by Shakeal Masoud, Attorney at Law
The goal of the means test is to prevent abuse of the bankruptcy process by individuals who can actually repay creditors through a Chapter 13 reorganization plan. There is a debate by bankruptcy attorneys nationwide as to why this has not worked. Nonetheless, the means test is a requirement to determine if a debtor qualifies for liquidation under Chapter 7 bankruptcy, or a reorganization of debts through a Chapter 13 plan.
The first part of the means test looks at the debtors income six months prior to filing the bankruptcy. If the debtor’s income is less than the state median income, they qualify for Chapter 7 bankruptcy.
If the debtor makes more than state’s median income than the second part of the means test is necessary to complete. If after deducting expenses, the debtors disposable income is high enough to pay unsecured creditors than the debtor can pay through a Chapter 13 reorganization plan.
If you have any questions regarding the means test contact an experienced bankruptcy lawyer at Sky Law Group today!
Tagged as:
Chapter 13 bankruptcy,
Chapter 7 bankruptcy,
Income,
Los Angeles Bankruptcy Lawyer,
Means Test,
Sky Law Group
by Shakeal Masoud, Attorney at Law
The means test is one of the new requirements under BAPCPA for an individual filing bankruptcy. The intent of the means test is to prevent abuse of the bankruptcy system. The means test is determined based on an individuals income and expenses. If a debtor does not qualify under the means test for a Chapter 7 bankruptcy filing, than most debtors typically file a Chapter 13 bankruptcy. Debtors might be aware of the means test, but very few understand what exactly is involved with each step.
We will discuss the means test, step by step, in our upcoming posts so you get a better understanding of the mechanics behind the test.
If you have questions regarding the means test, contact an experienced Los Angeles bankruptcy lawyer at Sky Law Group today!
Tagged as:
Bankruptcy,
Chapter 13 bankruptcy,
Chapter 7 bankruptcy,
Los Angeles Bankruptcy Lawyer,
Means Test,
Sky Law Group
by Shakeal Masoud, Attorney at Law
If you have filed for Chapter 13 bankruptcy you might quickly assume that you must stop making charitable contributions to your local church. However, this is simply not true. The means test allows or accounts for your monthly charitable contributions but be prepared to provide adequate proof as the trustee will want to make sure you are indeed making the contributions on a regular basis. Similarly, in filing a Chapter 7 bankruptcy the means test allows the debtor to list his or her charitable contributions.
Often, clients remind me that the contributions they make are in the form of cash and there is no way for the church to accurately inform the trustee of the actual charitable contribution that is given. However, the burden of proof is on the debtor to make sure that all charitable contributions are accounted for and properly recorded.
From a bankruptcy perspective, it’s important to require the institution that you are contributing to on a daily, weekly or monthly basis to give you a receipt for the donations made. By providing proof that you are actually donating and have a record of doing so will go a long way in establishing your charitable contribution with the Chapter 13 trustee.
Thus, if you are considering filing for bankruptcy protection don’t automatically assume that you have to stop donating to your favorite charity or religious institution. Nonetheless, be prepared to provide proof that your contributions are actually being made.
Contact an experienced bankruptcy lawyer to discuss your bankruptcy at Sky Law Group today.
Tagged as:
Chapter 13,
Chapter 7,
Charity,
Donations,
Means Test,
Sky Law Group
The goal of the means test is to prevent abuse of the bankruptcy process by individuals who can actually repay creditors through a Chapter 13 reorganization plan. There is a debate by bankruptcy attorneys nationwide as to why this has not worked. Nonetheless, the means test is a requirement to determine if a debtor qualifies for liquidation under Chapter 7 bankruptcy, or a reorganization of debts through a Chapter 13 plan.
