| |
|
|
1. Means Test for Chapter 7 Eligibility
The Trustee or any creditor can bring a motion
to dismiss under §707(b) if the debtor’s income is
greater than the state median income. Abuse is presumed if the
debtor’s currently monthly income (as determined by an
average of the previous 6 months) less secured payments divided
by 60, less priority debts divided by 60, less the allowed expenses
permitted by the IRS, less certain other allowed expenses, is
greater than $100 per month of a Chapter 13 plan. Debtors who
meet this new standard would be shifted to 5 year repayment
plan in Chapter 13.
If a debtor’s income falls below the state median, the
court may still find abuse but the creditors do not have the
standing to file the motion.
In determining whether the median threshold has been reached,
the law looks at the number of people in the debtor’s
household (which the census bureau defines to be all the people
occupying a dwelling unit) compared to census figures adjusted
by the CPI.
The presumption of abuse may only be rebutted by demonstrating
“Special circumstances that justify additional expenses
or adjustments of current monthly income.”
|
|
|
