A general rule of thumb to use in determining if you can pass the Means Test is that if you if you are under median you pass, and if you are over median, you fail. But this is just a general rule of thumb. With the help of an experienced San Diego bankruptcy lawyer, you can be over median and still pass. Just how can a bankruptcy lawyer help you pass if your income is over median?
Pass Means Test When Over Median With the Help of a Bankruptcy Lawyer
Just what does it mean to be over or under median? The “median” income, for bankruptcy purposes, means the median family income (published by the U.S. Census Bureau) for a household of your size. For example, if you are married and have two kids, you would be a household of 4 people and you would need to look to the median income for a household of 4 to see if you are above or below the median income. If you are under median, you automatically pass the bankruptcy Means Test. If you are over median, you may still be able to qualify for bankruptcy, but you will definitely need the help of an experienced San Diego bankruptcy lawyer.
Passing When Over Median
If you are over median, your bankruptcy lawyer can sometimes still get you to pass the Means Test, depending upon your expenses. If you have a large mortgage payment, or several car loans, or pay a lot of money each month for child care, you may still be able to pass. Similarly, if you have a large child support or alimony payment, your bankruptcy attorney may still be able to get you to pass. The higher your income is above the median income, the harder it will be, even for the most skillful attorney, you get you to pass.
Home Loans Help
The reason that a home loan can help is that whatever the amount of your mortgage payments and property taxes, you get to deduct from your income to see if you pass. The Means Test gives you a certain allotment for home mortgage or rent expense. If you rent your home, then you simply get the mortgage/rent allowance. If you own your home and have a mortgage, you get to deduct the entire mortgage payment, no matter the amount. For example, if you are a household of 2 people and you rent, you would receive the mortgage/rent allowance of, let’s say, $1,700 (this is strictly for the sake of example). But if you owned your home and had a $5,000 mortgage payment, you would be able to deduct $5,000 per month from your income to see if you can pass the test.
Car Loans Help
Similar to home loans, car loans help and to a noticeable degree. If you don’t have a car loan, you get a small allowance for transportation expenses. But if you have a car loan, you get both the transportation expense allowance, plus your car loan payment as a deduction from your income in determining if you can pass the Means Test.
Child Car Helps
For many people who pay for childcare, this can be a huge expense. The bankruptcy Means Test allows you to claim your entire child care expense as an additional expense deduction. That means that if you pay $1,000 per month for day care, you could be $1,000 over the median income (on a monthly basis), and still pass.
Schedule a Consultation
To truly determine if you can pass the Means Test you should schedule a consultation with a San Diego bankruptcy attorney. An attorney can sit down with you and actually calculate your disposable income based upon the bankruptcy court test to see if you pass or fail, which will give you a clear picture of your bankruptcy options that are available to you based on your income level.