Bankruptcy Reform - Section 102

Section 102:  Dismissal or conversion  11 USC 707

Provides a means test.  No longer is there a presumption in favor of the debtor,
it is a presumption that abuse exists and it has to be proven otherwise.

"..whether the granting of relief would be an abuse of the provisions of this chapter
[Chapter 7], the court shall presume abuse exists if the debtors - 

   Monthly Expenses:

   1. Expenses as specified in the National Standards and Local Standards issued by 
   the IRS.  These expenses DO NOT include payments for debt.  If you can prove it 
   is reasonable and necessary, you can add 5% to food and clothing.

   a. For a 3 person family: Food, housekeeping supplies, clothing, personal care and 
       misc is $1156.

       IRS Food and other expenses Guidelines

   b. Car: a maximum of two is allowed:
 
       Transportation costs $251 for one car, or $355 for two.

       IRS Transportation Guidelines

      2. An additional expense of up to $1500 for each child under 18 for school 
   expenses provided it is documented and a detailed explanation is provided why       
   those expenses are reasonable, necessary and not already included in the  
   National/Local Standards under Other Necessary Expenses.

   3. Monthly expenses for housing(rent/lease only) and utilities in excess of the 
   allotted amount in the National/Local Standards must be based on actual expenses 
   and documentation is provided that such expenses are reasonable and necessary.

   Housing AND utilities* - for renters: $1489 for a family of 3 in Dane County
       (only Ozaukee and Waukesha counties are higher than Dane)

       IRS Housing and Utility Guidelines

   4.  Average monthly payment on all secured debts (including additional payments 
   under a chapter 13 plan to maintain possession of the primary residence, motor 
   vehicle or other property NECESSARY for the support of the debtor and 
   dependents that is secured by collateral.

   Vehicle loans are limited to 2 with the following amount limits:
           total vehicle loan payment on 1 car: $475
           total vehicle loan payments on 2 cars: $813

   5.  Priority claims are totalled and divided by 60;

   6.  Administration costs of up to 10% of the plan payments (current Wisconsin 
   allowance is between 7 and 9% depending on district)

   So.  Taking a family of three with 2 cars in Dane County, the maximum allowed
   expenses would be $3813.00.  

   Adding the priority claims (child support, IRS...) and administrative expense would 
   increase the monthly allowance.

  * (There appears to be no allowance for home mortgages in the Guidelines. There 
   is no breakout of utilities from the housing allowance...this will be an area that 
   eventually the courts in each district will decide but that Trustees will question 
   repeatedly.)

  Take your monthly income, subtract the $3,813 (or numbers calculated from the 
  Guidelines

multiply by 60.  If this figure is greater than $6,000

 - the debtor is abusing the provisions of this Chapter.  The Court can dismiss
or force a conversion to Chapter 13