Bankruptcy Means Test

    Means Test: What Is It and How Does It Affect Which Bankruptcy Chapter You Can File For

    When it comes to the Means Test, the court will calculate your disposable monthly income. This is done by deducting your expenses such as rent or mortgage payments.

    With the help of one of our California bankruptcy lawyers, we can learn if you’ll need to file for  Chapter 13 bankruptcy protection and get an idea of what your disposable monthly income is, using a six-month average of your income and taking away the allowable expenses. What are the allowable expenses?

    • Mortgage/rent
    • Priority debt
    • Past due taxes
    • Secured debt
    • $1,500 – private school tuition

    If you have more than $166.66 each month or just $10,000 in debt that could be paid back within five years, you will be required to use the Chapter 13 bankruptcy protection. Additional calculations are then used if this doesn’t happen.

    Another calculation that will need to be made is if you have over $100 a month to pay 25 percent of the unsecured debt for the next 60 months. If not, then you’ll be permitted to file for Chapter 7 bankruptcy protection. If the judge agrees there are extenuating circumstances, then you may also be eligible to file for the Chapter 7 bankruptcy, no matter what the calculation was.