The Means Test

Irvine Bankruptcy Attorney

There are several different bankruptcy programs that are designed to help a person who is unable to pay off their debts get relief from their financial problems.  Chapter 7 bankruptcy is a debt elimination program that can discharge all a person's debt.  It is designed for individuals who have few assets and a low income.  Chapter 13 bankruptcy is a program designed for individuals who have a regular income and want to reorganize their debts to pay them off over time. 

The first step to take is called the Means Test.  This is a standardized method of establishing how a debtor's income compares to the average income of other families of the same size in their area.  If their income is below the median income, they can qualify for Chapter 7 bankruptcy.  If their income is higher, they will still qualify for Chapter 13 bankruptcy.  Anyone interested in finding out more about the Means Test and the different bankruptcy programs available should speak to an Irvine bankruptcy attorney at the Law Offices of Arthur H. Hausmann. 

An experienced bankruptcy lawyer can advise anyone considering bankruptcy on all the elements that the Means Test is designed to measure.  If someone's normal income might show a significant increase due to an upcoming bonus or job change, the timing of a Means Test may be crucial.  The test is based on a person's income and expenses for the previous six months.  Even individuals with a relatively high income may still qualify for Chapter 7 if they have enough deductible expenses that qualify.

Bankruptcy Lawyer in Irvine

The amount and type of debts an individual has may also play a part in establishing what type of bankruptcy they should consider.  While a Chapter 7 program can eliminate most or all of a person's debts, it also requires that excess and non-exempt assets must be sold to discharge those debts before they can be dismissed.  Anyone who has significant equity in their home or in other real estate may not want to lose those assets as part of a Chapter 7 bankruptcy.  Consulting with an experienced bankruptcy attorney can protect such assets.  The firm also services clients residing in Huntington Beach, Costa Mesa, Anaheim and Santa Ana.

Contact an Irvine Bankruptcy Lawyer to learn how the Means Test can establish if a person is qualified for Chapter 7 or Chapter 13 bankruptcy