LOS ANGELES BANKRUPTCY BLOG
Who is eligible to file Chapter 7?
Sep 27, 2010
It's been almost five years since the Bankruptcy Code was amended to establish a "means test" to determine eligibility for individuals filing Chapter 7. Many potential clients call our firm and start by saying, "I know I earn too much to file Chapter 7, so I'm calling about Chapter 13".
In fact, most of our Chapter 7 clients earn more than the median household income, because that is only the starting point to determine eligibility for Chapter 7. Individuals whose gross household income is over the median can offset certain monthly expenses, such as secured debt payments, taxes, health care expenses, health and life insurance premiums, child care expenses and charitable and religious contributions. Also, the means test does not apply to individual debtors whose debts are primarily business or investment debts, rather than consumer or household debts. This means that clients with investment or rental properties are usually eligible to file Chapter 7 no matter what their income is.
Call Weintraub & Selth to schedule a consultation with one of the firm's attorneys to discuss options to solve your debt problems, both in and outside of bankruptcy.
