means test Tag

27 Nov Chapter 7 Car Expenses Without A Loan Allowed In Connecticut

A Connecticut Bankruptcy Judge has recognized that a person in Chapter 7 may deduct car expenses on the Means Test even if there is no car loan without triggering a presumption of abuse in Bankruptcy. Now there's a mouthful, but what does it mean?

The Means Test was devised by the credit industry to 'catch' consumers filing Chapter 7 bankruptcy when they could otherwise 'pay' at least some of their debts in a Chapter 13 case. Congress adopted the process of keeping consumers as slaves to their debt. One long-standing assumption of that means test calculation was that car expenses could only be deducted from income if there was a car loan. That is no longer the case in Connecticut.

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15 Nov Official Bankruptcy Secret

Bankruptcy has an official secrets law and it is contained in section 526 of the bankruptcy code. A lawyer can not advise a client to take out a new loan before filing bankruptcy. The Bankruptcy Abuse and Consumer Protection Act of 2005 includes this rule and I am going to break it legally. Why would someone want to borrow money before filing bankruptcy? There are some obvious reasons. The first reason would be to pay for the bankruptcy itself. The money has to come from somewhere to pay the expenses involved in filing a bankruptcy.
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26 Oct Should My Schedule I Income Always Match my Means Test Income Numbers?

Although it has been in effect for several years, the median income/means test provisions of the Bankruptcy Code continue to confuse potential bankruptcy filers. In my Atlanta, Georgia bankruptcy practice, I regularly get questions from new clients about the two "budgets" that are filed in Chapter 7 and Chapter 13 cases. The first "budget" is the median income/means test budget. The income side of this budget is a calculated figure that arises from a month by month analysis of the gross pay of income earners in a household for the six months preceding the monthly of filing. The second budget is what I call the "real life" budget that reflects the debtor's current income and expense situation. In my view the "means test budget" is not intended to actually function as a budget. Instead, taken as a whole, the means test is a qualification test to point you to either a Chapter 7 or a Chapter 13.
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