What Is The Bankruptcy Means Test In California?
When you are considering filing a Chapter 7 bankruptcy in California, completing the Chapter 7 Means Test to make sure you qualify is one of the first steps. When Congress made major changes to the federal Bankruptcy Code in 2005, the Means Test was included in the bankruptcy process. Congress was concerned about people abusing bankruptcy. They believed many people filing Chapter 7 cases could pay part or all of their debts. They created the Means Test in an attempt to counteract the “presumption that abuse” and ensure that Chapter 7 relief is only available to those who really need it. You can pass the bankruptcy Means Test in California in one of two ways – first, there is an income cutoff. Chapter 7 is immediately available if your monthly income exceeds the California median income for your family. You can still be eligible for Chapter 7 if your monthly income is less than the median in California. To prove this, you will need to complete the full Means Test. This will allow you to provide a detailed account of your income and expenses. After completing the entire calculation, you will be able to show that you have little or no income remaining at the end of the month. This will allow you to file your Chapter 7 application in California.
California Median Income Levels
|California Median Income Standards for Means Testing Cases Filled After May 1, 2021|
|Household size||Monthly Income||Annual Income|
Bankruptcy Discharge For California
To successfully file a California Chapter 7 bankruptcy, there are several steps you must follow. California bankruptcy discharge refers to the point at which your debts have been eliminated. This means that you no longer need to pay them and can start afresh. It is important to remember that some debts, like child support, will survive bankruptcy because they are non-dischargeable. Your California bankruptcy discharge can eliminate a lot of your unsecured debt, such as medical bills and credit cards. You will need to file all paperwork, take two credit counseling classes, and attend the Meeting of Creditors with the bankruptcy trustee. Partnering with Upsolve means we can help walk you through all of these details, step by step. Your discharge should be granted within 60 days after the Meeting of Creditors is over.
California Means Test Calculator
Congratulations if you have passed the California bankruptcy Means Test based on your income limits! Now you are ready to start your California bankruptcy. You will need to perform a full means test calculation if your monthly income (an average of all household earnings over the past 6 months) exceeds the median income. It is important that you use the most current California Means Test Calculator when doing this. There are many Means Test Calculators available online. However, it can be difficult to identify which ones are updated regularly. You don’t need to worry if you use Upsolve’s California Mean Test Calculator. It is up-to-date for California as well as all other states. It is important to have the most up-to-date information in order to be eligible for Chapter 7 relief. Upsolve can help you with the rest of your California bankruptcy process and assist you in obtaining your discharge.
What Happens If I Fail The Means Test For California
There are several things you could do if you fail the bankruptcy means test in California to determine if you still have eligibility for Chapter 7 bankruptcy. To make sure you have included all expenses, you can first look at the Means Test calculation. If you only purchase it once a year, such as school supplies for your children, it can be easy to overlook an expense. To calculate your monthly expenses, divide the annual total by 12 months. This could help you pass the Means Test if you have enough permitted expenses. You can also list any items not listed to determine if they count. After double-checking your expenses, you may still be unable to pass the Chapter7 Means Test. However, it is possible you could qualify for the test in the near future if your circumstances change. If you or your partner are pregnant, or you plan to move in with an elderly relative, your family size could increase. Your income will be highest when your work is seasonal or tied to wineries. Waiting a few months could make a big difference in this case. If you have any of these issues, you might want to wait a few months to complete the steps necessary to file your California bankruptcy. If none of this applies, then it may be time to consider a Chapter 13 bankruptcy instead as an alternative form of relief.
The Key Takeaways
- Chapter 11 Bankruptcy is a plan to reorganize a company. It is often used by large companies to keep them active and pay their creditors.
- Chapter 7 Bankruptcy Although bankruptcy does not require a repayment plan, you will need to liquidate non-exempt assets in order to repay creditors.
- Chapter 13 Bankruptcy can eliminate qualified debt by a repayment plan that is spread over three or five years.
- Chapter 7, Chapter 11, or Chapter 13 bankruptcy filings can have an impact on your credit score. However, not all of your debts will be erased.
- Bankruptcy can be a complicated legal process. It’s best to have a lawyer who is familiar with bankruptcy.
- Consult an experienced bankruptcy attorney To determine if bankruptcy is an option, and determine which of the different chapters of bankruptcy might be best for you.
Contact us today
If you are experiencing trouble with debt. Contact us today for a free consultation and to see which of the different chapters of bankruptcy is a viable option for you or your business.