Under 2005 federal bankruptcy law amendments is it easier for a creditor to get a Chapter 7 bankruptcy petition dismissed?

Under the 2005 amendments to the federal bankruptcy law, the trustee appointed by the bankruptcy court, or any of your creditors, can bring a motion to dismiss your bankruptcy petition if your income is greater than the state’s median income – in other words, if you fail the “means test” set forth in the new bankruptcy law.   “Abuse” of the bankruptcy process is presumed if a petitioner’s monthly income at the time of filing (as determined by an average of the previous 6 months), less certain calculations set forth in a statutory formula, is greater than $100 per month of a Chapter 13 repayment plan.  

Bankruptcy petitioners who fail to meet this new standard would be shifted to 5-year repayment plan in Chapter 13.   In determining whether the means test has been satisfied, the statutory formula looks at the number of people in the petitioner’s household (which the U.S. Census bureau defines to be all of the people occupying a dwelling unit) compared to statewide census figures adjusted by the consumer price index.  The presumption of abuse may only be rebutted by demonstrating special circumstances that justify additional expenses or adjustments of current monthly income.

You should consult a bankruptcy attorney who can advise you regarding all relevant issues in a potential bankruptcy situation, including your eligibility for and the critical distinctions between Chapter 7 and Chapter 13 bankruptcy proceedings, tax ramifications, debt consolidation and credit counseling.