All of these blog posts provide some general bankruptcy information and concern the filing for protection under the Bankruptcy Code. They include discussions of such things as the means test, filing for Chapter 7, Chapter 13, and other such bankruptcy issues. Bankruptcy Blog PostsIf you have any questions or want to know more about the bankruptcy process then take a look at the different blogs on here and if you don’t find and answer then give us a call.

We handle bankruptcy cases all across the State of Alabama and we hope these posts can provide some useful bankruptcy information. There is a blog post on bankruptcy exemptions that explains a little about what property you can protect from being liquidated in a Chapter 7 bankruptcy. There is a blog post on the different people involved in the bankruptcy process including the role of the Trustee in handling your case. One of the jobs of the Trustee includes an evaluation of your bankruptcy estate (which is all of the property that you own) to determine if there are any assets they can possible sell and distribute money to your creditors. 

Those are some of the many blog posts about the bankruptcy process. If you have any questions or want to say something about any of our posts then feel free to leave a comment or give us a call at (205) 201-1789.

What Are Bankruptcy Schedules and Exemptions

     When you file for bankruptcy, there are certain documents that the bankruptcy law requires you to file with your case.  First is your petition which contains all of your personal information.  The second set of documents are your bankruptcy schedules.  The schedules are a snapshot of your financial picture at the exact moment that your case is filed.  Although there are other documents that are required to be filed, your schedules are the largest and most comprehensive of the paperwork which you file.  There are several categories for your schedules which are listed as Schedules A through J.

            You must list in Schedule A all interests in real estate in which you are on the deed. Real estate includes land and buildings.  Schedule A provides the location and value of your real property interests.  Generally your attorney will use the tax assessor value, which is the value on which your property taxes are based.  You should also be sure to tell your Birmingham bankruptcy attorney if anyone else is on the deed with you. 

            Schedule B lists your interests in personal property.  Personal property consists of all things that are not real estate, such as vehicles, household goods, electronics, clothing, and bank accounts.   What Are Bankruptcy Schedules and ExemptionsPersonal property value is calculated using the replacement cost of a like item in the same condition.  If someone has died and you will be inheriting property or money, you will have to list this information on Schedule B even if you have not received the property yet. 

            Exemptions are listed on Schedule C.  Exemptions are amounts of equity in property that you are allowed by law to keep if the property were sold.  This does not mean that your property will be sold. Rather, it is a way for the Bankruptcy Court to calculate equity in your property.  State law is usually used in the exemption calculation, so your bankruptcy lawyer will have to review your property and apply your exemptions.  This schedule can be complicated and your bankruptcy attorney can explain the results of the exemption calculations to you.

            The schedules which address your creditors are Schedules D, E, and F.  The debts are arranged by secured, priority, and unsecured.  Schedule D lists all secured debts, including mortgages, vehicle loans, and other loans you owe in which you used the money to buy property.  Schedule E are priority debts.  These debts are income taxes, back child support, and court fines.  You cannot discharge priority debts; therefore, you are required to pay them.  Schedule F is a listing of all of your unsecured debts, such as credit cards, medical bills, payday loans, and signature loans. 

            Schedule G is a listing of leases and contracts that have not been fully performed. You will list the leases which you are assuming (continuing to pay) and those which you are rejecting (stop paying).  Schedule H lists the debts in which you are a co-signor on someone else’s debt or if someone is a co-signor on your debt.  A co-signor is a person who promises to pay a debt if the other person fails to pay it. 

            Schedule I sets out your monthly household income.  Income is based on the entire household.  If your spouse is not filing bankruptcy with you and you are living together, any income or wages received by the spouse has to be listed. Most income is from wages and the figures are taken from your pay stubs.  If you have a business as your income, you will list your income minus expenses for a net income amount for each month.  You will also list child support, alimony, retirement, food stamps, and disability. 

            Schedule J is a list of your monthly expenses.  The expenses are also for the entire household.  Sometimes it is difficult to list a set amount for expenses that change each month, such as utility bills, so you will use an average for those expenses.  You should also include expenses that you pay less frequently, such as car tags and insurance. 

            Schedules are a very important part of your bankruptcy filing in Jefferson County, Alabama.  You must be truthful and disclose all assets, income, and expenses.  It is best that you tell your attorney too much information than to omit something that should have been disclosed.

What is the Bankruptcy Means Test

There are several factors that your local bankruptcy attorney will consider when discussing the filing of a bankruptcy case.  These factors include your income, expenses, the types of debt you have, and the value of the assets that you own.  These and other factors go into how you perform on something called The Means Test. 

            In 2005 Congress decided that the bankruptcy laws needed to be changed so that people with high incomes will be required to repay debts through a Chapter 13 bankruptcy rather than just wiping out debts in a Chapter 7.  A new law was passed called the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).  One of the requirements that Congress approved was that each person filing bankruptcy must first pass a test called The Means Test.  

            The Means Test is a complicated calculation which has two steps.  The first step of the Means Test calculates your gross income.  Gross income is the amount of your wages before any payroll deductions are taken.  You must provide paystubs for the six months prior to the month of the filing of the case so that an average monthly income can be calculated for the last six months.  What is the Bankruptcy Means Test?This average monthly income figure is then multiplied by twelve to get a gross annual income based on those six months.  Your attorney will then look at a chart which lists the median (average) household income for a household of your size in the state which you reside.  If your gross annual income is below the median household income, you pass the means test and no further calculation is required.  However, if your annual income is above the median household income, you fail step one of the Means Test and must move to the second step of the calculation.

            The second step of the Mean Test is basically a budget.  The purpose of deducting expenses from your gross income is to calculate your net income.  Net income is the amount of your wages after all allowed deductions are subtracted.  There are three categories of expenses.  The first category are expenses which are fixed using IRS standards, such as food and clothing.  The second category are expenses which you actually pay, such as payroll taxes, insurance, and medical expenses.  The final category of expenses are monthly payments on your secured debts, such as vehicles and house payments.  After all three categories of expenses are deducted from your gross annual income, the net income figure is calculated and is called your disposable income.  Your bankruptcy lawyer will once again check the chart containing the median household figures.  If your disposable income is below the median household number on the chart, you pass the Means Test and can go forward with your case.  If your disposable income is above the median household income, you fail the Means Test.

            If you fail the Means Test after the second step, you have to reconsider your options on the type of bankruptcy you plan to file.  You cannot file a Chapter 7 bankruptcy because BAPCPA does not allow the filing of a Chapter 7 if you fail the Means Test.  However, your bankruptcy options are not closed to you.  You still have the option to file Chapter 13 and reorganize the repayment of your debts.  You and your attorney will review the case to see if a Chapter 13 is feasible for your situation.

            Failing the Means Test does not affect your ability to file a Chapter 13 bankruptcy.  You can file a Chapter 13 even if you fail the means test.  The impact of the failure to pass the Means Test on a Chapter 13 is that your disposable net income determines the amount of debt which you must pay to unsecured creditors.  Unsecured creditors are those in which there is no collateral for the debt, such as credit cards, medical bills, and payday loans.  The disposable income amount to pay unsecured creditors is a fixed amount.  Even if that fixed amount does not pay your unsecured debts in full, disposable income amount is all that the judge will order to be paid to those creditors in your case.

            The Means Test is a difficult calculation.  You should be sure to provide each paystub to your attorney for the six months prior to the estimated filing date of your bankruptcy case because you want the most accurate income figure for the calculation.  Sometimes a few dollars can make the difference in passing or failing the first step of the Means Test.  You may need to provide proof of some expenses, such as charitable contributions and monthly medical expenses.  Your bankruptcy lawyer will review the results of the Means Test with you so that you can make the best decision for your financial situation.