Flirgan Elf

Congress published new bankruptcy laws in 2005 and they produced new forms, 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, instead of having them discharged in bankruptcy. You are expected to complete this paperwork as well as the other changes that were placed like the pre-bankruptcy credit counseling and post-bankruptcy personal financial management courses.

Your income and expenses are listed on the means test and them compared to averages for your area and 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 “presumption” is a nice way of saying whether or not you may be trying to abuse the bankruptcy system. 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. You, and possibly your spouse, depending on how you plan on filing bankruptcy, will answer questions on your gross wages, business income, rental/property income, interest/dividends earned, child support, pension and any other income, averaged out for the last 6 months. Your income is then compared to the average incomes of families in your area. 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.

In part five you will deduct standard expenses for your family based on regional numbers the government has declared as acceptable for your area and family size, such as groceries, mortgage or rent, utilities and your car.

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, 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 choice before decide on filing bankruptcy.