New Means Test Critera Goes Into Effect March 15, 2009This is a comprehensive, very complex series of calculations that the federal government designed to ascertain whether someone qualifies for Chapter 7 filing. Under the old bankruptcy law, almost anyone could seek to eliminate their debts by filing Chapter 7. The new laws changed that. Click here to take a look at the actual Means Test form [1].
The Means Test formula is designed to evaluate whether a debtor has the financial means to pay back a substantial portion of his or her debts. If the person does, then he or she may not be eligible to file Chapter 7 bankruptcy [2], and may instead have to file a payment plan bankruptcy under Chapter 13 [3]. If debtor’s income is below the New York State median income for a family of that particular size, then passing the Means Test is virtually automatic. If not, the debtor must have a sufficient amount of acceptable deductions permitted by the Means Test.
New Criteria – Great for Long Island Bankruptcy Cases
The new criteria, which is based on U.S. Census figures and I.R.S. tables, increases the median income for residents of the State of New York. It also increases the various Means Test deductions which will make it easier for Long Island residents to be eligible for Chapter 7 bankruptcy relief.
This will have the effect of enabling more Long Island consumers to qualify than before and get total debt relief.
In my Long Island bankruptcy law practice, I estimate that about 7 out of 8 clients now seeking to file for Chapter 7 bankruptcy relief do indeed qualify under the means test. I anticipate that this number will increase and that even more Long Island consumers will qualify for Chapter 7 bankruptcy when the new criteria is used.
Census Bureau Median Family Income By Family Size
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. |
FAMILY SIZE |
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1 |
2 |
3 |
4 |
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New York |
$46,523 |
$57,006 |
$67,991 |
$83,036 |
Add $6,900 for each individual in excess of 4.
