The Means Test, included in the Bankruptcy Abuse Reform Act, or “BARF”, is a formula that determines whether you can really afford to cough up some cash for your creditors. If you fail the test, your only option is to repay a portion of your debts over a five-year Chapter 13 plan. Chances are, you probably wont have to take the test at all, provided you pass the median test. If your income for the six months preceding bankruptcy is less than the median income for your state, you’re home-free. The theory behind the test is that the people who earn more then the median income should not be able to simply walk away from their debts in Chapter 7 if they can pay a significant amount under a Chapter 13 repayment plan. The rules attempt to establish a one-size-fits-all formula for what constitutes income and how much of it you should be paying for your living expenses.
Your bankruptcy attorney Carmichael will take care of all the rules and details. You’re job is to organize your finances and provide your attorney the information she or he needs to perform all the necessary calculations. Keep in mind that the Means Test is aimed exclusively at consumers. It doesn’t apply at all to folks whose debts are not “primarily” consumer debts.
If you are having financial hardship and are considering filling for bankruptcy, please call bankruptcy attorney Carmichael at our office at (916) 971-8880 for a FREE confidential bankruptcy consultation.
Click here to fill out our FREE Confidential Bankruptcy Case Consultation form.
“We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”
Law Office of Robert W. Fong
Robert W. Fong
6825 Fair Oaks, Blvd., Suite 101
Carmichael, CA 95608
TEL: (916) 971-8880
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