May 17, 2009
Questions to Ask a Bankruptcy Attorney
The new bankruptcy laws passed in 2005 created some new forms that must now be included in a bankruptcy petition, one of which is the bankruptcy means test for those filing chapter 7 bankruptcy. The means test is supposed to tell the court whether or not you have enough disposable income left after paying your necessary living expenses to pay at least some amount to your creditors in order to settle your debts, rather than wiping them out. 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 averages for your family size. If most of your debt is not primarily consumer debt, or you are a disabled veteran “the presumption does not arise”, and you do not have to complete the majority of the form. The means test presumption of abuse signifies that you may have adequate income to pay your debts. If you have enough income and the presumption does arise, your chapter 7 may be dismissed or you can be pushed into a chapter 13 bankruptcy.
The second section will check your income. . Your income is then compared to the average incomes of families in your area. If you have a higher income than the other families, you must keep 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.
These deductions are then used to see how much income you have left to pay debts each month. The presumption does not arise if you have under $6575 a year leftover, if you have more than $10,950, the presumption arises, if your available income is in-between there, then you have to continue the form to compare your unsecured debt to your left over income.
The bankruptcy means test is confounding, so conferring with a bankruptcy attorney is always a good choice before think about filing bankruptcy.