Very interesting paper on the median income/Means test part of the BPCA

[aa06a47]

I asked my attorny in my consoltation if there were anything in the new laws that she couldn't tell me....then I asked for "examples" of things they were no longer allowed to tell me. She told me..."for example, I cannot tell you..." I must have worded it correctly and she was answering with hypothetical examples.

After it was over, she said there is a constitutional challenge concerning this part of the law. Attorneys should always be able to advise there clients.

[anonymuse]

I asked my attorny in my consoltation if there were anything in the new laws that she couldn't tell me....then I asked for "examples" of things they were no longer allowed to tell me. She told me..."for example, I cannot tell you..." I must have worded it correctly and she was answering with hypothetical examples.

After it was over, she said there is a constitutional challenge concerning this part of the law. Attorneys should always be able to advise there clients.

Could you imagine going to file right after the paycheck came in, but before the bills were distributed and wound up having to give all that money to the creditors? Who would you be ticked at--the lawyer--I think so?

When you go to buy a house with a realtor, they have to disclose what type of broker they are--basically, whether their working for the seller or the buyer. (Someone more familiar with realtors can use the correct terminology here.)

It seems that there should automatically be the same disclosure for lawyers.

But, then again, I think there should be instructions going along with each of the bk forms similar to what the IRS provides for the income tax forms. But silly me! I'm just being too logical. (**sarcasm intended**)

[anonymuse]

I just got finished reading most of the article during lunch.

It really seems like the means test will not accomplish what it set out to do (move more people to Ch 13) and they had the data that it was going to fail even before the test was changed.

They have, though, tried to put guidelines around "substantial abuse" (but doesn't really define it), which probably aren't quite working the way they intended.

Charitable Contributions -- that could put someone in a charitable mood rather quickly! "Courts are barred from considering that the debtor "has made, or continues to make, charitable contributions" to qualified religious or charitable organization."

They're still pretty much backed themselves into a corner with the determination of Current Monthly Income (CMI). Most BK filers (greater than 80%) are below the median. And pre-Bk planning can certainly make that work for someone. Let's say I've been out of work for 3 months and just get a job for $65K yearly. Well, the 6 month average is $32,500--below the median in almost all the states. When the employer asks you, "when can you start?" Careful planning could be applied.

CMI is strictly backwards looking and has no reach-forward provision to capture future income provisions. Yet congress failed "to provide an equivalent way to INCREASE CMI when CMI is less than actual or projected income may indicate". So does the statement asking whether you expect an increase in income even relevant? This lawyer/author appears to say that it doesn't matter, since the laws don't have a way to adjust the CMI in the means test.

BK laws were written with the intent of having people maintain a reasonable standard of living. And the changes in the means test are not doing what they intended to. The judges can't make up their own "can-pay" system, but if they really wanted to focus on the abusers of the system, there should be a means for higher scrutiny of high income filers. Having some kind of further testing (defined by laws) if the debtor makes 2 times the median income, or some other cutoff point. They have the means in place to stop the abuse of repeat filers, etc., but they should be able to target the abusers much better than they are doing. I don't see BK as being a means for someone making $100K to clear their debt and maintain the same living style. This goes far beyond helping people keep a reasonable standard of living.

I'm just glad that I fall under the safe harbor for below median income debtors so I don't have to deal with all this b.s..

I want to look for the cited articles

"Nine Traps and One Slap: Attorney Liability under the New Bankruptcy Law"

"Trying to Make Sense Out of Nonsense: Representing Consumers Under BAPCPA"

Could be another interesting reads.

[no_it_all]

<snip>although considering the fact that any sort of analysis of the law WILL be written by lawyers... and considering getting law interepreted and setting precedence is done by lawyers... I don't find the fact that this paper was written by lawyers a bad thing.

Actually, analysis, interpretation and precedent will be performed by judges, not lawyers..

[no_it_all]

It looks like all the early adopters that claimed the death of Chapter 7 because of the Means Test Calculator were ah........wrong.

[FoolAndHisMoney]

I'm just glad that I fall under the safe harbor for below median income debtors so I don't have to deal with all this b.s..

I actually wish I was way above the median making 100k a year so I wouldn't need bankruptcy to begin with.

[anonymuse]

I actually wish I was way above the median making 100k a year so I wouldn't need bankruptcy to begin with.

I'm with you there!

[aa06a47]

I actually wish I was way above the median making 100k a year so I wouldn't need bankruptcy to begin with.

I would like to make a statement here. High income filers have just as much of a chance of filing as low income filers with the exception that not too many high income filers will have medical bills as an excuse because they probably have health insurance where they work.

Not really trying to piss anybody off here, but if you make 50K per year and are filing BK because of credit card debts, what makes you think if you made 100K per year you would not be filing BK because of credit card debts. Your credit limits would be alot higher and you would think the same as you did when you made 50K and charged up that debt. It might take you longer to get to BK when you make more because you can sustain a larger amount of debt for a longer period of time, but if your spending habits are the same as when you made 50K as 100K (spending more than you make) eventually you will have to say uncle.

[no_it_all]

I would like to make a statement here. High income filers have just as much of a chance of filing as low income filers with the exception that not too many high income filers will have medical bills as an excuse because they probably have health insurance where they work.

<snip> Your credit limits would be alot higher and you would think the same as you did when you made 50K and charged up that debt. It might take you longer to get to BK when you make more because you can sustain a larger amount of debt for a longer period of time, but if your spending habits are the same as when you made 50K as 100K (spending more than you make) eventually you will have to say uncle.

Without question! There is an equilibrium that is reached between savings and spending, regardless of income. The key to successful savings (and resultant spending curb) is to "pretend" you make less than you actually do. An excellent research book on the subject is "The Millionaire Next Door" by professors Thomas J. Stanley and William D. Danko ..