| BANKRUPTCY REFORM ACT IS LAW |
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed into law by President Bush on April 20, 2005. The law went into effect on October 17, 2005.
MEANS TEST
The largest impact of the law is on people whose income is more than the median for the state. Median = the middle value in a distribution, above and below which lie an equal number of value. If your currently monthly income is more than the median for the state, you may have to file a five year Chapter 13 repayment bankruptcy.
The U.S. Census Bureau has the median income by family size by state listed on their website: www.census.gov
If your income is less than the median OR you do not have $100 per month to pay toward repaying your bills you MAY still be able to file Chapter 7 bankruptcy. Monthly income - Monthly living expenses = Money to pay toward bills
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IRS DETERMINES REASONABLE LIVING EXPENSES
When calculating the "Means Test" the Internal Revenue Service (IRS) will determine what are reasonable living expenses.
The IRS will determine what is a reasonable rent or mortgage payment. The IRS will determine how much food, clothing and other items are reasonable for a family to consume in a month. It is unimportant what you actually spend on these items per month. The bottom line is, if you have above the median income, you will probably have to file a Chapter 13.
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WESTERN DISTRICT OF MISSOURI - BANKRUPTCY COURT
The Western District of Missouri Bankruptcy Court has page on their website devoted to information about implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. You can access the page by going to http://www.mow.uscourts.gov
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