Call Our San Diego Bankruptcy Lawyer – (888) 875-9190
Questions about how the process works, what the steps are, and what the
timeframes are tend to be very common. Don’t worry, we have compiled
the following information to answer these questions and help you understand
Credit Counseling Briefing
An individual cannot file
Chapter 7 or
13 unless he or she has received individual or group credit counseling during
the 180-day period preceding the date of filing of the petition. You can
obtain the counseling at
www.cricketdebt.com. However, there are many other companies that provide this service on
the internet or over the telephone as well. Prices typically range from
$35 – $50 per couple.
The purpose of the briefing is to outline the opportunities for available
credit counseling and assist the individual in performing a related budget
analysis. This briefing takes place over the phone or internet and is
typically accomplished in less than an hour.
If the debtor’s “current monthly income” is less than
the median income for California, then the debtor will likely be able
to file for
bankruptcy. “Current monthly income” is defined as the debtors’
average monthly income from all sources derived during the 6-month period
preceding the date of determination. The median income depends on the
number of household members. The data required to determine the median
income applicable to the debtor can be found on the
U.S. Trustee’s Means Test Page.
If the debtor’s “current monthly income” is more than
the median income for California, then the debtor is subject to means testing.
The Means Test
The Means Test is performed by reducing the debtor’s current monthly
income by his or her expenses, then multiplying the difference by 60.
The result will determine whether the debtor can file Chapter 7, or if
a Chapter 13 will be necessary.
The debtor’s allowable monthly expenses are governed by the IRS and
fall into different categories depending on the type of expense:
IRS National Expense Categories. Expense amounts for the categories below will be taken from National Expense
Categories a single table maintained by IRS for all states. [§707(b)(2)(A)(ii)
(I) & (II)]
Apparel and services. Includes shoes and clothing, laundry and dry cleaning, and shoe repair.
Food. Includes all meals, home or away.
Housekeeping supplies. Includes laundry and cleaning supplies; postage and stationary; other
household products: cleansing and toilet tissue, paper towels and napkins,
lawn and garden supplies, and miscellaneous household supplies.
Miscellaneous. A discretionary allowance.
Food & clothing expenses may be increased by 5% above the allowance
when “reasonable & necessary.”
IRS Local Standard Expenses. Expense amounts for the categories below will be taken from the IRS Local
Standard Expenses table, based upon the county in which the debtor resides.
[§707(b)(2)(A)(ii) (I) & (II)]
Utilities. Includes gas, electricity, water, fuel oil, coal, bottled gas, trash and
garbage collection, wood and other fuels, septic cleaning, and telephone.
Housing. Usually, only expenses for the place of residence are considered to be
necessary. Housing expenses include: mortgage or rent, property taxes,
interest, parking, necessary maintenance and repair, homeowner’s
or renter’s insurance, homeowner dues and condominium fees.
Transportation. Vehicle insurance, vehicle payment (lease or purchase), maintenance, fuel,
state and local registration, required vehicle inspection, parking fees,
tolls, driver’s license, public transportation. Transportation costs
not required to produce income or ensure health and welfare are not necessary.
Assuming the debtor passes the Means Test, and his / her income and expense
analysis is ok, we then proceed with filing the case.
Meeting of Creditors (341 Hearing)
The Meeting of Creditors typically takes place approximately 30 days after
the case is filed. We will notify you of the date once it is scheduled,
which usually happens the day after the case is filed. While it is called
the “Meeting of Creditors,” creditors rarely show up at these
meetings. It is really just a meeting with the Trustee which is required
by the bankruptcy code. The Trustee’s job is to examine you under
oath and make sure you have listed everything in your papers accurately
and they may have a few questions for you about your income or assets.
These meetings are usually very brief and typically take approximately
2 minutes. However, in cases where the debtor runs his or her own business,
the trustee may have a few extra questions about the business income and assets.
Debtor Education / Financial Management Course
In addition to the Credit Counseling Course, debtors have 45 days from
the first date set for their Meeting of Creditors to complete the course
and have the Certificate of Completion filed with the court. Again, this
course can be completed over the internet at a variety of places, including
60 days after the Meeting of Creditors, if no creditors have objected to
the discharge, the court will proceed with entering the Discharge Order.
This can take a couple of weeks, but the whole process for a Chapter 7
bankruptcy typically takes about 3-4 months from filing to discharge.
The Discharge Order is powerful and prevents creditors whose debts were
discharged from ever even attempting to collect on the debt again.
Contact us today at (888) 875-9190 to