What is The Bankruptcy Means Test?
One of the most significant changes in the 2005 Bankruptcy Code amendments is the addition of a Means Test. The Means Test was implemented as a method to eliminate bad faith filing of Chapter 7 bankruptcy cases. Prior to the amendments, the Bankruptcy Code did not prohibit someone with disposable income from filing a Chapter 7, except in extreme cases.
It is now considered bad faith if someone files a Chapter 7 where he/she/they would have the ability to pay at least 25% of their unsecured debt over 5 years. The Means Test incorporates local and national standards for income and expenses to determine whether a presumption of bad faith would arise if a debtor choses to file a Chapter 7. If the presumption exists, then that debtor would be required to file a Chapter 13 bankruptcy.
For additional information or to discuss your specific case, please contact our Miami law firm to schedule an appointment.
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