Contact: John Hartgen
703-894-5935
CONCERNS THAT MEANS TEST WOULD LIMIT A
DEBTOR’S ELIGIBILITY FOR BANKRUPTCY RELIEF HAVE TURNED OUT TO BE
EXAGGERATED, ACCORDING TO LATEST ABI POLL
July 12, 2010, Alexandria, Va. — Concerns that the means
test created by the Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005 (BAPCPA) would limit a debtor’s eligibility for
bankruptcy relief have turned out to be exaggerated, according to a
majority (53 percent) in ABI’s latest Quick Poll. Thirty-one
percent “agreed strongly” and 22 percent “somewhat
agreed” that after four years of utilizing means testing in
consumer bankruptcy cases under BAPCPA, concerns that the means test
would limit a debtor’s eligibility for relief have largely turned
out to be unfounded.
Implemented more than four years ago by BAPCPA, the means test is
used by the courts to determine a debtor’s eligibility for filing
for chapter 7 or chapter 13 bankruptcy. To apply the means test, courts
look at the debtor's average income for the six months prior to filing
and compare it to the median income of an individual for that state. The
means test factors in the debtor’s gross income and deducts
secured and priority debt payments, as well as living-expense
allowances. If after completing the means test the debtor has sufficient
disposable income to make payments into a chapter 13 reorganization
plan, the debtor is not eligible to file for chapter 7 liquidation.
Prior to BAPCPA’s passage into law, consumer advocates were
concerned that means test would limit a debtor’s eligibility for
bankruptcy relief.
Forty percent of respondents, however, thought that the concerns that
the means test would limit a debtor’s eligibility for bankruptcy
relief are still warranted. Twenty-nine percent “disagreed
strongly” and 11 percent “somewhat disagreed” that
concerns were exaggerated that the means test would inhibit a
debtor’s eligibility for bankruptcy relief. Five percent did not
know or had no opinion on the issue.
ABI members and members of the public were welcome to submit their
response to the statement: “After four years of experience,
concerns that the means test would limit a debtor’s eligibility
for relief have turned out to be exaggerated.”
ABI’s Quick Poll is posted on ABI’s home page,
href='http://www.abiworld.org/'>www.abiworld.org. ABI
members and the public are invited to respond to a question on a timely
bankruptcy or insolvency issue. Visit
href='http://www.abiworld.net/quickpoll/'>
face='Times New
Roman'>http://www.abiworld.net/quickpoll/
to access the results of previous ABI Quick Polls.
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ABI is the largest multi-disciplinary, nonpartisan organization
dedicated to research and education on matters related to insolvency.
ABI was founded in 1982 to provide Congress and the public with unbiased
analysis of bankruptcy issues. The ABI membership includes more than
12,600 attorneys, accountants, bankers, judges, professors, lenders,
turnaround specialists and other bankruptcy professionals, providing a
forum for the exchange of ideas and information. For additional
information on ABI, visit
face='Times New Roman'>www.abiworld.org. For additional
conference information, visit
href='http://www.abiworld.org/conferences.html'>
face='Times New
Roman'>http://www.abiworld.org/conferences.html.