The debtor passed the means test but lost a motion to dismiss for abuse of the bankruptcy system. Schedule J, the debtor’s projected future expenses, showed a monthly excess of $500. Dollars to doughnuts, the debtor’s bankruptcy lawyer followed the form and the budget provided by the client. Dismissal resulted. What happened here? Two [...]
Tag Archive: means test
Bankruptcy Dollar Amounts Changed April 1
Bankruptcy Code sections that reference a dollar amount, such as the threshold for a presumption of abuse on the means test or the cap on Chapter 13 debts, were adjusted effective April 1, 2010. This change occurs every three years and is tied to the Consumer Price Index. Here’s a table of the changes in [...]
Bankruptcy’s Means Test Doesn’t Apply to All
New bankruptcy lawyers sometimes forget in the flurry over getting the means test right that it only applies when the debts are primarily consumer. Primarily means over half in dollar amount. The code defines consumer debts in §101(8) as debt incurred for a personal, family or household purpose. You may be surprised by the kinds [...]
Taxes Owed from Day One
April 15th is so ingrained in our thinking as Tax Day that it’s easy to forget that the tax for the previous year is owed on the first day of the next tax year. Payment isn’t due til April 15th, but the obligation exists before the return and payment are due. Why is this important [...]
New Bankruptcy Lawyer: Meet Old Car Allowance
Bankruptcy courts have embraced an unwritten deduction for older cars for purposes of the means test. You won’t find this deduction in the official forms and I’ve had a hard time finding the text in the on- line Internal Revenue Manual, but the cases repeatedly cite Internal Revenue Manual 5.8.5.5.2 as authority for allowing debtors [...]