How to file bankruptcy – #16 of a series – The “presumption of abuse”

23 Mar How to file bankruptcy – #16 of a series – The “presumption of abuse”

Congress really knows how to paint a bulls-eye on your behind. If you can afford to pay something under a chapter 13 plan according to the means test, you are presumed to be abusing the system by trying to file a chapter 7 case – a straight bankruptcy.

Our friends who produced Form B 22 A made it easy as pie for you to figure this out. Right!

After you figure out your “current monthly income” simply deduct all your permitted allowances and expenses to figure out your “current monthly disposable income”. Multiply that out by the “applicable commitment period” of 60 months and see if it is more than $10,950 (adjusted from time to time by inflation). If so, you are presumptively abusing the system by trying to file a chapter 7 case.

But if you can pay less than $6,575, you’re not presumptively abusing the system.

In between, $6,575 and $10,950, you’re in never-never land. You need to figure out if you pass the secondary presumption.

Huh?

Well, as you can see, the means-test form is not for the faint-of heart. The likelihood of a non-attorney getting this right is about the same as the likelihood of me fixing my brakes from instructions in a how-to-do-it book. You might get all the pieces together but there’s a strong chance that it won’t be accurate or sufficient.

Lot’s of experienced attorneys need help with this. Let a real pro help you.

We’ll tackle the “secondary presumption” tomorrow. Stay tuned here on Bankruptcy Law Network.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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