How will the new bankruptcy means test affect you?
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.
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 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).
Chances are you'll qualify for bankruptcy, but you have to go through the new process step by step with good legal advice by your side. While many have the impression that the new bankruptcy law has eliminated this option for most people, the truth is that it is still a viable option that you should consider.
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.
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 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).
Chances are you'll qualify for bankruptcy, but you have to go through the new process step by step with good legal advice by your side. While many have the impression that the new bankruptcy law has eliminated this option for most people, the truth is that it is still a viable option that you should consider.
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 how to declare bankruptcy visit us at at http://personalbankruptcyquestions.org
posted by Credit Counseling at
1:50 PM
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