Congress’ recent changes to the Bankruptcy Code, through the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, imposes novel income-related restrictions on individual consumer debtors seeking a Chapter 7 discharge. In the event you “flunk” the means test, you may: (1) demonstrate special circumstances entitling you to a Chapter 7 discharge despite the presumption of abuse; (2) convert your case to a Chapter 13 repayment plan; or (3) dismiss the petition entirely. The means test is also of particular importance in Chapter 13 cases in determining how much you are required to pay your unsecured creditors. Fortunately, we can accurately forecast whether a presumption of abuse will arise in your case after evaluating your financial condition at the initial consultation. We will, of course, require that you provide us with six (6) months worth of pay stubs so that we can fully determine your current monthly income under the Bankruptcy Code.

 

As you might expect, there are quite a few exceptions to the means test. One noteworthy exception is that the means test does not apply to individual debtors whose debts are not primarily consumer debts. For all intents and purposes, a debtor is considered a consumer debtor when at least fifty percent of all debts are consumer debts. A consumer debt is a debt incurred primarily for personal, family, or household purposes. Alternatively, business debts are primarily incurred in furtherance of a legitimate business pursuit.

Please call our office to schedule your free consultation so that we may evaluate your case to determine the full extent of relief available to you under the Bankruptcy Code.