What is the Mean’s Test?

Seasoned Los Angeles County Chapter 7 Bankruptcy Attorney
Chapter 7 bankruptcy was specifically created to provide effective relief to those who are facing serious financial problems due to a divorce, loss of employment, medical emergency or other unexpected monetary crisis.Unfortunately however, not everyone can avail themselves of this form of bankruptcy to discharge their debts.  Specifically, debtors must meet the strict requirements of the Mean’s Test, which is a mathematical formula used to determine whether a debtor qualifies for liquidation bankruptcy. At the Goldbach Law Group, we will take the time necessary to review your financial situation and evaluate your bankruptcy options. Even if you do not meet the income and other requirements under Chapter 7, there are additional options available to address your debt and gain a fresh financial start.

What is the Mean’s Test?
As most people are aware, back in 2005 there were several significant amendments that were made to the U.S. Bankruptcy Code, which included the introduction of the bankruptcy “Mean’s Test”. Specifically, the Mean’s Test was created as a way to filter out those who have enough income to manage their debt without having to file for bankruptcy. While many people falsely believe that the Mean’s Test makes it nearly impossible to qualify for bankruptcy, this could not be further from the truth. If you are overwhelmed by the amount of debt that you have and are considering filing for bankruptcy as a way of discharging it, you may qualify under the test and start the process of reclaiming your financial freedom.

Under the Mean’s Test, your total income is added up from the six months prior to filing, which may include all income gained from jobs and certain benefits, such as Social Security and unemployment. Once your income is determined, it is then compared to the average income of a household similar to yours. If your income calculation is lower than the average household of a similar size, you will be eligible to file a Chapter 7 bankruptcy case.

If your income amount exceeds that of an average household similar to yours, you must complete the rest of the test in order to determine whether you are eligible for Chapter 7 bankruptcy.  This includes examining your additional expenses and deducting them from your total income, such as those related to child care, food, utilities, car payments, and housing costs. Your total income, minus your expenses, is then used to determine how much income you are left with each month. If the final amount calculated comes out to be between 125 and 175 dollars, you will likely qualify for Chapter 7 bankruptcy. If you are left with less than 125 dollars, you will automatically qualify under Chapter 7. If you happen to have a disposable income exceeding 175 dollars, you may be entitled to file a Chapter 13 action.

Contact us now to learn whether you qualify for Chapter 7 bankruptcy
If you are in debt, there are a number of options to choose from in order to regain your life and start anew. For more than two decades, the attorneys at the Goldbach Law Group have been helping clients find practical solutions to even the most challenging financial problems.  For more information, contact us today at (562) 696-0582 to schedule a free confidential consultation. We service clients located throughout Los Angeles County, including the Whittier, Norwalk, Downey and El Monte areas. Se Habla Espanol.

About Marc Aaron Goldbach

Marc Aaron Goldbach has worked tirelessly to develop a successful bankruptcy and civil law practice for clients located throughout Los Angeles County. Mr. Goldbach at GoldBach Law Group have represented a wide array of small businesses and individuals with 100% client success rate. Mr. Goldbach is always available to answer questions and willing to guide you through the entire legal process.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply