The 2005 changes in the bankruptcy laws were partly motivated by creditors who felt that Chapter 7 was being abused by people who could pay something toward their debts.
Whether you qualify for bankruptcy protection is determined initially by the median income for a family the size of yours. If your income is higher than the median, you must undergo the means test, comparing your gross income and allowed expenses.
The means test actually mirrors a test the Internal Revenue Service (IRS) has used for more than 20 years. To determine whether you qualify for an offer in compromise or a payment plan, the IRS assesses your financial condition with a test comparing your income to allowed expenses.
Bankruptcy Eligibility
If the means test indicates you have little disposable income, you may qualify to file under Chapter 7. However, your actual disposable income could be greater than your theoretical disposable income. In that event, you will not be eligible for Chapter 7, only a repayment plan under Chapter 13 lasting three or five years.
Similarly, if the means test shows that you have significant, theoretical, disposable income, usually greater than $150.00, you will likely not qualify for Chapter 7. In that event, the payment plan will be five years. Contact an attorney at Nahrgang & Associates, P.C.to learn more.
Call for a Free Initial Consultation
Contact our Collegeville, Pennsylvania, office today to discuss your bankruptcy or family law questions. You can reach us by toll free phone at 888-773-6714 or via e-mail. A lawyer will respond promptly to all phone calls and e-mails, usually within 24 hours.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
