Can you Pass the Means Test?

The means test is a step that you must take to determine if you qualify for a Chapter 7 or a Chapter 13. The main goal of the means test is to keep higher income filers filing Chapter 13 instead of Chapter 7. The presumption is they can pay their debts back easier and reorganize instead of wiping their debts away immediately through a chapter 7. A chapter 13 last 3–5 years. You have to compare your income to the median income of a family in California of your household size, roughly 48,000 for indiviuals and 64,000 for families of 2. If you are under the median income then you qualify for a chapter 7. If you are over the median income then you have to go a step further and see if your allowable expense including any secured debts such as mortgage and financed cars that you still pay, essentially leave you with no disposable monthly income to pay creditors. Having a high mortgage payment or other allowable expenses makes it easier for some high income earners to squeeze into a Chapter 7 even though failing the first prong of the means test (income).

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