Posted on: Friday, April 15, 2005
Here's how a debtor is affected
| • | Bankruptcy bill goes to Bush |
Associated Press
How the new "means" test for measuring a debtor's ability to repay would work under the bankruptcy overhaul legislation:
• People with insufficient assets or income as determined by the test could still file a Chapter 7 bankruptcy, which, if approved by the court, would erase debts entirely after certain assets are forfeited. • People with income above their state's median income who can pay at least $6,000 over five years — $100 a month — would be forced into a Chapter 13 bankruptcy, where the court would order a repayment plan. The U.S. average for state median household income was $42,654 a year for 2001-02. Hawai'i's median household income is $50,110, according to the state Department of Business, Economic Development and Tourism.
Under current law, a bankruptcy judge determines under which chapter of the bankruptcy code a person falls — whether they have to repay some or all of their debt.
