If you are like millions of others, these tough economic times may have hit your card. You may be wondering, can filing bankruptcy help?
While it is difficult to find free bankruptcy help and there is no substitution for good legal advice, this post will help you understand the new bankruptcy laws and how they might impact your ability to file.
The “new” bankruptcy laws really aren’t so new any more. They have been around since October of 2005, when the Bankruptcy Abuse Prevention and Consumer Protection Act went in to effect.
The intent of the law was to make it more difficult for people with high incomes to file Chapter 7, making filing Chapter 13 the only viable income.
The new laws state that if the debtor earns more than the median in the state in which they reside, they are subject to a means test. (If your income is below the median, the means test does not apply to you. You can be in violation of the means test and still file without issue.) In addition to being subject to the means test, any person
Only those who pass the means test will qualify for bankruptcy help. If a Chapter 7 is filed by an individual with “primarily consumer debt” and does not pass the means test, their case may be dismissed or converted to a Chapter 13.
The fist step of the means test is to calculate current income. For these purposes, current income is considered an average during the six months prior to the bankruptcy filing.
Once your current income is calculated this amount is reduced by allowed living expenses specified from the IRS (regardless of your actual true expenses) and the actual cost of certain items such as disability insurance, health insurance and health savings accounts. Additional reductions to your income will be made for family violence protection, continued contributions to the care of a nondependent family member, up to $1500 annually per minor child for expenses related to education and home energy costs. Once these deductions are made, 1/60th of all secured and priority debt that will become due in the next five years is calculated and deducted from your income.
You fail the means test and can not seek Chapter 7 bankruptcy help if once these calculations are made you have either $166.67 in monthly income available after the deductions regardless of the about of debt you currently have or $100 remaining but this would be enough to pay your unsecured creditors at least 25% of what you owe them over the next five years.
So, as you ask your self “Can bankruptcy help me get back on my feet?” you must first consider the new bankruptcy laws and how they will impact your situation.
By the way, if you would like after bankruptcy help repairing your credit, don’t forget to check out Credit Repair College’s video training course on credit repair. We can help you with credit repair after bankruptcy. To get more information, click on the “Claim My FREE CD button” on your Right!
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