The Means Test is the Notorious Invention of the 2005 Bankruptcy Reforms which has created controversy and confusion for many natives in California. The main reason for this is that instead of calculating a debtor's true debts, they are forced into a formula based on the Internal Revenue Service standards, which places estimations on what people's expenses "should" be based on the area they live. Two of the estimated expenses allowed are related to vehicles: ownership expenses and operation expenses.
A recent decision by the Ninth Circuit, In re Ransom, has added even more confusion, stating that if you don't have a car loan, then you cannot deduct for operating expenses. This seems to create a punishment for having a car that is actually paid off! What's more it is totally counter-intuitive, and is a trap for those who think they can calculate their own Means Test by simple on-line calculators.
Many client are disappointed to find out that the real calculations are not the same as their own because they are not aware of the many pitfalls, such as calculating vehicle operation expenses when they do not have a car loan.
As a Los Angeles Bankrutpcy Attorney, I can help you to decide whether to file a Chapter 7 filing or a Chapter 13 filing, and apply the Means Test in the proper way that can save you the time, confusion, and embarrassment of being rejected on your own Bankruptcy filing without using an attorney.
