Help! I Don’t Pass the California Chapter 7 Bankruptcy Means Test! Now what?

In all chapter 7 individual cases where consumer debts are at issue, the persons filing for chapter 7 bankruptcy are subject to the Chapter 7 Means Test within official Bankruptcy Form 22.  Again the means test, in short, determines whether or not you have too much disposable income for purposes of filing for chapter 7 bankruptcy.
What happens though if you do not pass the means test?   Is all hope lost?  Well, the answer is not always.   You can file at another time, typically in the future, if your household income will decrease or face significant reduction for whatever appropriate reason.  But if you must file the bankruptcy case now, and you don’t otherwise qualify under the Means Test, then a presumption of abuse under Form 22 must be checked.   In other words, someone who files chapter 7 bankruptcy and shows too much discretionary income is subject to the presumption of abuse.  Thus, the United States Trustee must determine whether they will dismiss or convert the chapter 7 case to chapter 13 or another chapter of bankruptcy.
Now, it is possible to overcome the presumption – Section 707(b)(2)(B)(i) of the Bankruptcy Code says it is.   Persons filing bankruptcy would have to demonstrate special circumstances that rebut the presumption of abuse, such as a serious medical condition, loss of income, retirement, etc.   There must be an explanation to the US Trustee’s satisfaction that the debtors’ income and/or expenses have changed and there is no reasonable alternative to it.  In essence, debtors must show that any such disposable income that is reflected on the Means Test pursuant to Form 22 is no longer the case, that it is no longer an accurate or realistic reflection of household income for the debtors.
In such limited circumstances, it is possible to establish that debtors are entitled to file chapter 7 bankruptcy even though they do not initially appear to qualify.   The California Chapter 7 Bankruptcy Means Test can be complex and requires the analysis of a knowledgeable bankruptcy attorney.   With the help of the right attorney, it is possible to overcome the presumption of abuse, and it is more than possible to successfully file for California chapter 7 Bankruptcy.