Bankruptcy Means Test

The most recent changes to the United States Bankruptcy code was the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 passed in April of 2005 and became effective in October of 2005. Among its many changes were a "means test.

The Bankruptcy Means Test is a 2005 addition to bankruptcy law. Created as a way of disqualifying petitions for Chapter 7 bankruptcy protection, the bankruptcy means test takes into consideration a lot of complex factors to force more people into a Chapter 13 than Chapter 7. The creditors' lobby loves the bankruptcy means test, because it means they get paid more, and more often than they used to. First, the bankruptcy means test measures your income against median income in the area. If you earn below the median income, there is a better chance the Chapter 7 will work. However, if your income is higher than the median, the bankruptcy means test becomes much more challenging. Using the bankruptcy means test, and a couple of other forms and formulae, the court will calculate your disposable income. This is done by mixing fixed expenses and estimates for variable other expenses.

Machi & Associates, P.C.
Principle office located in Arlington, Texas.

^*Ted Machi, Board Certified Consumer Bankruptcy Law, Texas Board of Legal Specialization. Barry Johnson, Board Certified Personal Trial Injury Trial Law, Texas Board of Legal Specialization. *Barry Johnson, Board Certified Criminal Law, Texas Board of Legal Specialization. All Other Attorneys Not Certified By The Texas Board of Legal Specialization.

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