Tag Archive: Bankruptcy Code


Filing for bankruptcy is a very ‘front-loaded’ process for most people – essentially the pre-filing period where all your information is gathered and analyzed by your attorneys is a lot of work (for you and us) and filing your petition itself is simply a couple of mouse-clicks on our end.  Now, that your petition has been filed, you know that your creditors’ meeting will be coming up soon, and that’s probably about all you know. 

Once your petition is filed, the bankruptcy court will mail out a notice of filing to all of your creditors.  This puts them on notice that you are protected by the federal bankruptcy laws from their efforts to collect, at least until further notice.  Your trustee will also mail something out, but not to your creditors – he or she will mail something to YOU. 

In preparation for your creditors meeting, the trustee assigned to your case will send you a letter, some kind of questionnaire and a request for documents.  It is your duty, under the bankruptcy code, to respond to the trustee’s requests.  If the trustee does not receive your response at least 10 days before your creditors meeting, he can dismiss your case or continue your creditors meeting, thereby delaying your discharge.  Most law firms, including Marco | Wimmer PLLC will assist you and guide you in this process, to make sure all t’s are crossed and all i’s are dotted.

The Trustee’s request will be your main project between your filing and your creditors meeting.  You may also want to go ahead and complete your financial management course during this time.  You don’t have to complete this course before your creditors meeting, but you can.  I typically recommend this, because then, once your creditors meeting is done, YOU are done and simply wait for the trustee to recommend your discharge and administer your assets, if there are any.

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In 2005, Congress amended the Bankruptcy Code to include what is now commonly referred as the means test.  The means test is the analysis that is required to determine whether a potential debtor qualifies for Chapter 7 relief or Chapter 13 relief, and even though it is called a test, it is not as simple as filling out a questionnaire to determine the result.

That said, don’t fill out an online means test – chances are the results are wrong, and it may mislead you into thinking no relief is available for you, or that you are qualified to file, when really you are not.  This post will discuss the three step system that the means test uses.

1.  The first step is to determine your income for the last 6 months.  That is all that is relevant…. it doesn’t matter if you made 200K in 2009, if you didn’t make any money in the last 6 months… It is backwards looking, but only to an extent.  The relevant time period is the 6 months prior to filing, not including the month that you are filing in.  So, if you were to file in February, we are looking at August 2009 through January 2010. Once your total gross income for the last 6 months has been determined, you multiply it by 2, to give you a yearly average.  Then you compare your yearly average with the median household income for a household of your size in the county you live in.  This number is determined by the IRS, and the most current listing can be found at http://www.justice.gov/ust/eo/bapcpa/meanstesting.htm

2. If you are under the median household income you qualify for relief under Chapter 7.  You can still file a Chapter 13, provided you have disposable income at the end of the month to make your plan payment, and, if you do go the Chapter 13 route, you have the option of making your plan only 3 years long (instead of the otherwise mandatory 5 years).  Now, typically this is not a problem, but you also need to review your current income and expenses – the expected future numbers so to speak:  If you have a lot of money left over at the end of the month, the US Trustee may argue that you have the ability to repay some of your debts, and your slam dunk 7 gets itself in some trouble.  Your attorney will review this numbers and check the likelihood of a problem for you BEFORE filing, so you know what is ahead.  In my experience, those with an income that is less than the median household income hardly ever run into that problem.  Nevertheless, I always check.

Now, if you are OVER the median household income for a household of your size, not all is lost.  The second step of the means test comes into play, and you may still qualify for Chapter 7.  More on that in my next post.