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.
There are definitely some changes that you need to be aware of, including the so called means test. This can help determine whether you can file chapter seven bankruptcy.
When it comes to bankruptcy, it seems like there's been an ongoing battle between creditors and debtors for a long time. In the U.S., for example, there have been a series of bankruptcy laws during our history which sometimes benefited the creditors and sometimes the consumer. Recently, a law was passed by Congress as a result of extensive lobbying by the credit card industry.
The purpose of the law is supposedly to make sure that bankruptcy is not being abused by people who simply don't want to pay their debts. The main provision of the new law was the means test, which makes consumer show all income and expenses in order to prove the bankruptcy really is needed. In other words, the question is whether you have the means to pay off your debts.
The first thing you should know is how your income compares to other people's income in your own state. If your income is below the median income of your state, then you don't even have to worry about that means test. This makes sense, of course, because if you have a lower income you're less likely to be able to afford your debts.
If your income is higher, however, you'll have to go through the annoying process of calculating all of your income and expenses. Based on this, the court will determine whether you can afford to pay both your necessary expenses and your consumer debt.
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).
The good news is that many people will still qualify for bankruptcy, even though the process itself has become more complex. You simply need to have good legal advice to guide you through the difficult maze.
There are definitely some changes that you need to be aware of, including the so called means test. This can help determine whether you can file chapter seven bankruptcy.
When it comes to bankruptcy, it seems like there's been an ongoing battle between creditors and debtors for a long time. In the U.S., for example, there have been a series of bankruptcy laws during our history which sometimes benefited the creditors and sometimes the consumer. Recently, a law was passed by Congress as a result of extensive lobbying by the credit card industry.
The purpose of the law is supposedly to make sure that bankruptcy is not being abused by people who simply don't want to pay their debts. The main provision of the new law was the means test, which makes consumer show all income and expenses in order to prove the bankruptcy really is needed. In other words, the question is whether you have the means to pay off your debts.
The first thing you should know is how your income compares to other people's income in your own state. If your income is below the median income of your state, then you don't even have to worry about that means test. This makes sense, of course, because if you have a lower income you're less likely to be able to afford your debts.
If your income is higher, however, you'll have to go through the annoying process of calculating all of your income and expenses. Based on this, the court will determine whether you can afford to pay both your necessary expenses and your consumer debt.
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).
The good news is that many people will still qualify for bankruptcy, even though the process itself has become more complex. You simply need to have good legal advice to guide you through the difficult maze.
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 filing chapter 7 bankruptcy visit us at http://personalbankruptcyquestions.org
posted by Debt Consolidation Loan at
1:51 PM
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