Do I Qualify for Bankruptcy?
Additionally, individual consumers generally need to pre-qualify under a “Section 707(b)(2) of the Bankruptcy Code applies a "means test" to determine whether an individual debtor’s chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case (generally to chapter 13). Abuse is presumed if the debtor’s aggregate current monthly income (see definition above) over 5 years, net of certain statutorily allowed expenses is more than (i) $10,950, or (ii) 25% of the debtor’s nonpriority unsecured debt, as long as that amount is at least $6,575. The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income. Click for more: Means Test Article” or qualify by other methods to legitimately file a Chapter 7 The document filed by the debtor (in a voluntary case) or by creditors (in an involuntary case) by which opens the bankruptcy case. (There are official forms for bankruptcy petitions.). An individual may still be able to file a Chapter 7 bankruptcy even if they do not meet the means test requirement under certain circumstances, such as when much of their debt is business related. You should seek legal advise before assuming that you do not qualify to file a Chapter 7 bankruptcy petition.
A consumer generally must qualify under the Chapter 7 means test in order to file for Chapter 7 bankruptcy protection. The means test first compares your income to the median income in your state. If your income is lower than the median income in your state, you can file for Chapter 7 bankruptcy. However, if your income is greater than the median income in your state, additional calculations regarding your income and allowable expenses are required to determine whether or not you can file for Chapter 7 bankruptcy.
For bankruptcy purposes, a persons’ residency and domicile is the location where that person has lived for the majority of the 180 days preceding the bankruptcy filing. So, someone could file bankruptcy in California after living here for 91 days. However, a individual can only A creditor’s assertion of a right to payment from the debtor or the debtor’s property. California’s asset exemptions if he or she has resided in California for the previous two (2) years.
People who do not qualify for a Chapter 7 bankruptcy usually qualify for The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.) Click for more: Chapter 13 Bankruptcy. They typically make enough income to cover any living expenses, but not enough to completely pay off all of their debts. When individuals do not qualify to file for a Chapter 7 bankruptcy, they often will be eligible to file for a Chapter 13 bankruptcy because there is no “means test” to disqualify them as there is with a Chapter 7.
We will help you correctly fill out the paperwork for the means test. The form is six pages long and asks for a lot of financial information regarding your household income and expenses.
To learn more, contact our offices at (949) 450-8500 for your FREE consultation.
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