The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) includes a means test set forth primarily in subsection 707(b) of the Bankruptcy Code. The Code provides that a case may be dismissed if "the granting of relief would be an abuse of the provisions of this chapter." The formula for determining whether a presumption of abuse exists is called the means test.
Section 707(b) does provide a method for addressing situations where the mechanical approach of the means test fails to recognize debtors for whom the granting of relief would not be an abuse of the provisions of Chapter 7 due to a debtor’s particular circumstances.
The debtor, however, does need to articulated special circumstances that would rebut the presumption of abuse: medical conditions, job insecurity, the inability to fund a Chapter 13 plan or other factors that prove that filing a chapter 7 bankruptcy is not an abuse of the system.
When a debtor “fails” the means test, and the debtor lacks a showing of special conditions, the court will presume abuse exits. With no reasons offered as to why chapter 7 relief should be offered to a debtor who failed the means test, the court will dismiss the debtor’s case or the case must be converted to a case under chapter 13.
A converted chapter 13 case can still bring you much needed relief from your harassing creditors, and can provide you with a fresh start. Chapter 13 cases last between 3 to 5 years, but through the duration of the bankruptcy, you are protected from creditors and receive a discharge of your debts if you successfully complete the chapter 13 plan.
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Although, it may be disappointing to fail the means test, with no special circumstances, your chapter 7 case will likely be dismissed or need to be converted to a chapter 13. But chapter 13 cases can still provide you with relief from creditors and help you manage your debt. Contact the attorneys at Kain and Scott and see us at www.kainscott.com. You will be glad you did!