Chapter 7 in San Diego may not work for every person with debt and financial challenges. As highly experienced bankruptcy attorneys in San Diego, we will tell you when Chapter 7 isn’t right for you and we’ll explain why. But we’ll also carefully explain your legal alternatives and your options.

In some situations, the bankruptcy “means test” prevents a viable Chapter 7 case for individuals. We are expert at analyzing and dealing with means test issues. Generally, the means test looks at your recent monthly income, and if your income is above a state median threshold, a formula is applied to your income to determine if you have a predetermined minimum amount of net monthly income to pay your creditors some formula specific amounts over time. The formula that is used to determine your “net income” combines some of your actual living expenses with some “hypothetical” living expenses, so you’ll need to have your situation analyzed by an expert if you think your income might exceed the state median.

Of course, even if your income is relatively high, you might still qualify to discharge your debts in Chapter 7 because of the timing and nature of the means test and the formula that is used. We urge you to have your situation analyzed right away, especially if your income is increasing. You may still have time to discharge you debts if you act quickly. We will meet with you for free and do a careful means test analysis and explain your options.

Besides the means test, sometimes people can’t file Chapter 7 because they’ve filed bankruptcy recently or within the last 8 years. Nevertheless, if you are in this situation you still have options that will allow you to take legal control of your ongoing debts and stop any madness plaguing your finances.

The most common alternative to Chapter 7 is Chapter 13. Individuals who have regular income may seek an adjustment of debts—a plan—that will organize your debts, pay what you can reasonably afford, and get you financial life back on track. One particular advantage of Chapter 13 is that it allows people an opportunity to save their homes from foreclosure by allowing them to “catch up” past due payments through a payment plan.

Other people use Chapter 13 to temporarily take away the financial pressure from huge student loan payments that they simply cannot afford. In those cases, when student loan debts cannot be discharged, a Chapter 13 plan can still be confirmed that will dramatically reduce the monthly payments to fit your budget over a 3 to 5 year period.

In other cases, a few people will have too much valuable property that can’t be “exempted” (protected) in a Chapter 7 case, so they use Chapter 13 to retain their valuable property and to pay a reasonable amount of net income to their creditors over time.

Besides Chapter 13, there is also the alternative of an out of court settlement with some or all of your creditors. These options are best discussed with a qualified bankruptcy lawyer since we are the most experienced at dealing with creditors and sorting through the details of your financial circumstances. We also understand the very negative consequences of so-called “plans” that debt settlement “companies” offer. Debt settlement companies can actually make it harder to settle debts on a reasonable basis and they can do long term damage to your credit. Let an expert explain these options to you first, then make up your own mind.