Back in 2005, the Bankruptcy Abuse Prevention Consumer Protection Act was passed, which made a few significant changes to the laws related to bankruptcy in the U.S. The BAPCPA affected both business and consumer bankruptcies because it created a new way to determine who is able to repay the debt they owe and what type of bankruptcy they are allowed to file.
Today, anyone who wants to file bankruptcy has to first take the bankruptcy means test. This is an income-based test that evaluates the financial situation of the person to see if they qualify to file Chapter 7 or 13 bankruptcy. It is a good idea to hire a Bankruptcy Lawyer in Cincinnati OH for help at the very beginning of this process.
Means Test Considerations
The means test was created to help limit the Chapter 7 bankruptcy option to only those businesses and individuals who really needed it. The test analyzes a person’s monthly income as well as their disposable income to determine if they have the ability to repay their debt.
Monthly Income Considerations
When looking at monthly income, the test compares a person’s to the median income for their state. If the person makes less than the median, they can file Chapter 7 bankruptcy. If their income is more than this number, the test looks at the person’s disposable income to figure out if they can repay their debt.
Disposable Income Considerations
A person’s disposable income includes any funds that remain after paying all their monthly expenses. If they don’t have enough disposable income for making any payments for their debt, which is determined by the means test, the debtor can move forward with the Chapter 7 filing. However, those who do have the funds to make payments will likely have to file a Chapter 13 bankruptcy.
Having the services of a Bankruptcy Lawyer in Cincinnati OH to help with the means test can be beneficial since there are parts that can be confusing. Also, it is imperative not to make a mistake, since this is the test that determines the type of bankruptcy a person can file. Visit Dean Snyder Attorney At Law to learn more about the means test and filing for bankruptcy.
