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This statute provides that when a debtor makes a payment to a creditor and the debtor files bankruptcy within 90 days of that payment, the Bankruptcy Court can force the creditor to pay that money back to the debtor for distribution to all of the debtor's creditors. Bankruptcy Preference Claims | Preference Payment Rule hh-law.com ? blogs ? litigation ? bankruptcy-pref... hh-law.com ? blogs ? litigation ? bankruptcy-pref...
Bankruptcy law provides the Trustee with the power to recover certain payments made prior to filing a case. Among these are any payments made to creditors (those to whom you owe money) within 90 days prior to filing a bankruptcy. This is a 90 day lookback period.
Calculation of Current Monthly Income: To begin the means test, debtors calculate their current monthly income, which equates to twice the gross income earned in the six months leading up to the bankruptcy filing.
You can earn a high income and still pass the means test if you have substantial expenses like a hefty mortgage, multiple car payments, taxes, childcare, health care, or care of an elderly or disabled person. However, if your disposable income is more than a certain sum, you will not be able to file.
The means test is calculated by comparing the debtor's average income for the past six months (current monthly income), annualized, to the median income for households of the same size in the debtor's state of residence.