In Chapter 7 cases, if you have little or no income, you may apply for a waiver of your court fees. The court will take into account your income and expenses when granting or denying your waiver. Unless you receive a waiver, the court will dismiss your case if you fail to pay the required filing fees.
What is an abusive bankruptcy petition?
If, after deducting all allowable expenses from the total income, your disposable income is less than the amount described by the Bankruptcy Code, your petition will not be considered abusive. If it exceeds the described amount, your petition will be presumed abusive.
When was the means test and presumption of abuse introduced in the Bankruptcy Code?
2005
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) introduced a means test to determine whether the bankruptcy petitioner filing for Chapter 7 is presumed abusive.
What is your current monthly income?
What’s Considered Your Current Monthly Income? For the means test purposes, your current monthly income (CMI) is the average monthly income you receive from all sources during the full six-month period preceding your filing date.
Can a bankruptcy be filed under the presumption of abuse?
Accounting for unusual expenses like these may be enough to move someone from the “fail” to the “pass” column. If the presumption of abuse arises under the means test calculation, you may still file a Chapter 7 case.
What is the presumption of abuse in Chapter 7?
If you decide to go forward with a Chapter 7 case anyway, you are doing so under the “presumption of abuse.”. The presumption is that you can afford to pay some of your unsecured debt, but you’re choosing not to by filing the Chapter 7 case. That, Congress deems, may be an abuse of the bankruptcy system.
Is it possible to overcome the presumption of abuse?
For many, the term “bankruptcy” is cringe-worthy. Throw in another cringe-inducing word like “abuse,” and the result can be downright terrifying. While filing a Chapter 7 case under a cloud of doubt is intimidating, it is not impossible to overcome the “presumption of abuse.”
What happens if you file a Chapter 7 bankruptcy?
If you file a Chapter 7 case after the presumption of abuse arises, your trustee or the U.S. Trustee’s office will pay particularly close attention to your case. BAPCPA dictates that, in these scenarios, the filer has the burden of proving they are not abusing the bankruptcy system.
