The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) significantly changed the rules for people filing a consumer bankruptcy case. For the first time, the bankruptcy laws required an analysis if someone was over the median income level in the particular State that the person had filed the bankruptcy. Take a look at the following charts on median income levels. Therefore, if a debtor was over the median income level, the debtor was presumed to be ineligible for a chapter 7. Then the debtor had to go through the means test to determine if they were eligible or had to file a chapter 13 case and pay a percentage to creditors over a 60 month plan.
First Determine If Debts Are Primarily Consumer Or Business Related
An often overlooked strategy for circumventing the rules concerning median income levels and means testing is where an individual's debts are not primarily consumer debts. For example, if a person's debts are more than half business related or investment related, the harsh rules of BAPCPA do not apply. There are of course the good faith requirements of the bankruptcy code and a further detailed analysis that needs to be performed. However, taking the prospective case out of the purview of the BAPCPA rules, many times will allow someone to qualify for a Chapter 7 bankruptcy where that person might not otherwise be eligible.
If Debts Are Primarily Business Related BAPCPA Rules Do Not Apply
The first question that should be asked in analyzing the qualifications of a potential debtor in a bankruptcy case is their type and amounts of debt. If more than half of their debt is business related, there is no need for the BAPCPA analysis on the median income level and means testing. Of course, typically a business type bankruptcy poses other significant problems that a purely consumer case will not, but taking the bankruptcy case out of this part of the analysis required under the 2005 changes to the bankruptcy laws will many times be of great assistance.
Contact an Attorney in One of Our New Jersey Offices
Contact one of our New Jersey Lawyers to discuss how to best proceed.
Our law firm offers bankruptcy solutions and legal strategies to clients throughout cities and towns of New Jersey, including but not limited to Wayne, Hoboken, Newark, Jersey City, Paterson, Orange, West Orange, South Orange, Irvington, Belleville, Maplewood, Clifton, Wayne, Passaic, Fort Lee, West New York, Morristown, Guttenberg, Union City, Weehawken, North Bergen, Paterson, Hackensack, Englewood, Livingston, Bloomfield, Little Falls, Hillside, Union, Kearny, Harrison, Fairfield, Caldwell, Garfield, Lodi, Totowa, Bayonne, North Bergen, Weehawken, Union City and Secaucus, and Passaic County, Hudson County, Essex County, Bergen County, Union County, Sussex County, New York, Manhattan, New York County, Bronx County, Brooklyn, Long Island, Queens and Staten Island.
