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What’s The Point Of Means Testing For Chapter 7?

Congress enacted a major reform of bankruptcy law in 2005. Big companies lobbied to make it harder for Americans to get out from the debt they’d accumulated from relaxed lending standards and pervasive credit card access during the 1990s and early 2000s.

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 introduced a means test to Chapter 7 filings to ensure that filers truly can’t repay their debt.

In Chapter 7, the court will discharge most of a filer’s debts, leaving the creditors with little or nothing.

By implementing a means test, wealthier filers – who can pay back some or all of their debt – are shunted into Chapter 13 bankruptcy and put on a years’ long payment plan, which creditors generally prefer.

It’s strategically important for you to know whether you’ll be filing a Chapter 7 or a Chapter 13 bankruptcy, because the impact on the assets you own is significantly different.

Learn which bankruptcy is right for you by calling Zelenitz, Shapiro & D’Agostino at 718-599-1111 to talk to an experienced bankruptcy attorney for free.