INDIVIDUALS WITH ENOUGH INCOME TO FILE CHAPTER 13 MAY BE INELIGIBLE TO FILE CHAPTER 7. Certain individuals may no longer be eligible to file Chapter 7 under the new Bankruptcy Code if they earn sufficient income to make payments to Creditors under a Chapter 13 Plan. The purpose of the Means Test is to evaluate whether you have enough disposable income, after subtracting certain allowed expenses and required debt payments, to make payments to Creditors under a Chapter 13 Plan.
“CURRENT MONTHLY INCOME”. The first step in determining your eligibility to file Chapter 7 is to figure out your “Current Monthly Income”. Current Monthly Income is defined as the Debtors’ average monthly income from all sources during the 6-MONTH PERIOD prior to the date of commencement of the case. Current Monthly Income includes income paid by an entity on a regular basis for household expenses. Current Monthly Income excludes all social security benefits and compensation paid to victims of war crimes and domestic or international terrorism.
COMPARE YOUR CURRENT MONTHLY INCOME WITH THE MEDIAN INCOME IN YOUR STATE. Once you’ve calculated your Current Monthly Income, multiply it by 12 and compare it to the median income for your state. You can find median income tables, by state and family size, at the website of the United States Trustee at www.usdoj.gov/ust. Select “Means Testing Information” on this site.
PERFORMING THE MEANS TEST – SUBTRACT CERTAIN EXPENSES FROM CURRENT MONTHLY INCOME. To ascertain whether you will pass the Means Test and qualify to file Chapter 7, subtract the following expenses from your Current Monthly Income:
SCORING THE MEANS TEST. If your total income, after subtracting the above items, is less than $100, you pass the Means Test, and you will be allowed to file for Chapter 7. If your total remaining monthly disposable income is more than $167, you have flunked the Means Test and you will be prohibited from filing Chapter 7 but not Chapter 13. If your remaining monthly disposable income is between $100 and $167 and is sufficient to pay more than 25% of your unsecured, nonpriority debts (credit card bills, student loans, medical bills, etc.) over a five-year period, you flunk the Means Test. If not, you pass the Means Test and Chapter 7 is an option.
II. DOCUMENT PRODUCTION REQUIREMENTS
SECTION 521(a)(1)(B) PRODUCTION REQUIREMENTS. Debtors filing bankruptcy under the new laws much file the following documents at the time they initiate their bankruptcy case:
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CREDIT COUNSELING REQUIRED. An individual cannot file Chapter 7, 11 or 13 unless he or she has received individual or group credit counseling (including telephone or internet) during the 180-day period preceding the date of filing bankruptcy. [Section 109(h)] Individuals must receive such counseling from certain approved, non-profit budget and credit counseling agencies. The clerk of the Bankruptcy Court maintains a list of approved credit counseling agencies which are authorized to offer the required pre-bankruptcy credit counseling in the State of Utah. At the present time, none of the approved agencies have offices within the State of Utah, and their services are available only by telephone or internet. The fee presently being charged for this credit counseling is between $30 and $50 which individuals must pay.
The credit counseling agencies are required to perform two tasks:
Note that there is no requirement that individuals attempt a debt repayment plan outside of bankruptcy; but only that the agency outline opportunities for such and perform a budget analysis.
Prior to filing their bankruptcy case, individuals must file with the court a certificate from the credit counseling agency that describes the services provided and a copy of a debt repayment plan, if one was created.
FINANCIAL MANAGEMENT COURSE IS ALSO MANDATORY. In addition to credit counseling, all debtors must complete a financial management instructional course within 180 days AFTER they initiate their bankruptcy case. Unless debtors participate in such a course, their debts will not be discharged (eliminated) in bankruptcy. The clerk also has a list of approved financial management instructional courses.
For more information to see if you qualify, contact the Midvale Chapter 7 Bankruptcy Attorneys at Huntsman | Lofgran | Walton pllc. Call us at 801-474-0031 today or contact us online to arrange for a free initial consultation
NO INFORMATION CONTAINED HEREIN IS INTENDED TO CONSTITUTE LEGAL ADVICE, AND IS NOT APPLICABLE TO ANY SPECIFIC SET OF FACTS, ESPECIALLY AS TO ANY INDIVIDUAL’S PERSONAL SITUATION. THE INFORMATION CONTAINED HEREIN NOR THE PERUSAL OF IT DOES NOT ESTABLISH NOR CONSTITUTE AN ATTORNEY-CLIENT RELATIONSHIP WITH HUNTSMAN LOFGREN & ASSOC. OR ANY OF ITS ATTORNEYS. THE INFORMATION SET FORTH ABOVE IS BASED ON NEW BANKRUPTCY LAWS WHICH BECAME EFFECTIVE OCTOBER 17, 2005 KNOWN AS THE BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005 (BAPCPA). BECAUSE OF THE COMPLEXITY OF THE NEW LAWS, PLEASE REFER TO THE ACTUAL BANKRUPTCY CODE AND RULES AND/OR CONSULT WITH A BANKRUPTCY PROFESSIONAL TO EVALUATE THE APPLICATION OF THE ABOVE INFORMATION TO YOUR SPECIFIC SITUATION.
The law offices of Huntsman | Lofgran | Walton pllc, designated a debt relief agency by an Act of Congress and the President of the United States, has proudly assisted consumers seeking relieve under the U.S. Bankrutpcy Code for over 12 years.