The Means Test Under The California Bankruptcy Laws

2007-03-08 10:33:40

( Legal )



The new California bankruptcy laws can apply to individuals who have been residing in the state of California for a certain number of years before the date that the bankruptcy is filed. You may also file for bankruptcy in California if you have lived for several months prior to the number of resident years required in the state of California.

With the new bankrupt laws an individual must take a means test in order for the court to determine whether an individual is eligible to file for any of the two types of bankruptcies applicable to individuals.

With one type of bankruptcy the court erases all of the debts of an individual, allowing for a fresh start. Another type of bankruptcy will obligate a person to pay a majority amount of the debts within a certain number of years.

In performing a means test the average income of an individual for a certain number of months is taken and compared to the average income in the state of California. If the average income is lower than the state’s average income, then according to the California bankruptcy laws, an individual may file for one type of bankruptcy.

If the calculation results in an amount higher than the state’s average income, further calculations need to be done to determine whether the individual would apply for another type of bankruptcy. With the second type of bankruptcy your income and your living expenses are considered, but the debts that were included in your bankruptcy filing are excluded. These figures are multiplied against a particular number, and if the results are above the stated income level, the second type of bankruptcy can be filed. If not, the bankruptcy that pertains to the erasing of all debts will then apply.

According to the California bankruptcy laws, if the individual is caught with unexplainable loss of assets or submits an incomplete listing of assets and liabilities, a bankruptcy filing can be cancelled. The same will hold true of you are found guilty of getting rid of relevant financial records, or do not obey the orders of the court. Bankruptcy filings can also be rejected if you fail to submit certain records to the trustee or are found guilty of transferring the ownership of properties with the intention of defrauding your creditors.


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