Too much money can complicate your chapter 7 in Roseville or Santa Rosa
If you’re considering bankruptcy it may feel like you don’t have much money. However, many bankruptcy clients in Roseville and Santa Rosa are surprised to learn that their annualized current monthly income as determined by the average income for the past 6 months exceeds the California median income for a household of their size. What does that mean? Well, for clients who want to file chapter 7 bankruptcy it means they will have to pass the means test. The means test is a calculation designed to determine whether filing chapter 7 bankruptcy would be an abuse in that the debtor could repay creditors in chapter 13 bankruptcy. If the client fails the means test they will be forced to file chapter 13 bankruptcy; ie. they will not qualify for chapter 7 bankruptcy. Therefore, higher income individuals in Roseville and Santa Rosa may have difficulty qualifying for chapter 7 bankruptcy.
How Can You Pass the Means Test?
First, talk to a bankruptcy attorney. A bankruptcy lawyer in Roseville or Santa Rosa can help you determine whether you qualify for chapter 7 bankruptcy. If it appears that the means test will be an issue in your case they may be able to perform the calculation during the consultation. However, don’t be surprised if the attorney has you pay for a more extensive means test calculation.
Certain expenses can help you pass the means test. Secured debt payments (mortgage, car) can be deducted from your income. Likewise, child care expenses and tax obligations can decrease your projected disposable income and help you qualify for chapter 7 bankruptcy. Priority debt payments (child support, alimony) will also help you pass the means test. Unfortunately, food expenses (usually) and other actual monthly expenses cannot be deducted in the means test and won’t help you qualify for chapter 7 bankruptcy. In essence, what qualifies as a deductible expense is not intuitive so don’t assume that your actual monthly expenses are what count. Instead, speak with a Santa Rosa or Roseville bankruptcy attorney to learn what expenses can help you qualify for chapter 7 bankruptcy.