Bankruptcy Means Test – under the old bankruptcy rules, you could choose to file either a chapter 7 or a chapter 13 bankruptcy and it’s not surprising that most chose chapter 7. The new laws take the right to choose which Chapter of Bankruptcy to file away from some filers and require each to pass the bankruptcy means test.
The goal of the bankruptcy means test is to force people who can pay back some of their debts over time to file a chapter 13. If the information you provide the bankruptcy court shows that your income exceeds the Georgia state median and you can pay more than 25% of your debts over a five year period, your chapter 7 filing will likely be presumed to be abusive and you have failed the bankruptcy means test.
However, if you can show to the U.S. Trustee that the presumption of abuse should be set aside because of a special circumstance, you may be able to proceed under a chapter 7 even if you have failed the means test. The means test is complicated and you should seek out an attorney to explore how it would apply to you. Many items are not included in the bankruptcy means test and if most of your debts are business debts, it does not even apply to you.
Additionally, the law provides for a temporary exclusion from taking the means test for National Guard members who were called to active duty after September 11, 2001. The exclusion period lasts for 540 days after the 90-day active duty.
The bankruptcy means test is very specific and it is best to consult with an experienced bankruptcy attorney to see if the “presumption arises” in your case. For more information about the bankruptcy means test contact the Remboldt Law Firm, LLC for a free consultation.