Practice Areas

Debtor Representations in Ch. 7 Bankruptcies

On 10/17/2005 Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This new law made some very dramatic changes in the law including a definition for a “debt relief agency” that may be applicable to attorneys. If in fact this definition applies to attorneys then we are required to make this disclosure:

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

The new law did dramatically reduce the number of bankruptcies. Bankruptcies (all chapters) filed in 2007 were roughly 50% of what they were before BAPCPA. That’s up from about 33% for the year before. The new law has so complicated what used to be a simple consumer bankruptcy case has doubled the costs in most cases. When the new law passed there was so much publicity associated with it that it appears as though the public was misled about whether relief is still available. It most certainly is. The new law implemented a “means test” for persons to be eligible to file for Ch. 7 relief. Here’s generally the calculation to determine if a normal consumer can “pass the means test” in the jargon of bankruptcy lawyers.

The test generally says that you must examine your household income and average it from all sources over the last 6 months. Many issues abound as to what is included in the determination of “current monthly income”. Social Security Benefits are not but as to other specific moneys, their inclusion or exclusion needs to be discussed in consultation with us. Multiply the monthly average x 12 to annualize it and then compare it with the median income for your household size. In Ohio the median family income for a family of 4 is $ $72,345.25 and is updated frequently by the United States Trustee on their website. The median family income is updated frequently and current figures can be obtained from the website of the United States Trustee. If the 6 month average of your income is less than the median income, then you “pass the means” test and are eligible for Ch. 7 relief. Even if you don’t Ch. 13 relief is available to you and there are a number of permissible calculations that can dramatically improve your financial condition through that chapter. At Schuh & Goldberg, LLP we are familiar with all aspects of the new law that will permit you to retain your exempt property and still obtain a discharge from your debts.

It is very important to note that the “means test” implemented by BAPCPA is only applicable to persons whose debts are primarily consumer debts, so if you find yourself in a situation where you have have an above median family income but are saddled with a majority of bad business debts, significant relief awaits you.

People often ask: “What can I keep in a bankruptcy?” and the answer is, you can keep all “exempt” property. Exemptions are provided, usually by the law of the state of a person’s residence, and they identify the things that no creditor can take away from you and that you can keep in a bankruptcy. Ohio has recently passed a new exemption law dramatically increasing what a person can keep in bankruptcy. This statute became effective on September 30, 2008.

Schuh & Goldberg, LLP is not a “bankruptcy mill” which is a term commonly used for law firms who advertise debtor bankruptcy services at cut rate prices. In this regard we believe that you get what you pay for. While Schuh & Goldberg, LLP is competitively priced to provide Ch. 7 debtor bankruptcy services, our focus is to spend the time on your case to get it right the first time and to provide you with an experienced counsel who will walk you through what can be a very stressful event in your life.

As a citizen of the United States, Congress has provided you with a way to obtain relief from your debts and to make a fresh start. There is nothing to be ashamed about in filing a Ch. 7 bankruptcy. You will be glad you placed your trust in us.