A local bankruptcy attorney stumbled over the most basic part of the means test. Just this week... nearly 15 years after the bankruptcy "reform" act of 2005. I thought we were several years past bankruptcy attorneys clueless about the means test. But apparently not. This fine fellow told a couple that they couldn't file Chapter 7 because they had $3000 of disposable income per month. Their case would be an abuse of Chapter 7, under the law. Only he never apparently considered whether their debts were "primarily consumer debts". He forgot the gotcha baked into the means test: it only applies to ***consumers.*** Only consumers have to prove they are worthy of the Chapter 7 discharge. Folks with primarily business debts or, drumroll, taxes, aren't subject to the means test. So, lots of disposable income is not a bar to Chapter 7 when the debts are primarily taxes. Let's review. Who takes the means test So, just why are some above median income families … [Continue reading...]
