How Do You Know If You Qualify For Bankruptcy?

Not everyone qualifies for a Chapter 7 bankruptcy (sometimes referred to as a straight bankruptcy) and there is a specific method used to determine eligibility called "The Means Test." The test was designed to evaluate the debtor's income level against his expenses to see if there is enough money left over to make the scheduled payments that a Chapter 13 bankruptcy would require. An attorney who is educated in California and U.S. bankruptcy law can help you with the administration of the test so as to determine your qualifications for a Chapter 7.

How Does the Test Qualify a Person?

One part of the test will compare what your current monthly income level is and compare it to the median income level as related to a household the same size as yours. If your income is less than the median level, then you pass the test and don't need to proceed with the next step. You qualify for a Chapter7.

If your income happens to be higher than the median level, you will then move to the next step on the test which evaluates your expenses as related to your income level. The purpose for this is to see if you have enough money left over after all of your basic expenses to make scheduled monthly payments to creditors under a Chapter 13 bankruptcy. This part of the test is more complex and takes detailed attention and accuracy. If it shows that you have a sufficient amount of disposable income after the comparison has been done to pay off debt, then you will not qualify for a Chapter 7. If you do not have sufficient money left over after this has been done, then you could qualify.

Get Qualified Help

If you feel you are caught up in the never ending scenario of getting deeper and deeper into debt and feel like you are drowning, declaring bankruptcy and starting over again may be the best action you can take. If you are in the Irvine or surrounding area, you should contact an Irvine bankruptcy attorney at Peter Rasla & Associates, P.L.C. We have been helping individuals with financial difficulties for years with much success. We can help you with a means test to see if you qualify for a Chapter 7 or with some other type of bankruptcy that best suits your situation.

Contact an Irvine Bankruptcy Lawyer at our office to set up a free consultation and we will go over the details of your case.