Denver Bankruptcy Attorneys - Law Office of Andrew McKenna

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    Contact us today at 303-730-8819, or use our CONTACT PAGE to request your free Telephone Consultation with Andrew F. McKenna, The Bankruptcy Attorney.

  • Bankruptcy Means Test

    Much has been made of the bankruptcy means test, which was established as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The act was largely a Congressional handout to banks and big business amid complaints that consumers were abusing the bankruptcy laws by running up large amounts of unsecured debt and then filing for protection.

    The Denver bankruptcy attorneys at The Law Office of Andrew McKenna continue to help record numbers of people seek protection under both Chapter 7 and Chapter 13 bankruptcy protection in Colorado. In 2004, the year before the means test went into effect, there were 25,003 Chapter 7 bankruptcy filings in Colorado, according to the U.S. Bankruptcy Court for the District of Colorado. In 2010, there were 27,113. The Great Recession should have told you all you need to know about who is to blame. And it’s not the families struggling to make ends meet.

    The leading driver of bankruptcies in Denver continues to be irresponsible and predatory lenders, followed by medical bills.

    Chapter 7 Means Test in Denver

    The law requires those whose income is higher than the median income in the state are required to submit to a means test to determine whether a Chapter 7 filing can be found to be abusive. Those who fall below the median income, may be in violation but they are protected by “safe harbor” as no means test can be performed.

    Other factors for determining bankruptcy abuse via the Means Test include:

    • Determination of median income according to family size.
    • Exclusion of certain income, such as Social Security payments.
    • Living expense deductions.
    • Actual expenses.
    • Contributing care to non-dependent family members.
    • Home energy costs.
    • Continued contributions to tax-exempt charities.

    The reality is very few are looking for an excuse to file bankruptcy. The exact opposite is true: In most cases consumers wait too long to seek the advice of a qualified Colorado bankruptcy attorney. Consequently, the vast majority of debtors are in well over their head. The very credit card companies who pushed for the to curb abuses have made this the reality: They continue to lend until a consumer hits the outer reaches of the company’s risk profile – often that profile is so extreme that the consumer buckles under the weight of the debt and seeks protection before the company stops lending money at predatory interest rates.

    Fighting Means Test Myths in Bankruptcy

    Unfortunately, the biggest impact the means test may have had on bankruptcy rates is in keeping those who lack sufficient information from inquiring about whether or not they qualify for protection. A means test is not a determination of your net worth. In fact, many exemptions allow you to keep significant assets and still file for Chapter 7 bankruptcy protection:

    • Up to $60,000 in home equity.
    • Up to $5,000 in vehicle equity.
    • Certain life insurance proceeds.
    • IRAs, 401Ks and retirement funds.
    • Pension Funds.
    • Certain proceeds from the sale of real estate.
    • Social Security payments.

    Contact a Colorado Bankruptcy Attorney Today

    If you need bankruptcy assistance in Denver or would like more information, call The Law Office of Andrew McKenna today at 303-730-8819for a free consultation or contact us online. We are a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code. Serving clients in Denver and throughout Colorado, including Aurora, Englewood, Lakewood and Boulder.

    Denver Bankruptcy Help – 303-730-8819– Free Consultation


    20 Years of Experience
    NACBA Member
    Only represents consumers
    BBB Accredited, A+ Rating

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    North Metro Denver Office – 11154 Huron
    St. Northglenn, CO 80234

    South Metro Denver Office – 3801
    E. Florida, Suite 400, Denver, CO 80222


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