17th May 2009
Bankruptcy Means Test
Congress issued new bankruptcy laws in 2005 and they created new forms, including the Means Test in a Chapter 7 bankruptcy. The courts created the means test in order to see if you have enough available income to pay your debts, instead of having them discharged in bankruptcy. The means test must be finished along with credit counseling and a personal financial management course.
Consisting of 57 questions, the means test lists your income and expenses and compares them to national and local norms for your family size. If you are a disabled veteran or most of your debt is not consumer debt, you only have to complete a portion of the means test. The means test presumption of abuse signifies that you may have enough income to pay your debts. Your case can be dismissed or pushed into a ch 13 bankruptcy if the presumption arises and you have adequate income to pay part or all of your debts.
The second section will determine your income. Depending on how you file, you and your spouse will submit your income from business, rent, interest, child support, pension and other income for the last 6 months. The third section will determine your average yearly income and compare it to the median family income based on the state you live in, and the size of your family. If your income is more than the average for your family size in your state you will have to continue filling out the means test, if it is less, then the presumption does not arise.
The next step is adding in your expenses which are determined by where you live and the number of people in your family, these include food, housing, automobile, utilities and other expenses.
The final part is determining how much money you have left over each month. If you have less than $6575 a year, the presumption does not arise, the presumption does arise if you have more than $10,950, and if you have somewhere inbetween $6576 and $10,949 you must continue with the means test form which compares the amount of unsecured, non-priority debt you have with your disposable income.
The bankruptcy means test is confusing, so consulting a bankruptcy attorney is always a good option before think about filing bankruptcy.
