What you should know about the new Bankruptcy means test
If you feel that you may need to declare bankruptcy in order to solve your debt problems, you may be worried about the recent bankruptcy law. Many have made the assumption that they no longer qualify because of the recent changes in the bankruptcy code.
Bankruptcy is certainly still around, but there are some changes you need to be aware of. Among these changes, the most important is called the means test, which will help decide whether you can file chapter seven bankruptcy.
Many lawyers and consumers alike have questioned the recent law, stating that it is bad for consumers and only makes things more difficult for people who really need financial help. Nevertheless, the law was passed in 2005 as a result of pressure from the credit industry.
The good news is that bankruptcy is still available for those who need it, but the new law makes the process more tedious if you wish to have your debts eliminated under chapter seven. This brings us back to the means test.
Simply put, the means test tries to determine whether you make too much money (or have too few expenses) to qualify for bankruptcy. If your annual salary is unusually low when compared to other salaries in your state, then the means test does not even apply to you.
If you have a higher salary, though, you will have to go through a more painstaking process to carefully document all of your income and expenses. From this, the bankruptcy court will determine whether you have the means to pay for your debts and if you qualify for chapter seven bankruptcy.
This more tedious process is one of the results of the bankruptcy reform law passed in recent years. If the court determines that you make too much money, you may be forced to pay part or all of your debt (though you'll probably be given a repayment plan as part of a chapter 13 bankruptcy).
You should know that most people who would have qualified previously will still be eligible under this new law. However, the process has become more difficult, so you should have legal assistance by your side at all times. Good legal advice will probably pay for itself if you're able to successfully file for bankruptcy
Bankruptcy is certainly still around, but there are some changes you need to be aware of. Among these changes, the most important is called the means test, which will help decide whether you can file chapter seven bankruptcy.
Many lawyers and consumers alike have questioned the recent law, stating that it is bad for consumers and only makes things more difficult for people who really need financial help. Nevertheless, the law was passed in 2005 as a result of pressure from the credit industry.
The good news is that bankruptcy is still available for those who need it, but the new law makes the process more tedious if you wish to have your debts eliminated under chapter seven. This brings us back to the means test.
Simply put, the means test tries to determine whether you make too much money (or have too few expenses) to qualify for bankruptcy. If your annual salary is unusually low when compared to other salaries in your state, then the means test does not even apply to you.
If you have a higher salary, though, you will have to go through a more painstaking process to carefully document all of your income and expenses. From this, the bankruptcy court will determine whether you have the means to pay for your debts and if you qualify for chapter seven bankruptcy.
This more tedious process is one of the results of the bankruptcy reform law passed in recent years. If the court determines that you make too much money, you may be forced to pay part or all of your debt (though you'll probably be given a repayment plan as part of a chapter 13 bankruptcy).
You should know that most people who would have qualified previously will still be eligible under this new law. However, the process has become more difficult, so you should have legal assistance by your side at all times. Good legal advice will probably pay for itself if you're able to successfully file for bankruptcy
About the Author:
Don't let the fear of your debt take over your life. Get the facts about bankruptcy and learn how to get control of your debt. To learn more about how to avoid bankruptcy and pay off debt visit us at http://personalbankruptcyquestions.org
posted by Credit Counseling at
1:50 PM
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