What is meant by the phrase "relief in Chapter 7 is not Automatic"? Fully describe the Means Test, its origin, and its purpose
What will be an ideal response?
When Congress enacted BAPCPA, it included an amendment to the Bankruptcy Code that required prospective debtors to prove that they are financially worthy of a total discharge of their debt or that they possess the ability to pay back their obligations. Prior to the passage of BAPCPA, debtors were allowed to choose which type of bankruptcy petition to file with the court. Most debtors chose to file under Chapter 7 because a discharge would, in effect, wipe out all their debt. Under these circumstances, debtors could easily abuse the bankruptcy system, and many did. The law now requires individual debtors to pass a Means Test, which is a formula designed to determine whether debtors have the ability to restructure their debt and make payments to creditors. One of the purposes of the Means Test is to determine whether the debtor can afford to pay 25% of his or her income on nonpriority, unsecured debt. The Means Test consists of a series of financially related questions and formulas designed to determine whether debtors qualify for Chapter 7.
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