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New Bankruptcy Laws - Test of Means

New Bankruptcy Laws - Test of Means
"In October 2005, new bankruptcy laws came into effect. Since then, laws have changed significantly. Particularly, if you intend to file under chapter 7, you must be aware of the two significant modifications. First, passing the means test is now required, and second, utilizing credit counseling services is required. It is crucial that you recognize that filing under distinct chapters is no longer optional. Certain eligibility requirements have been established by the new laws. Based on the outcome of the means test and your credit counselor's recommendations, the bankruptcy court will determine which chapter you should submit your case under. The means test is essentially an evaluation of your property, money, and other assets.

The Comparison Of Your Income To The Median Income In Your State

The means test provided by the new bankruptcy laws consists of two steps. The first section evaluates all assets and properties, while the second section compares your income to the monthly median income for your state. To determine your annual income, multiply your monthly income by twelve. Now, if the quantity is less than the state's median income, you are eligible to file for chapter 7 bankruptcy. Alternatively, if your annual income is greater than the median, you cannot petition for chapter 7 protection. You will be required to file a petition under chapter 13, and your income will be factored into a formula so that you can not only repay your debts but also regain financial control.

Formula for the Means Test

Here, it is essential to note that the means test formula does not take your entire monthly income into account. Only the quantity remaining after deducting necessary living expenses such as food and shelter is considered. If the court or trustee determines that you cannot pay even $100 per month, you may be granted immediate bankruptcy. Alternatively, if it is determined that you can pay at least $10,000 over a period of five years, your case will be considered under chapter 13. If the amount you can pay falls between $6,000 and $10,000, another mathematical calculation is used to determine the chapter under which you are eligible to register your case. According to the new bankruptcy laws, you cannot file for chapter 7 if you can pay at least 25 percent of your total unsecured obligations. Similarly, if you cannot pay even 25 percent of your unsecured obligations, you may be granted bankruptcy.""

" - https://www.affordablecebu.com/

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"New Bankruptcy Laws - Test of Means" was written by Mary under the Finance / Wealth category. It has been read 76 times and generated 0 comments. The article was created on and updated on 03 June 2023.
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