Median Income Changes Means Test
New median income figures take effect November 1, 2009. The change in median income levels will have a direct impact on those seeking debt relief through chapter 7 bankruptcy because of the means test. Individuals seeking to file chapter 7 bankruptcy must pass the means test in order to qualify; otherwise they will be required to file under chapter 13 and make some payments toward their debt. Not since the inception of Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA") in 2005 have we seen the income figures drop. What this means is that those seeking debt relief under Chapter 7 bankruptcy, may soon be disqualified and forced to file under Chapter 13 instead.
Here in California, our current unemployment rate is 12.2%, according to the Bureau of Labor Statistics. Our real estate market still has not bottomed out as those in the industry project a Gloomy Outlook. Lenders have been stalling out or flat out refusing to modify mortgages that would otherwise qualify under the Obama Plan and more foreclosures are coming soon. Also, our state workers have taken approximately 3 furlough workdays without pay, which equals an approximate 14% pay cut. No wonder the median income figures are dropping.
It's time to review those borderline Chapter 7 cases pending and get them filed before the client potentially becomes disqualified under the new changes taking effect November 1st. I don't think it's Bankruptcy Means Test Irony as the folks over at Bankruptcy Law Network do; it's the factual truth.
