The Bankruptcy Means Test – GA Lawyer

The Bankruptcy Means Test – GA Lawyer

Under the old bankruptcy law, almost any resident of the United States could choose to file either a Chapter 7 or Chapter 13 Bankruptcy. Debtors whose debts were mainly consumer debts were subject to scrutiny by the trustee or the Bankruptcy Judge to determine whether they had enough disposable income that allowed them to file for Chapter 7 Bankruptcy or if their filing is a substantial abuse. If they did have enough disposable income, the case could be dismissed or the debtor can convert to a Chapter 13 Bankruptcy.

The present bankruptcy law now includes a formula test, referred to as the bankruptcy means test, to determine who may and who may not be qualified to file for Chapter 7 Bankruptcy. The bankruptcy means test is applicable to people whose debts are primarily consumer debts like credit cards, car debt, or mortgages. Many people are forced into bankruptcy because of a failed business or a large business related judgment. Debtors with mainly business debts are exempt from the bankruptcy means test requirement and may file Chapter 7 bankruptcy regardless of their income and expenses. The bankruptcy means test evaluates the debtor’s income in comparison to the official median income for households in the Georgia as reported by the government in the most recent reporting year. The median income base grows with the size of your household.
Debtors having an income equal to or below the State of Georgia median income for families of the Debtor’s size are exempt from the bankruptcy means test requirements. Debtors with income above the Georgia State median income, there is a presumption of abuse on the part of the debtor, which the debtor has the burden of disproving.

The bankruptcy means test evaluates if your present monthly income from all sources is more or lower than the applicable median income. Current Monthly Income (CMI) is actually the average monthly gross income received during the six full months preceding or just before to your filing for bankruptcy. In the bankruptcy means test, your average income over the last six months is used, regardless of current actual income. CMI includes gross income from all sources such as income of a non-filing spouse, regular gifts or assistance from family members, and gross income from a wholly-owned business. CMI does not include social security.The bankruptcy means test will not stop a debtor from filing a bankruptcy; it will only help determine what chapter of bankruptcy must be filed.
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We are Augusta GA bankruptcy lawyers and bankruptcy attorneys in Augusta – Evans Georgia that assist their clients in filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy in Augusta GA.