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The purpose of the new bankruptcy code amendments were twofold.
First, the availability of Chapter 7 qualification was placed out of
reach for most individuals. This was accomplished with the
implementation of three new means testing requirements, that disqualify
individuals in three separate ways. Secondly, the amount of recovery for
creditors under Chapter 13 plans was increased substantially, by
requiring higher payments, over longer plan terms.
One of the most important new divining points for the implementation
of these changes centers on median income within the state of the
debtor's residency during the last two years. Anyone earning above their
state's median income cannot file Chapter 7, and must file a plan
lasting at least 5 years, and will be permitted living expenses while
the plan is pending that are far below the threshold of poverty.
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