How do you qualify for bankruptcy? 3 Answers as of August 17, 2010

Is there an exact dollar amount that you must fall under in order to file for bankruptcy? Do certain types of bankruptcy have different amounts?

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Fasel, Fasel, & Nefulda, LLP
Fasel, Fasel, & Nefulda, LLP | Thomas Fasel
There are several basic eligibility requirements you must meet to file consumer Chapter 7 bankruptcy. In addition, if your current monthly income is more than your states family median income for a family of your size, and your debts are primarily consumer debts, you will have to pass the means test. The means test measures certain expenses and deductions against your Current Monthly Income to see whether you have any income you can spare to propose a Chapter 13 bankruptcy plan.

To discuss further, please contact me for a free consultation.
Answer Applies to: California
Replied: 8/17/2010
David Nelson
David Nelson | David Nelson
There is not an exact number.

There is a 3 part test to filing a straight bankruptcy or chapter 7 bankruptcy which is also called a liquidation bankruptcy.

First we check to see if your gross income from your pay stubs or your net business income is greater than the median family income for a family of your size. If your income is under then we go to a practical test which is a close look at the ins and outs of your budget. If your reasonable and ordinary allowable expenses make it so that you have money left over at the end of the month, you may still have to file a chapter 13 bankruptcy with a monthly payment plan. Chances are that they do not if your income comes in below the median for a family of your size. That is just the usual reality.

If your gross is greater than the median family income for a family of your size, then we run you through a complicated legal fiction called the means test. However, in my experience, even families with large incomes often still pass this portion of the test. There are a few things that make it possible to win this part of the test, such as a couple or more children, and such as a good sized mortgage payment (you do not necessarily have to be paying it if you are trying to work a loan modification on the mortgage) and if you are a family of faith who pays tithing and offerings or if you are simply a person who has a moral obligation to pay a charitable contribution to the atheists united then you still qualify for this expense being taken as reasonable and ordinary, provided you have in fact paid it for the last 6 months.

Of course, if you pass the means test, there is still the question at the end of how much is your budget in the red or the black. If you have excess income at the end of the month, you could still end up paying payments in a chapter 13 plan for several years.

If you are anywhere in California, give me a call.
Answer Applies to: California
Replied: 8/17/2010
Diefer Law Group, P.C.
Diefer Law Group, P.C. | Abel Fernandez
This can be a complex question. Yes, there are income guidelines to qualify for different bankruptcy cases. There are in essence two tests. First, you have to be below the income guidelines for your area. There are income guidelines determined on the household size. If you meet that requirement, then you still have to meet the second part of the test.

The second part is that your net income has to be comparable to your cost of living expenses. If you meet these guidelines, then you qualify for a Chapter 7 case. For more information, please feel free to call me at the information below.
Answer Applies to: California
Replied: 8/16/2010
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