To return to the bankruptcy means test, the test can be extremely perplexing to the untrained eye and has been criticized by judges and attorneys in numerous states and bankruptcy cases. I suppose it seemed like a good idea when it was conceived.
One must realize that the means test is merely a financial formula that endeavors to predict whether you can afford to repay all or a portion of your debts. If you fell into this category of being able to repay your debts, you may be forced to file for Chapter 13 bankruptcy rather than Chapter 7 bankruptcy. Congress established the means test to determine which form of bankruptcy filing is appropriate for the debtor.
When Congress established the means test, they were attempting to create a uniform method that would require debtors with sufficient resources to repay a portion or all of their debts through a Chapter 13 payment plan. The test consists primarily of a comparison of income and expenses. In 1986, the bankruptcy law was amended to require bankruptcy filers to complete a form detailing their income and expenditures. Even though Congress amended the code by including a means test, they did not alter the previous test. The actual revenue and expenditures test projects your current income and household expenses into the future. This form takes a deeper look at a person's household budget.
The formula for the means test is comprised of the previous six months' income and a combination of expenses that may be limited by IRS allowances. With the addition of this and numerous other nuggets to the bankruptcy code, it has become imperative that individuals employ a bankruptcy attorney to assist them in navigating the code's complexity. The debtor can assist their bankruptcy attorney by providing all financial documentation, such as evidence of past and present income and a list of all household expenses. The bankruptcy code was drafted by attorneys, and it appears that attorneys are also required to comprehend it.
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