i have a lot of equity in my home and would like to file chapter 7 section 1 bankruptcy. I'm over 55, single and have made less than $25,000 in the past 6 months, but if I include 7 months income it would be over. California allows equity of $175,000 if income is less than $25,000 yearly, but the means test only asks for 6 months. Is it based on the true yearly income or averaged by the 6 months prior.
The exemption says yearly, they mean yearly.
The means test and exemptions are completely different things. The means test is determined by federal law, the exemptions are established by the state. (Even the means test will take that 6 month income and double it for determination of eligibility by comparing it to the median yearly income. )
Robert W GambrellChapter 13 Bankruptcy AttorneyOxford, MS ·
Exemption laws in most states have been basically the same for many years. The last major overhaul for California exemptions was done in the 1980s when the second exemption scheme was added for bankruptcy debtors, which basically tracts the federal exemption scheme. The means test made a part of the bankruptcy code as of October 17, 2005, and is only used as a method to determine whether a person is qualified to be a chapter 7 debtor. A similar provision using the same 6 calendar months to determine current monthly income (CMI) and disposable income is used in chapter 13 cases. Thus, to my knowledge, the means test has nothing to do with exemptions in any state.
Agree with others as far as income. Will just add that perhaps you can consider chapter 13, but whether that will help depends on more details. Do not attempt c13 without attorney. Get a consult! I would recommend that anyway, just in case you missed some ideas.
It is based upon your annual income, however I must strongly urge you to get an attorney to handle this matter. While I understand your fear that an attorney might be costly you need to understand what can happen without one. If you file a chapter 7 and there is an asset which exceeds the allowable exemption the trustee can auction it off. It will not matter that you are not an attorney nor that you have no legal experience. You can not unring the bell in these circumstances. This means you can not decide once the house is worth too much that you no longer want to file and should be able to dismiss. Save yourself the headache and at least meet with an attorney. if you were to meet with me and we determine that the house has too much equity I would look at a 13, and estimate the payment or advise you that I would not file. Its better than filing only to find out the house is not fully exempt. If you think the stress of the debts is bad this would be 10 times worse. I have sent many people away because I feared them losing the house.
