Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), debtors are required to submit their income to a means test. If the debtor fails the means test, the court will presume that the debtor is attempting to abuse the bankruptcy process to avoid paying legal debt. If the presumption holds, the debtor’s case will either be converted into a Chapter 13 bankruptcy or dismissed.
How is the Presumption of Abuse Rebutted?
Under the BAPCPA, the debtor has the burden of proof to show that the debtor is not abusing the system. The debtor must show that special circumstances caused the debtor to take out the expenses that the debtor has. Special circumstances are factors which leave the debtor with no reasonable alternative but to carry the expenses.
If the debtor successfully rebuts the presumption of abuse, the bankruptcy court will reopen the case and allow the debtor to continue with his or her Chapter 7 bankruptcy.
What are Acceptable Special Circumstances?
The BAPCPA does not give a precise definition of "special circumstances" but only states that debtors must have no reasonable alternative. The following are considered special circumstances under the BAPCPA:
Serious medical conditions
Active military duty
The list is not exhaustive, so there may be other special circumstances which could justify a debtor’s expenses.
Do I Need a Lawyer?
Successful rebutting the presumption of abuse is difficult. It is important to hire a bankruptcy lawyer when filing for bankruptcy. An experienced bankruptcy attorney can help protect your assets, and make the entire bankruptcy process as painless as possible.