The means test was added to the bankruptcy process by BAPCPA in 2005 to make it more difficult for some consumers to file Chapter 7 Bankruptcy. Those people with an ability to repay the debts must file a Chapter 13 Bankruptcy instead.
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Kansas city Law Firm, Jeppson Law, Explains
The Means Test And Chapters 7 & 13
Here is an explanation of the
decision between Chapters 7
and 13: First, split all of the
debt between 2 buckets.
Bucket 1 is the debt that
debtors are going to keep
paying.
Most taxes, child support
arrears and secured debts
such as mortgages and car
loans for property that they
want to keep will go into
bucket 1.
Bucket 2 is all of the stuff
they don't want to and
don't have to pay.
Bucket 2 also contains the
secured debt for vehicles that
are being surrendered as
part of the bankruptcy.
Bucket 1 is stuff that they
will continue paying, Bucket
2 is everything else.
Chapter 7 dumps out
bucket 2 and lets debtors
deal with bucket 1 on their
own.
It is faster, easier and
cheaper but doesn't help
with any of their bucket 1
debt.
Chapter 13 allows the set up of
a payment plan to pay off the
debts or arrearages in bucket 1
and only as much as they can
afford to pay of the debts in
bucket 2.
Any bucket 2 debts that they
can't afford to pay over the life
of the Chapter 13 payment plan
gets dumped out just like it
would have in a Chapter 7.
Find Out More At
https://www.jeppsonla
woffice.com/
The Means Test And Chapters 7 & 13
Here is an explanation of the
decision between Chapters 7
and 13: First, split all of the
debt between 2 buckets.
Bucket 1 is the debt that
debtors are going to keep
paying.
Most taxes, child support
arrears and secured debts
such as mortgages and car
loans for property that they
want to keep will go into
bucket 1.
Bucket 2 is all of the stuff
they don't want to and
don't have to pay.
Bucket 2 also contains the
secured debt for vehicles that
are being surrendered as
part of the bankruptcy.
Bucket 1 is stuff that they
will continue paying, Bucket
2 is everything else.
Chapter 7 dumps out
bucket 2 and lets debtors
deal with bucket 1 on their
own.
It is faster, easier and
cheaper but doesn't help
with any of their bucket 1
debt.
Chapter 13 allows the set up of
a payment plan to pay off the
debts or arrearages in bucket 1
and only as much as they can
afford to pay of the debts in
bucket 2.
Any bucket 2 debts that they
can't afford to pay over the life
of the Chapter 13 payment plan
gets dumped out just like it
would have in a Chapter 7.
Find Out More At
https://www.jeppsonla
woffice.com/