Be Good To Your Money Bulletin http://ezezine.com
CHAPTER 7 BANKRUPTCY--THE MEANS TEST
Effective 10/17/2005, the choice of whether to file for Chapter 7 or
Chapter 13 disappeared. Consumers, now, must pass the "means test" in
order to file for Chapter 7 bankruptcy protection.
Under the means test, if a debtor's adjusted income is less than $6000,
there is no presumption of abuse, and the debtor is free to choose
Chapter 7. If the debtor's adjusted income is between $6000 and
$10,000, abuse is presumed, only if the debitor's income exceeds 25% of
his/her nonpriority, unsecured debt (such as credit card debt).
Chapter 7 makes it harder for people who CAN pay off their debts to
simply have them discharged in bankruptcy. The means test won't
prevent you from filing for Chapter 7 bankruptcy protection, but if you
fail the means test and file Chapter 7 anyway, you run the risk of
having your bankruptcy converted from a Chapter 7 action to a Chapter
13 action, by the court.
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