BAPCPA Refresher for Brooklyn ResidentsSaturday, April 18th, 2015, 2:20 pm
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was passed by Congress in 2005 with the goal to make it more difficult for debtors to file a Chapter 7 Bankruptcy, requiring them to instead file a Chapter 13 Bankruptcy.
To determine whether the debtor qualified for a Chapter 7 Bankruptcy – under which most debts are forgiven – Congress developed a Means Test Formula to discover if there is “presumption of abuse,” meaning the debtor is able to repay their creditors.
There are two main factors used in the Means Test Formula (MTF): Current Monthly Income (CMI), and Median Family Income (MFI). Current Monthly Income is the amount of income made per month during the six months prior to filing bankruptcy. Median Family Income is the median household income for the state in which the debtor lives.
If your Current Month Income is less than the Median Family Income for a family of your size in your state, you are able to file Chapter 7 Bankruptcy with no presumption of abuse, although you it may not always work in your favor. For example, a debtor could have recently lost a job, and therefore still have a CMI that is above the Median Family Income that raises a presumption of abuse. A Brooklyn Bankruptcy lawyer can help you determine the best time to file your Chapter 7 bankruptcy to avoid this.
The second test to determine if the bankruptcy filing is abusive is by examining the debtor’s disposable income. After taking all allowable deductions, if your available income is less than $117.91 per month, or $7,075.00 over 60 months, you can file Chapter 7 bankruptcy without presumption of abuse. The list of what can be deducted from the CMI can be a bit confusing, so a Brooklyn Bankruptcy lawyer can help you determine what is included in the allowable deductions.
For questions about The Bankruptcy Abuse Prevention and Consumer Protection Act and how it affects your qualifications for filing Chapter 7 bankruptcy, contact an expert Brooklyn bankruptcy attorney at Michael F. Kanzer & Associations P.C. We have helped hundreds of individuals discharge their debts by providing our clients with expert protection against Chapter 7, Chapter 11, Chapter 12, and Chapter 13 bankruptcy for more than a decade.
Category: Bankruptcy Law