Los Angeles Chapter 7 Bankruptcy Attorney
Liquidate Eligible Debts with Chapter 7 Bankruptcy for Consumers in CA
Many hard-working people run into financial difficulty through no fault of their own. A layoff, a divorce, or major medical problem can push you to your financial limit.
You do not have to worry about how you will ever get out from under the bills and debts you owe. You can face the future with hope and optimism again. RHM LAW LLP can help you take control of your financial future.
What can Chapter 7 Do For Me?
Chapter 7 bankruptcy essentially allows you to wipe your financial slate clean without the worry of making “past due” amounts. A trustee liquidates your salable assets, thus allowing you to pay off your credits. Once that’s done, lenders shouldn’t be calling you to collect.
Do I Qualify for Chapter 7 in California?
To file for Chapter 7, you must meet several qualifications.
- Not enough income: First, the family must show that they do not have sufficient household income to repay their debtors. A monthly submission of a family’s income and household expenses must show there is not any extra money left over that could be used to pay creditors. With the high cost of living in California and soaring gas and food prices, this is usually the easy hurdle. It is important to note that the expenses claims must be reasonable.
- Pass the means test: The second component is more difficult, passing the means test. This gauges your income against the median of your household in the state.
- You are an individual, married couple filing jointly, or small business owner.
- No recent bankruptcy discharge: You are not legally able to file Chapter 7 bankruptcy if you had a previous Chapter 7 bankruptcy discharge within the past 8 years, or a Chapter 13 bankruptcy discharge within the past 6 years. The filing period starts the date your previous bankruptcy was filed, rather than when the bankruptcy was discharged.
- No recent bankruptcy dismissal: You are not able to file Chapter 7 bankruptcy if you had a bankruptcy dismissed within the past 180 days for any of the following reasons: you violated a court order, abused the bankruptcy system, made a fraudulent bankruptcy filing, or requested a dismissal because a creditor requested the automatic stay be lifted.
- Complete Credit Counseling: To be able to file any type of bankruptcy, you are required to receive credit counseling from a government-approved credit counseling agency. You are not required to get counseling before filing bankruptcy, but it must be completed no more than 180 days prior to the bankruptcy discharge and it must include a two-hour financial management course. Your bankruptcy case will be dismissed if you do not go through credit counseling within the specified time frame.
Passing the Means Test in California
Chapter 7 is typically reserved for low-income debtors who may not be able to afford repayment plans under Chapter 13. In order to qualify for Chapter 7 bankruptcy, you must pass the Chapter 7 Means Test.
- It looks at your average monthly gross income for a household for the prior six months and annualizes that figure. If your income is less than the median, then you pass the Means Test and are eligible to file for Chapter 7.
- If your income exceeds your state's median for your household size, then you do not qualify for Chapter 7. You may opt for Chapter 13 or consider waiting until your income is low enough to qualify for Chapter 7.
Bankruptcy is a complicated area of law and not all expenses may be allowed. There are many rules that must be followed and requirements that must be met. RHM LAW LLP can evaluate your situation in a 30-minute risk-free consultation. We may recommend a Chapter 7 filing or a Chapter 13 filing. Both options can lift your debt burden and give you a new financial life.
How does a "Means Test" Work"?
A means test consists of two parts; the first examines your household income. If you earn less than the California median income, you will automatically qualify for chapter 7. The second part of the test looks at your disposable income, which is the amount of money you have left after paying your necessary expenses. If you do not have enough disposable income to repay your debts, you will also qualify for chapter 7. The means test is designed to ensure that only those who truly cannot afford to repay their debts can file for Chapter 7.
Who Qualifies For The Means Test?
If your household income is below the median income for California, you will automatically qualify for Chapter 7. The second part of the test looks at your disposable income, which is the amount of money you have left after paying your necessary expenses. If you do not have enough disposable income to repay your debts, you will also qualify for chapter 7 bankruptcy. The means test is designed to ensure that only those who truly cannot afford to repay their debts can file for bankruptcy.
Current Median Incomes for California (Updated 2021)
The means test is based on calculations from the Census Bureau. The mean amounts vary depending on state and family size. The median income for a household is typically adjusted at least once a year, sometimes more frequently to account for fluctuating household incomes. Currently, the median income numbers for California are:
•· Single person household: $62,171
•· Two person household: $82,418
•· Three person household: $91,605
•· Four person household: $105,232
•· An additional $9,000 is added for each additional person beyond a family of four.
For those who do not meet these threshold amounts, they may still qualify for a Chapter 7 bankruptcy provided they can document additional accepted reasonable living expenses for the court. The debtor will complete the extensive means test form, which deducts additional living expenses such as taxes, health insurance, daycare, etc., to determine a monthly disposable income. If that amount is within the threshold, then they pass the means test.
The Benefits of Chapter 7 Bankruptcy
Chapter 7 personal bankruptcy is ideal for people without significant assets who have hit a bump in the road and want a fresh start. After a brief meeting with a Los Angeles chapter 7 bankruptcy attorney at our firm, we may be able to file your case and immediately stop creditor harassment and calls from collection agencies.
With a Chapter 7 filing, you can say goodbye to:
- Credit card debt
- IRS debt
- Tax bills more than 3 years old
- Garnishment and the threat of foreclosure and repossession
- Other unsecured debts and obligations
- Free up income that used to go toward interest and late fees
- Keep your house, car, and personal possessions if you are current in payments for them
- Begin rebuilding your credit rating
- Start a new financial life
- RHM LAW LLP charges convenient flat fees and offers long-term payment plans for those that qualify. We devote our practice solely to bankruptcy, so we can provide skilled and knowledgeable services in an efficient manner.
What Chapter 7 Bankruptcy Doesn’t Eliminate
It’s also important to know that Chapter 7 does not eliminate some debts including student loans and most back taxes, along with court-ordered alimony and child support.
With the help of our Chapter 7 bankruptcy lawyers in Los Angeles, in just a short period of time you may bay be able to eliminate unsecured debts and get tax debt relief and be on the way to a more secure financial future. Our firm serves clients in the Los Angeles area and San Fernando Valley through offices in Encino and Los Angeles.
When Can You File Chapter 7 Again in CA?
In California, you can file for Chapter 7 bankruptcy again after a waiting period of eight years from the date of your previous Chapter 7 filing. This waiting period allows you to utilize the benefits of a Chapter 7 discharge once again. However, it's important to note that bankruptcy laws can be complex, and it's advisable to consult with a bankruptcy attorney to understand your specific situation and ensure compliance with all requirements.
Don't go through the Chapter 7 bankruptcy filing process alone. For a 30-minute risk-free consultation with a personal bankruptcy lawyer at RHM LAW LLP, contact us today.
M. Jonathan Hayes Senior Counsel
Matt D. Resnik | Managing Partner Certified Bankruptcy Specialist
Roksana D. Moradi-Brovia | Partner Certified Bankruptcy Specialist
W. Sloan Youkstetter | Associate Attorney Certified Bankruptcy Specialist
Russell J. Stong III | Associate Attorney Certified Bankruptcy Specialist
David M. Kritzer Associate Attorney
Committed to making the process as stress-free as possible for our clients, our Los Angeles bankruptcy attorneys and dedicated staff will handle everything for you. From filling out paperwork through getting end results, we will work to help your case run smoothly and efficiently. We serve our clients in English, Spanish and Farsi.