How will the new bankruptcy means test affect you?
If you've been considering bankruptcy and have paid attention to some of the changes that have taken place recently, you may be wondering if you qualify. Some people seem to think that bankruptcy has disappeared as a option for gaining control over your debt.
Bankruptcy is still a viable option, but there are some new rules that you should be aware of. The biggest change in the bankruptcy law is something called the means test.
Many lawyers and consumers alike have questioned the recent law, stating that it is bad for consumers and only makes things more difficult for people who really need financial help. Nevertheless, the law was passed in 2005 as a result of pressure from the credit industry.
Essentially, this law tries to make it more difficult for someone to file for bankruptcy, specifically chapter seven bankruptcy where most of your debts are completely wiped out. The new law was passed in 2005, and one of the main provisions was the means test. This test tries to determine whether or not you can actually pay your debts.
Simply put, the means test tries to determine whether you make too much money (or have too few expenses) to qualify for bankruptcy. If your annual salary is unusually low when compared to other salaries in your state, then the means test does not even apply to you.
If your income is higher, however, you'll have to go through the annoying process of calculating all of your income and expenses. Based on this, the court will determine whether you can afford to pay both your necessary expenses and your consumer debt.
If you fail to qualify under the means test, you'll probably be given a payment plan under chapter 13 bankruptcy instead of simply wiping out your debt.
The good news is that many people will still qualify for bankruptcy, even though the process itself has become more complex. You simply need to have good legal advice to guide you through the difficult maze.
Bankruptcy is still a viable option, but there are some new rules that you should be aware of. The biggest change in the bankruptcy law is something called the means test.
Many lawyers and consumers alike have questioned the recent law, stating that it is bad for consumers and only makes things more difficult for people who really need financial help. Nevertheless, the law was passed in 2005 as a result of pressure from the credit industry.
Essentially, this law tries to make it more difficult for someone to file for bankruptcy, specifically chapter seven bankruptcy where most of your debts are completely wiped out. The new law was passed in 2005, and one of the main provisions was the means test. This test tries to determine whether or not you can actually pay your debts.
Simply put, the means test tries to determine whether you make too much money (or have too few expenses) to qualify for bankruptcy. If your annual salary is unusually low when compared to other salaries in your state, then the means test does not even apply to you.
If your income is higher, however, you'll have to go through the annoying process of calculating all of your income and expenses. Based on this, the court will determine whether you can afford to pay both your necessary expenses and your consumer debt.
If you fail to qualify under the means test, you'll probably be given a payment plan under chapter 13 bankruptcy instead of simply wiping out your debt.
The good news is that many people will still qualify for bankruptcy, even though the process itself has become more complex. You simply need to have good legal advice to guide you through the difficult maze.
About the Author:
Don't let the fear of your debt take over your life. Get the facts about bankruptcy and learn how to get control of your debt. To learn more about filing bankruptcy in Texas visit us at http://personalbankruptcyquestions.org
posted by Debt Consolidation Loan at
1:50 PM
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