The purpose of the Means Test is to keep high income earners away from Chapter 7 Bankruptcy and into Chapter 13 Bankruptcy. However, some high income earners do qualify for Chapter 7 Bankruptcy depending on their expenses, such as high mortgage, high out-of-pocket medical expenses, backed child support, etc. Basically, Chapter 7 Bankruptcy is meant for someone who cannot afford to repay their debt.
There are some people who are excluded from the Means Test: someone's whose majority of debt is business debt; disabled veteran; and reservist or national guard. Detailed definition of the excluded groups from the Means Test will be discussed in another Sacramento bankruptcy attorney blog.
However, if you do not fall into one of excluded groups, then you must take the Means Test. If your and your spouse's income (assuming that you are not separated) is less than the median income for your state and household size, then you pass the Means Test. However, there are other factors that might disqualify you of Chapter 7 Bankruptcy discharge or might dissuade you from filing Chapter 7 Bankruptcy even though you qualify for it. For example, you might have a house with too much equity (more than what the exemption can protect) and you are worried that the Chapter 7 Trustee might liquidate your house. In such a case, you might want to consider Chapter 13 Bankruptcy.
If your and your spouse's income (assuming that you are not separated) is more than the median income for your state and household size, then you must fill out the rest Form 122A-2 to determine if you have sufficient disposable income to pay a Chapter 13 Plan.
The Means Test is very complex and an experienced Bankruptcy Attorney is familiar with the nuanced and inconspicuous rule to make you eligible for Chapter 7 Bankruptcy. Muoi Chea is an Experienced Bankruptcy Attorney in Sacramento, Fairfield, Stockton, CA who can help you. I cannot and will not discussed all the rule and tricks to make you qualify for Chapter 7 Bankruptcy in my website but I will use my extensive knowledge to help my clients. I helped and accepts clients from Vallejo, Vacaville, Roseville, Rocklin, Elk Grove, Citrus Heights, Woodland, Davis, Modesto, Stockton, Tracy, and other nearby Northern and Central California cities.