In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).
BAPCPA heralded the introduction of the Means Test. The Means Test determines whether or not a repayment of debt is required by deducting specific allowable monthly expenses from your current monthly income. These allowable expenses are based on the Internal Revenue Service’s (IRS) financial standards used in collecting taxes. Current monthly income is an average of your past six months of gross income .
The use of Median Income as part of the Means Test to determine eligibility to file a Chapter 7 or Chapter 13 Bankruptcy came into play with BAPCPA. The IRS determines Median Income. It varies by family size and your state of legal residence.
Waiting Period Between Filings
BAPCPA changed the law to 8 years between Chapter 7 filings. If you were discharged from a Chapter 7 Bankruptcy less than 8 years ago, you can file a base plan Chapter 13. A base plan Chapter 13 would result in a repayment to creditors of approximately $100.00 a month for 36 months regardless of the amount of debt included in the bankruptcy.
The 2005 changes to the bankruptcy code require pre-filing Credit Counseling and pre-discharge Debtor Education. Yes, you do have to take a “course” but not in the sense that you have to go to class, study, or have any fear of failing. These “courses” are done online or over the phone with a nonprofit budget and credit counseling agency appointed by the United States Trustee’s Office. There are many credit counseling agencies.Remember, you cannot fail Credit Counseling or Debtor Education and your answers cannot prevent you from being eligible to file bankruptcy.
The changes are not a bar to you getting relief from debt and a fresh start through filing for bankruptcy.
The trustee will request your tax returns for the three years immediately prior to the year in which you are filing.
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