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Means Test

The Means Test

What is it?

Qualifying for bankruptcy under Chapter 7 of the Bankruptcy Code is done using the means test. The test was devised to fight against inconsistent standards prevalent before 2005. The test is administered in two parts. An Irvine bankruptcy lawyer from the law office of Peter Rasla & Associates, P.L.C. can help you through a means test and if you are not qualified for Chapter 7, he can inform you of other possible options for you.

The first part of the means test determines if your average monthly income for the prior six months is above, below or equal to the average family income in your area. If it is below or equal to, you pass the means test at this point and are qualified to file a petition under Chapter 7. The test is accomplished through the completion of certain forms and documentation of all sources of income. Some income is exempt. It is important to properly document all income accurately on the forms as it can make the difference in qualifying for bankruptcy or not.

Why You Need a Bankruptcy Attorney in Irvine

If your income is above the average in your area you would do the second step. In this step, your income is compared with your allowed expenses. If your allowed expenses are higher than your income you would qualify for Chapter 7. If there is disposable income remaining that could pay some portion of your debt, you may qualify for Chapter 13.

If you are facing overwhelming debt and you have not been able to find a way out, bankruptcy can be a legal option that allows you to make a fresh financial start. Peter Rasla & Associates, P.L.C. has helped many individuals and businesses begin anew when past bills become too much of a burden. Their 15 years in practice gives them the understanding and compassion that clients need in difficult financial times. Contact the firm to review your options and for help completing the means test.