means test bankruptcy

means test bankruptcy

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPC), brought a few changes to the current U.S. bankruptcy law, but essentially the structure of the Act of 1978 remains unchanged.

The bankruptcy is a legal procedure that a person or company that can not pay their debts to protect, but also the protection of creditors. These judicial proceedings are:

 • Volunteers who by a citizen or a company is not in a position to pay his debts is initiated.
 • Involuntary: If the creditor to take action if they demonstrate the individual or business has debts of more than $ 5,000.


Once the application has been filed, the court will decide one of the following three ways:

Chapter 7 calls for liquidation, that the sale of the assets of the debtor and the procedure for Sales used to satisfy the claims of creditors. Excluded from this chapter are railways, banks, insurance companies or government entities. The law stipulates ensure that creditors have priority over unsecured creditors.

Chapter 11 calls for the reorganization that the citizens or if a company is given 120 days to present a reorganization plan that eliminated the factors that are causing the stress. This plan must be confirmed by the court will. In many cases, the plan works and the individual or business in bankruptcy is stronger and ready to return to their own function. Federated Department Stores; Macy's, Texaco, and some airlines are examples of the reorganization.

Chapter 13 calls for the repayment, that the individual or business must comply with the document a plan for the repayment of certain debt. This chapter applies to debtor with liabilities of less than $ 350,000 in secured debts and less than $ 100,000 in unsecured debt. The plan will be submitted to the court to specify the amounts and time periods during which It will take place. The court will normally three years but may be extended up to five years in some cases the time limit. To ensure that the plans goes smoothly, the court will appoint a trustee to receive the payments and satisfy creditors' claims in turn.

Changes in the 2005 Act

The new law prohibits filers with high incomes from using Chapter 7 Anyone whose "current monthly income" is more than and the median income in his State of the question. In addition, they take the "means test needs."
Another crucial change in the Act of 2005, rather than effects lawyers of the petitioners. Lawyers are now the responsibility for the accuracy of the information which has been available to customers made. Consequently, lawyers in a case-by-case basis, research must be done due diligence on their own customers, which means that they spend more time and resources in a case will. Needless to say, they have to levy higher fees.


The word "bank insolvency" means that something is broken. In medieval times the money-lenders and usurers would be so angry about the inability of their debtors to pay them back, that they break their banks would be on the backs of the poor souls "banca rota.

England had a civilized treatment of insolvent debtors People: prison. Mr. Micawber – that was arrested garrulous and good-natured character of David Charles Dickens 'Copperfield' Early one morning, and transferred King's Bench Prison in the city. "

In the U.S. we have a compassionate system of laws that protect the individual from the impossibility of Sometimes, paying debts. Our legal court prevented the abuse and the misery of the European system.

M. Guerrero

Retired Investment Banker, Corporate Controller, graduate of Columbia University, and Vietnam Vet (1967-1968).

To learn about more about writing techniques visit,

By the way, my personal blog contains many articles on accounting and many other subjects.


Taking the Mystery Out of the Means Test

Taking the Mystery Out of the Means Test

In bankruptcy, the user cannot choose which chapter (7 or 13) they would like to file. The type of chapter is dictated by comparing their annual income and family size with their states’ median income. If their income is higher than the state median, the user must file a chapter 13. If under, a chapter 7 is available. This e-book offers suggestions, tips and solutions on how to pass (file chapter…

Bankruptcy's a Bitch - Your Lawyer Shouldn't Be!: 22 Truths you need to know about filing bankruptcy - from someone who's been there!

Bankruptcy’s a Bitch – Your Lawyer Shouldn’t Be!: 22 Truths you need to know about filing bankruptcy – from someone who’s been there!


Are creditors hassling you? Does the financial hole you’ve dug yourself just seem to get deeper and deeper? Not sure what to do next? I know what you’re going through. As they say, I’ve been there – done that! When you decide it’s time to bite the bullet and take the steps necessary to cure your own situation, you need to educate yourself on the bankruptcy process. But beware! Your attor…

Best of ABI 2014: The Year in Consumer Bankruptcy

Best of ABI 2014: The Year in Consumer Bankruptcy


The best ABI Journal articles and selected papers from ABI’s top-rated educational seminars are compiled in this must-have reference, which covers the most important developments in consumer bankruptcy for 2014. This edition delves into such timely topics as student loans, family law and bankruptcy, individual chapter 11, chapter 13 and plan issues, housing and mortgages, ethics and much more, and…

Share and Enjoy:
  • Print
  • Digg
  • Sphinn
  • Facebook
  • Mixx
  • Google Bookmarks
  • Blogplay

Leave a comment

Your comment