I am frequently asked by clients whether or not they will qualify for a chapter 7 or chapter 13 filing.
The Courts have a ‘means test’ which attorneys use to determine the answer to this question. When putting a client’s information into the means test, we take into account your income, expenses, as well as the average expenses permitted by the IRS in your geographic area. So, if you live in the Santa Clarita area, your expenses will not be compared to those of someone far away, but to the expenses of people in Northern Los Angeles and Ventura Counties from Santa Clarita to Ventura, Oxnard. Simi Valley and the surrounding areas.
In my experience, nearly 90% of clients who are having financial trouble will be able to qualify for a chapter 7 filing, which will eliminate the debtor’s debt entirely. Virtually everyone else will be able to file under chapter 13, which permits the debtor to make payments over a period of 3 to 5 years.