Chapter 7 Bankruptcy Median Income Plays A Key Role
Getting a bankruptcy declaration has always been a rather complicated task. You would have to make sure that a number of factors are satisfied. One of these factors is Chapter 7 bankruptcy median income. It is one of the paramount factors and you are not able satisfy this condition, you can not be allowed to proceed with a Chapter 7 bankruptcy.
In the year 2005, President Bush's administration put the Bankruptcy Abuse Prevention and Consumer Protection Act in effect. This has been one of the most important legislation in the recent times. It took a lot of effort by banking and financial institutions to put this law in force. The key change which was introduced by this law is that a new Means test has to be administered. With the introduction of this test, it is not possible for people with considerable sources of income to get a Chapter 7 bankruptcy.
The debtor would be required to repay a part of the loan. The problem is that a number of people have developed a misconception that to get a Chapter 7 bankruptcy, you would have to be completely broke.
The fact is that you need not be completely broke for such a thing. It is possible to have a lot of money coming to you every month yet you can be eligible to get a Chapter 7 bankruptcy. In fact most of the people who would have qualified for a Chapter 7 bankruptcy prior to the changes in the law in 2005 are still eligible to get a Chapter 7 bankruptcy. The primary purpose of the new law is to regulate the tendency of people to indiscriminately apply for Chapter 7 bankruptcy. The process of means test is where your Chapter 7 bankruptcy median income comes into picture. It is used to determine if you are able to pay off the debts or not. The determination requires that you should have a fixed degree of disposal income. For this all your sources of income would be taken into account. The current monthly income is considered here and the current monthly income is takes as the average income six months prior to you filing for bankruptcy. Your essential monthly expenses would be deducted from this amount. What remains is your disposable income. Where the disposable income is lower than the state average median you would be allowed to proceed to the credit counseling stage. In the reverse case you would have to file for a Chapter 13 bankruptcy. Keep in mind that if you are not able to get it through the Chapter 7 Bankruptcy Median Income part, it is not all over. There are still options and alternatives. The best course is to get advice about the option that you have about your debts.
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