MEANS TEST and Median Income in Rancho Cordova
Sacramento Bankruptcy Attorney serving Rancho Cordova links to quick way to pass the Chapter 7 “means test” under the New Bankruptcy Law
The new bankruptcy law passed in October 2005 made it easier for bankruptcy judges to detect abuse of the bankruptcy system. Specifically, filing a Chapter 7 bankruptcy (then and now) allows for the total discharge of eligible debt. But what if a debtor has the means (income/assets) to reorganize finances and pay debts off over a period of 3-5 years? The new bankruptcy law requires a “means test,” where debtor is questioned about their income and expenses to determine whether they have enough extra income to fund a Chapter 13 plan. “Failing” the means test may limit debtor’s options, one of which becomes filing a Chapter 13 bankruptcy and submitting a repayment plan.
The “means test” is simply a way to determine who can afford to repay some of their debt. The means test is a comparison of your average household income over the previous six months to the average (median) income in your state for a family of your size.
A test? Ugh! Who likes a test? But my experience as a Sacramento bankruptcy attorney is that most people have no trouble passing the means test. In fact, this test takes lots of the guesswork out of who will qualify for a discharge of debt under Chapter 7 because there is a fixed formula to determine your eligibility. You can use this online calculator right now.
This calculator is set by zip code for Rancho Cordova, CA residents. For others, simply change the zip code, indicate the number of people in your household, and find out where you stand. Scroll down and Take the Quick Test. If you are going to print it out, it’s 12 pages.
What you are doing is computing your current monthly income and comparing that figure to you state’s median income. And you are compiling data you’ll need to fill out FORM B22A which is a Statement of Current Monthly Income and Means Test Calculation
Even if you have already decided to file for Chapter 13, go ahead and take the Means Test. You will need these numbers to figure out the requirements of your repayment plan.
Finally, there’s information regarding means test and median income and expenses (deductions) for families of your size at U.S. Trustee Program, the official government website.
As a Sacramento bankruptcy attorney serving the Rancho Cordova community, I’m always glad to discuss your options and provide ready, brief, and clear answers for callers.
If you can pass the means test and would like to move forward with the Chapter 7 bankruptcy filing process, please contact our office at 916-313-9069 or email us at info@california-bankruptcyattorney.com for a free consultation. And, too, if you can’t pass the means test, we may be able to provide solutions of which you are unaware, or help with filing a Chapter 13 bankruptcy.
