No More. Since the passage of the The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, or “BAPCPA” for short, there is another step involved in qualifying for Chapter 7 Bankruptcy, the dreaded Means Test. The Means Test is an income qualification for those wishing to file Chapter 7 Bankruptcy. This forces some individuals to file Chapter 13 Bankruptcy instead, and pay off a portion of their debts through a Bankruptcy Court sponsored repayment plan.
Unlike before BAPCPA where an individual of some means could qualify for Chapter 7 Bankruptcy, if he or she had enough debts; now, an individual must demonstrate that their income falls below the median income for the state in which they reside. In addition, if the individual's income is a little higher than the median income for their state, BAPCPA allows for other deductions from the individual's income, like mortgage payments, vehicle payments, taxes, child care, etc., to bring the individuals below median and qualify him or her for Chapter 7 Bankruptcy. Although this can get very complicated in practice, a knowledgeable bankruptcy attorney, like those at Croke & Croke, can get many people qualified.
For those who do not qualify for Chapter 7 Bankruptcy under BAPCPA, the Bankruptcy Code allows these people to file a Chapter 13 Bankruptcy and repay a small portion of their debts over a 5 year repayment plan. Although Chapter 13 Bankruptcy is not always an individual's first choice, it can put an end to creditor harassment, suits, and growing debt, and it can give a fresh start. Chapter 13 Bankruptcy can also deal with more kinds of debts than Chapter 7 Bankruptcy, so for some people, it can be better than Chapter 7 Bankruptcy.
Ultimately, the Means Test can be a complicated legal process that requires a knowledgeable attorney to help guide you through the process. Contact Croke & Croke, S.C. today to see what kind of bankruptcy you qualify for.