The Role of the Means Test
A San Jose bankruptcy attorney explains how the Means Test affects bankruptcy proceedings.
Courts have long tried to prevent fraudulent bankuptcy filings. One method used to eliminate bankruptcy fraud is the bankruptcy means test. The test is a check of income against debts used by the court to determine if the filer is able to repay the debt, or if the debt should be forgiven entirely.
The income check is often complicated and uses the income from the previous six months. Some income such as social security income, is usually not included. This income is then compared to the state median income. If the income is above the median, then further testing is used. Otherwise, the filer is considered to have passed the means test and is able to file Chapter 7 bankruptcy.
In the event the income is above the median, then the income is compared with expenses. Should income exceed expenses, the court may determine the filer ineligible for Chapter 7 bankruptcy. In high expense areas such as San Francisco, it is easy to be about the state median but still pass the test. Through the use of a means test, bankruptcy fraud is reduced while still protecting those truly in need of bankruptcy debt relief.
At Sagaria Law, we offer an exceptional team of bankruptcy lawyers, bankruptcy client care specialists and bankruptcy staff supporting San Jose. If you need help regarding bankruptcy in San Jose, contact us at 408.279.2288 or 1800.941.6730 for a free consultation or visit us online at www.sagarialaw.com to request a free in person appointment at a Sagaria Law office location nearest you. We can answer your questions regarding filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. We have bankruptcy attorneys located throughout California and Oregon to assist you with all your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation to quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, San Jose!
