What Kind of Bankruptcy Do I Qualify For?

Is My Income Low Enough To Qualify for Chapter 7 My State?

A mathematical formula—called the means test—determines whether you qualify for Chapter 7 Bankruptcy in California. The means test first looks to see if your average income for the past six months is below the median income in California. And if it is, then it looks at whether would have enough "disposable income" to fund a five-year Chapter 13 debt repayment plan—after allowing for monthly expenses for food, housing, clothing, transportation and medical care, based in part on county-by-county expense standards for Kern County that the IRS uses in their nationwide tax-collections efforts.
ADVERTISEMENT -
AD_GOOGLE_2_RESPONSIVE_PRE_CONTENT
Updated: 2020-06-23
How To File for for Chapter 7 or Chapter 13 Bankruptcy in Bakersfield, CA:
Step-By-Step
 
Alternatives to Bankruptcy

Which type of bankruptcy you qualify for depends, in part, on whether your annual income is more or less than your state’s median income. Before looking at numbers and formulas, however, you should be familiar with the two main types of personal bankruptcy:

Chapter 7 bankruptcy lets you eliminate most unsecured debts in a matter of months in return for giving up all property that is not exempt. (Unsecured debts are debts—like credit card charges or medical bills—that aren’t backed up by specific items of property as collateral.)

Chapter 13 bankruptcy requires you to repay a portion of your debts over three to five years. During that time, you must live within a strict budget that is monitored closely by a bankruptcy court trustee. If you don’t make the required monthly payments, the Chapter 13 bankruptcy fails and you still owe your debts—unless you can convert to a Chapter 7 bankruptcy.

A mathematical formula—called the means test—determines which type of bankruptcy you qualify for. The means test considers the following:

  • how your monthly income compares to your state's median income
  • the amount and types of your debts, and
  • other aspects of your financial situation.

For more details, and to find the median income amount that applies to you, select your state from the list on this page.


Jurisdictional relevance: ST

There are versions of this article for each State.

You may also be interested in:

ADVERTISEMENT -