Bankruptcy means test: Watch out for January 2012!
Posted by Robert Weed / in The 2005 Bankruptcy Law / 8 comments
Your bankruptcy means test may be too high if you file your bankruptcy case in January 2012.
People with bi-weekly paychecks get 26 paychecks a year. Usually you will have 13 paychecks in the six months look-back period of the bankruptcy means test. But some people will have 14 paychecks instead of 13 for the six months of July – December 2011. If your first September paycheck was dated September 9, you will be one of those people. (It’s no problem if you got paid on September 2.)
Most people on bi-weekly pay look forward to those months with three checks. They usually come every six months. But this year, if you got paid September 9, both July and December will be three check months. (Your next three check month will be June 2012.) But in bankruptcy, good is bad. That 14th paycheck could force you into a five year Chapter 13 bankruptcy repayment plan, because your income could be just a little too high.)
Here’s one example:
Take a single parent supporting one child in Virginia making exactly $30.00 a hour, no overtime, renting, one paid for car, no medical issues, no child care. That family is means test eligible for a Chapter 7 bankruptcy, if the parent files in October 2011 or November 2011, or December 2011, or February 2012, or March 2012. But in January 2012: not eligible. Mandatory five year Chapter 13 payment plan.
This problem can be fixed with proper planning. I had to change the bankruptcy filing date for a client I met yesterday, to avoid that problem. Otherwise, it would cost him $300 per month for 60 months–an $18,000 mistake.
The 2005 Bankruptcy Reform has a lot of tricks and traps. This is one of them.
Hello Mr. Weed,
Thank you for your very informative website. I was wondering if you could recommend someone closer to the Richmond/Ashland area of Virginia? I need to consult with a lawyer about filing bankruptcy and a warrant in debt but I don’t know where to go.
In Richmond, there are three law firms that I like a lot. One is H.Darden Hutson. Another is Jason Krumbein. Also Mitchell Goldstein.
I also need to consult a lawyer like you in Miami, Florida. Any suggestions? I would hate to get a car wash attorney.
I’d start by looking at NACBA.org.
I filed bankrutcy in louisville , ky in 2005 before the new law became into affect in October..Due to illness and finacial hardships im being forced to have to file agian im just wondering if i would be eliglbe to file agian in 2012..can someone get back to me about this.
Before the new law, you could come back and file a Chapter 7 bankruptcy again in six years. Under the new law, it’s eight. So that would be 2013. If your situation is desperate, you should teak to a lawyer in your area about Chapter 13. You should be eligible to get a discharge in Chapter 13–starting only four years after your Chapter 7 bankruptcy. So that would have been any time after 2009.
We have a complicated case of owning an llc and the need to claim bankruptcy out of your area. Would you have a referral for the Frederick County (Winchester) VA area that might specialize in this type of case of closing a business and filing personal bankruptcy? I so wish we were still in Sterling VA! We would definately use your services, You offer so much information on your website! Thanks,
Thanks for your kind words.
Dan Press is the smartest bankruptcy lawyer in Northern Virginia. (I know people in Winchester call that area Northern Virginia, too, but you know what I mean.)
Anyway, I like to say I’m the second smartest, but Dan is the smartest and he sometimes takes cases out your way. (He also has an office in Cumberland, Maryland, I guess he’s a country boy at heart.) You can contact Dan here http://www.chung-press.com/ and see if he’s interested.
David Cox, in Lychburg, is also regarded as one of the best bankruptcy lawyers in Virginia. He’s opened an office in Winchester and you can get info on him here. http://www.coxlawgroup.com/.