What is the Means Test in the 2005 law?
A. The Means Test is a review and analysis of the income and expenses of the Debtor. It is used when the Debtor wants to file under Chapter 7 and liquidate (wipe out) the debts. Under the 2005 law, if the Means Test shows that the income less the expenses is above a specified level considering the state of residence, the family size, and other factors, the person will not be permitted to use chapter 7 but must file under Chapter 13. In a Chapter 13 bankruptcy, the Debtor agrees to a plan to pay off most of the debts according to a schedule. The debts are not wiped out but might be reduced and paid off entirely or partly. A Chapter 13 payoff plan might last for several years. This is a brief and general summary of the Means Test and its affect on Debtors. An attorney can give the details applicanble to a specific debtor.
