If you are considering filing bankruptcy in California then you may have to go through what is known as a means test. This process can be very confusing for a person who is not familiar with bankruptcy law. The good news is that The Law Offices of Paul Y. Lee is here to help you with the process. Read on to learn more about means testing and then reach out to us at 951-755-1000 for a free legal consultation.
What exactly is the means test?
It is a complicated calculation that Bankruptcy Court uses to get rid of Chapter 7 bankruptcy filings that have been improperly filed. In the event that a person’s income is more than the state median income level for a household of their size, then there is a presumption of abuse if they use Chapter 7. In the event the debtor in question does not defend themselves then the court will likely convert the bankruptcy to Chapter 13.
Does everyone have to take the means test?
No. A person who has an income that is greater than the median income level for their state and their household size is required to take the means test. If a person has income below the state median then they automatically qualify for Chapter 7 and do not need to take the test. There are other categories of people who may be able to skip the means testing process:
- Disabled veterans
- Active duty military
- Business debtors
The means test is not as straightforward as it should be
Ideally, the means test would be simple but this is not the reality. If it was, then you may be able to handle a bankruptcy on your own. The reality is that there are confusing terms concerning what exactly the IRS considers income, what expenses you are able to claim and which ones don’t qualify, what a “special circumstance” is, and what non-priority unsecured debts are. Making a mistake in filing can result in having to start the process over, which can make a big difference in the overall success of your case.
Get a free consultation to find out if bankruptcy is the best option for you
Is bankruptcy the right option for every person who is in debt? No, but it may be the right option for you. Too often, a debtor looks into the laws, rules, and regulations and finds them too complicated. This may cause them to walk away from the process but the best way forward is to talk to a bankruptcy attorney who can make sense of seemingly confusing facts.
If you are ready to learn more about your bankruptcy options then we welcome you to reach out to The Law Offices of Paul Y. Lee at 951-755-1000 or office@leelawyer.com. We provide a free legal consultation so that you know what your options are before moving forward. There is a way out of the pickle you are stuck in. Call us now for help.
