When Congress passed the ‘new’ bankruptcy law in 2005, it included a provision that Debtors must prepare and file what is called the Means Test.   It looks at all of your income from every source except Social Security benefits.  If your income exceeds a certain amount (less allowed expenses) a presumption arises and you are not [...]

The “means test” is complicated and, as is much of the new bankruptcy law, is interpreted in wildly different ways throughout the country.  Don’t try to take the test on your own.
The means test has been justifiably criticized since the new bankruptcy law (”BAPCPA”) went into effect in 2005.  In fact, the means test may well [...]

The most common form of consumer bankruptcy, a Chapter 7 filing, takes about 90 days to complete.  For each case filed, the court assigns a trustee and schedules a date for a meeting of creditors.  This meeting occurs about 30 days into the process.   (And it does NOT take place in a courtroom.)
At the meeting of creditors, the bankruptcy trustee [...]

The U.S. Court of Appeals for the First Circuit today affirmed in re Rudler, a case in which both the Bankruptcy Court and the Bankruptcy Appellate Panel for the First Circuit allowed a means test deduction for a car payment when then car was being surrendering in the course of the bankruptcy case. The [...]

If you decide to file bankruptcy, you must first calculate your “current monthly income.”  Current monthly income (“CMI”) is a highly artificial number that can have big implications on whether you are allowed a Chapter 7 discharge or how much you must pay to your creditors in Chapter 13. Calculating CMI also requires your attorney to [...]

The chorus is growing — two more appeals courts have ruled that the bankruptcy “means test” (also known as Form B22C) doesn’t establish how much a chapter 13 debtor needs to pay each month into the plan.  Instead, both the Fifth and Seventh Circuit Court of Appeals recently said that the means test only provides a “starting [...]

According to the Eighth Circuit Bankruptcy Appellate Panel, a bankruptcy debtor cannot lose social security benefit payments in a bankruptcy case, even the money is paid as a $17,165 lump sum for past benefits.  In re Carpenter, No. 08-6046 (8th Cir. BAP July 13, 2009), held that section 407 of the Social Security Act excludes such [...]

A few days ago, I wrote Part I of a series entitled Bankruptcy and the MLM Distributor.  In that post I described my typical MLM distributor as an entrepreneurial, motivated businessperson who worked full time on his MLM business and ran into debt problems because of a sudden or unexpected change in his compensation plan, [...]

Over the past couple of years I have met with several potential clients who were in the MLM (multi-level-marketing) business and were looking to file (Chapter 7) bankruptcy.   Recently I spent a good 45 minutes on the phone with another potential client in the MLM business and this conversation got me thinking about the issues [...]

The 2005 amendments to the bankruptcy code created a new “Means Test.” The main purpose of this test is to a) determine if an individual is eligible to file a Chapter 7 bankruptcy and b) to determine the disposable income of a Chapter 13 debtor who is above the median income.
In order to determine [...]