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Qualifying for Bankruptcy

The decision to file for bankruptcy protection can be difficult for many people. While they may be desperate to get out from under a suffocating amount of personal debt, they’re also worried about the damage it will do to their credit rating. In addition, a person contemplating bankruptcy may feel a sense of shame or failure, and worry about the stigma attached to not paying their debts. And, there’s always the fear that one may not qualify for bankruptcy in the first place.

If you are thinking of filing for bankruptcy, the first thing you need to do is speak with an experienced debt relief attorney. The legal team at the San Fernando offices of Nader & Berneman has been helping Southern California residents deal with their debt issues for over two decades. We can answer any questions you may have about the bankruptcy process and help you determine what the wisest course of action is for you to take. Call (800) 568-0707 for a free consultation.

You Are Not Alone

You shouldn’t feel ashamed about filing for bankruptcy, many respectable Americans have had to do the same; including Abraham Lincoln, Thomas Jefferson, Walt Disney, Henry Ford, and George McGovern.

The Means Test

The Bankruptcy Abuse and Consumer Protection Act, passed in 2005, made it harder for individuals to qualify for Chapter 7 bankruptcy, which is the liquidation of all or most of someone’s debt. Now to qualify for Chapter 7 bankruptcy, one must pass what’s referred to as the "means test." The means test is designed to determine whether you earn enough income to pay off what you owe in a reasonable amount of time. The first thing the courts will do is look back on your salary for the last six months and determine your average monthly income. Your average monthly income will then be compared to the median monthly income of a household the size of yours, in your state. So if the median monthly income of a family of one in California is $2,000, and you make $1,700 per month, you will automatically qualify to file for Chapter 7 bankruptcy. But, if you make more than the median monthly income, you are not necessarily denied the opportunity to file Chapter 7. Eligibility for Chapter 7 bankruptcy is based on disposable income, which is the income you have left over after paying all your monthly expenses, such as rent, utilities, food, transportation, etc. It’s quite often that a person who earns more than the median monthly income in their state still qualifies for Chapter 7 bankruptcy because they have little or no disposable income. If you still do not qualify for Chapter 7 bankruptcy, you do have other options, such as Chapter 13 bankruptcy, debt settlement, and debt reduction.

Qualified Legal Advice

How to handle your debt is a big decision, one that you shouldn’t have to make without the sound legal advice of an experienced Encino bankruptcy attorney. At Nader & Berneman, we understand that this is a trying time for you and your family, and our goal is to put you at ease. Dealing with your debt issues is just the first step in the process of starting over with a clean slate. Call our offices at (800) 568-0707 for a free case review.

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