Why Congress Incorporated The Means Test To Bankruptcy
The US Bankruptcy Code was modified in 2005, and since then filing bankruptcy has taken on a fresh complexity that numerous people have a hard time comprehending. One of the major modifications that are challenging for numerous individuals to understand is the means test. Congress added the means test to bankruptcy law when it modified the code. They did this in order to put a halt on abusive bankruptcy filings. It is unclear if it truly was effective. Before the law came into effect, there were scores of people attempting to get their bankruptcy filing in before the deadline. In 2006, rates decreased significantly and it appeared to be effective. After that, the over inflated real estate market crash occurred, which nearly destroyed the economy. When this turbulent situation was made the unemployment rate spiked to over 10% throughout the country. Naturally, the rate of those filing for bankruptcy every year did not decrease. The reason is since the code was modified it has consistently risen to a rate of one and a half million bankruptcy filings in just the year 2010.
When it comes to the bankruptcy means test, the test can be extremely complicated for the average person and has been condemned by judges and attorneys across the nation and numerous bankruptcy cases. I assume it appeared like a fantastic concept when it was created. One has to comprehend that the means test is merely a financial formula that tries to predict if you are able to afford to pay off a few or all of your debts. If you are in the group that is able to pay your debts back, you can be put into the category of a Chapter 13 bankruptcy rather than the Chapter 7 bankruptcy you were attempting to file. Simply stated, Congress made the means test to determine what kind of bankruptcy filing is suitable for the debtor.
When Congress made the means test, they were trying to create a standard way that would make debtors that had the means to pay back a portion or all of their debts in a Chapter 13 bankruptcy payment option. Overall, the test involves an income versus expenses tests. What is humorous is an individual filing for bankruptcy is already required to submit an income and expenses form that is part of the bankruptcy law added in 1986. Although Congress altered the code with the addition of the means test, they still left the former test as it is. The actual income and expenses test takes into account your present salary and household expenses and projects them into the future. This form actually resembles an individual's household budget.
The formula used for the means test incorporates the last six months income in addition to a combination of expenses that may be capped because of IRS allowances. By adding this and several other bits and pieces to the bankruptcy code it has become a necessity for individuals to seek the help of the bankruptcy lawyer to assist them in understanding the code. The debtor can help by providing their bankruptcy lawyer with all the financial data as well as proof of past and current income and their household budget. Lawyers devised the bankruptcy code and it appears it needs to be comprehended by lawyers as well.
When it comes to the bankruptcy means test, the test can be extremely complicated for the average person and has been condemned by judges and attorneys across the nation and numerous bankruptcy cases. I assume it appeared like a fantastic concept when it was created. One has to comprehend that the means test is merely a financial formula that tries to predict if you are able to afford to pay off a few or all of your debts. If you are in the group that is able to pay your debts back, you can be put into the category of a Chapter 13 bankruptcy rather than the Chapter 7 bankruptcy you were attempting to file. Simply stated, Congress made the means test to determine what kind of bankruptcy filing is suitable for the debtor.
When Congress made the means test, they were trying to create a standard way that would make debtors that had the means to pay back a portion or all of their debts in a Chapter 13 bankruptcy payment option. Overall, the test involves an income versus expenses tests. What is humorous is an individual filing for bankruptcy is already required to submit an income and expenses form that is part of the bankruptcy law added in 1986. Although Congress altered the code with the addition of the means test, they still left the former test as it is. The actual income and expenses test takes into account your present salary and household expenses and projects them into the future. This form actually resembles an individual's household budget.
The formula used for the means test incorporates the last six months income in addition to a combination of expenses that may be capped because of IRS allowances. By adding this and several other bits and pieces to the bankruptcy code it has become a necessity for individuals to seek the help of the bankruptcy lawyer to assist them in understanding the code. The debtor can help by providing their bankruptcy lawyer with all the financial data as well as proof of past and current income and their household budget. Lawyers devised the bankruptcy code and it appears it needs to be comprehended by lawyers as well.
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