms you’ll find. We take that hour consultation and use it to your advantage, and then price your personal case directly in line with your situation.

What is  bankruptcy means testing?

 

Bankruptcy means testing  is a mathematical formula used by bankruptcy attorneys to determine what  type of bankruptcy relief a debtor can receive. Means testing was created by congress with the help of the credit card lobby to prevent bankruptcy abuse. The most likely mistake potential bankruptcy clients make is to first go online , late at night when they can’t sleep and try to do means testing online . 95 percent of all San Diego residents who file bankruptcy wouldn’t fit the means test requirements online, but still qualify for bankruptcy. 0The bankruptcy means test is all about the math and how you put it together.

Means testing will determine if you can  first even be considered as a candidate for a Chapter 7 bankruptcy, or if instead, you may be required to use a Chapter 13 case.This is an income-based means testing , and debtors who have income above the median income of  their state are subject to the unpleasant limitations imposed by the Means Test. However, the analysis doesn’t end there; from the income on the Means Test, one gets to take certain deductions.

  • Taxes : You can deduct your tax obligations from your income on the means test as well.
  • Involuntary deductions :Deductions required for employment such as mandatory retirement plans, union dues, or uniforms.
  • Health, disability, or term life insurance
  • Secured debt payments These include payments on secured debts such as your mortgage or car loan. Even if your mortgage or car payment is above the national or local living standards, you can normally deduct it in full on the means test.
  • Court ordered payments :If you are required to pay domestic support obligations such as alimony or child support, you can deduct these expenses on the means test.
  • Child care: Expenses for child care such as babysitting, daycare, or preschool .
  • Health care :If you incur more out-of-pocket health care costs (other than insurance) for  you or your dependents than the allowed national standard, you may be able to deduct the actual amount you pay.
  • Education for employment or disabled child :You can deduct your education expenses if those expenses are required for your employment or for your mentally or physically disabled child.
  • Charitable contributions :If you regularly made charitable contributions prior to bankruptcy and expect to continue making those contributions, you can deduct them on the means test.
  • Care of elderly, chronically ill, or disabled :You can deduct the amount you contribute towards the care of an elderlyor disabled family member or person in your household.

The Means Test determines if a bankruptcy petition must be assigned a “Presumption of Abuse” by the court. If your petition is assigned a presumption of abuse status, you must prove that your bankruptcy petition is not “abusive” or fraudulent. The rule of thumb so far, in practice, is that if the Means Test result is that “The Presumption of Abuse Arises,” it is extremely unwise to try and file the case as a Chapter 7 . A bankruptcy attorney can properly do the Means Test for you and let you know what your options are. It’s a bad idea for you to rely on so-called “Online Means Test Calculators” because the test is highly complex. The key to a thorough, accurate Means Test is not just  getting in all the required income; it’s knowing how to apply bankruptcy law in figuring out how to maximize the allowable deductions. That is why just having a calculator isn’t going to do the trick.