Means test · Beverly Hills
Means Test Evaluation in Beverly Hills at Your Free Consultation
A means test evaluation in Beverly Hills tells you whether you can file Chapter 7 or need Chapter 13. We run it with you at no cost during your free consultation. Call (310) 362-9071 and have your last six months of pay stubs ready.
- Six months of pay stubs for everyone in the household with income
- Records of other income: rent, support, unemployment, business income
- Your last two tax returns
- Mortgage or rent, car loan and insurance statements
What the means test is and who it applies to
The means test is a federal formula that decides who can use Chapter 7. It was designed to steer people who can repay part of their debt into Chapter 13.
It applies to people whose debts are mostly consumer debts, such as credit cards, car loans and mortgages. If most of your debt comes from a business you owned, the means test may not apply at all. Certain disabled veterans and reservists are also exempt. We check this first, because it can make the rest of the test unnecessary.
How we run your means test, step by step
- Count household income. We average all income from the six full calendar months before you file. That includes wages, business income, rent, support you receive and most other regular payments. Social Security benefits are not counted.
- Compare to the California median. We compare that average, times twelve, to the California median income for your household size. If you are at or below the median, you pass and Chapter 7 is open to you.
- If you are above the median, subtract allowed expenses. We apply the IRS expense standards for Los Angeles County, plus your actual secured debt payments, taxes, health insurance and other allowed costs.
- Check disposable income. If little is left over each month, you may still qualify for Chapter 7. If a lot is left over, Chapter 13 is usually required, and the result sets your minimum plan payment.
- Look at timing. Because the test uses a six-month look-back, the month you file can change the result. A recent job loss or a one-time bonus can make waiting a few weeks the smarter move.
Cost and timeline
The means test evaluation is part of your free consultation. There is no separate charge. If you hire us, the full means test form is prepared as part of your case under our flat fee, which starts at $1,200 plus the court filing fee.
With pay stubs in hand, we can usually tell you during the consultation whether you are above or below the median. A full above-median calculation may take a day or two after we have all your expense records.
Why the means test works differently in Los Angeles
The median income figures are set by state and household size and are updated by the U.S. Trustee Program from time to time. The expense side uses local IRS standards, and housing and car costs in Los Angeles County are higher than in much of the country. That means some Beverly Hills and Los Angeles households with incomes above the median can still pass, once allowed expenses are counted.
Your case is filed in the Los Angeles Division of the U.S. Bankruptcy Court, Central District of California. The trustee reviews your means test against your pay stubs and tax returns, so the numbers must match your records.
Means test mistakes to avoid
- Leaving out a spouse's income. A non-filing spouse's income usually counts, though some of it can be deducted.
- Using take-home pay. The test starts with gross income before taxes and deductions.
- Filing in the wrong month. A big check in the six-month window can push you over the median.
- Guessing at expenses. Estimated numbers that do not match your records draw objections from the trustee.
Related services
If you pass, learn what to expect from Chapter 7 bankruptcy in Beverly Hills. If you do not, Chapter 13 bankruptcy may be the right path. Either way, bankruptcy exemptions decide what you keep.
More on Chapter 7 bankruptcy
- Chapter 7 bankruptcy in Beverly Hills
- California Median Income Figures for the Means Test
- What Debts Are Wiped Out in Chapter 7
- Debts Chapter 7 Will Not Discharge
- Can I Keep My Car in Chapter 7?
- Can I Keep My House in Chapter 7?
- The Chapter 7 Timeline, From Filing to Discharge
- What the Chapter 7 Trustee Looks For
- Filing Chapter 7 With No Income or Between Jobs
- Filing a Second Chapter 7: The Eight-Year Rule
- Chapter 7 for Married Couples: Filing Alone or Together
- What Happens at the 341 Meeting of Creditors
- Redeeming a Car in Chapter 7
- Means test evaluation
- Reaffirmation agreements
Means test questions
What if my income is above the California median?
If your income is above the California median, you can still qualify for Chapter 7 after allowed expenses are subtracted. Many households with high housing costs in Los Angeles do. If you do not qualify, Chapter 13 is the usual alternative.
Does my spouse's income count if only I file?
Yes, your spouse's income usually counts in the means test even if only you file. Part of it can be deducted when it goes to your spouse's own separate expenses. We work through those deductions with you.
Is Social Security counted in the means test?
No, Social Security benefits are not counted as income in the means test. We still list them in your budget, because the trustee looks at your actual income and expenses.
I just lost my job. Does the means test use my old salary?
Yes, the means test looks back six months, so your old salary still counts for now. Your average drops each month you go without that income. We can tell you the earliest month you would pass.
Free consultation
Find out where you stand in one meeting
Call (310) 362-9071 or send the form. Bring six months of pay stubs and we will run the means test with you for free.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.