BANKRUPTCY ELIGIBILITY REQUIREMENTS:

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) imposed new eligibilty requirements on debtors seeking to discharge their debts in Chapter 7: However, there's a good faith standard that has always and still applies: You are eligible for Bankruptcy relief if you're income is insufficient to pay your debts as they become due. If you're economic situation doesn't pass the smell test, you don't qualify for Chapter 7, but that's always been true. With the new Bankruptcy Law, there are additional reporting requirements, which include:

1. Tax Returns/Proof of Income

You must have filed your tax returns for the four years preceding your petition. You also have to provide two years of tax returns and proof of income for a six month period prior to your Bankruptcy.

2. The “Means Test”

One of the big myths about the Bankruptcy Code changes is that you are no longer able to file Chapter 7 and that you will be required to pay some of your unsecured debts.Consumer debtors have to go through a “means test” designed by Congress to weed out people who are abusing the system. The formula uses actual numbers regarding your income and expenses, with artificial standards for expenses. Information that you provide is entered into an artificial formula, and if your income exceeds the mean income for the District in which you file, and you are able to pay a portion of the debt back, you maybe ineligible for Chapter 7. However, you are entitled to deduct certain things such as secured debt payments on a house or car, taxes, medical expenses, spousal and child support etc. within certain limitations. Although the means test disqualifies some from a Chapter 7 filing, as a practical matter experience has shown that the “means test” has not affected the vast majority of filers. Most people wanting to file a Chapter 7 are still eligible. There is also another myth that you'll have to give up your house and cars and be forced to pay back all your secured creditors. It's simply not true.

3. Education Requirements:

The Bankruptcy Code now also requires that you complete two educational requirements from a credit counseling agency approved by the Department of Justice. 1) Prior to filing, you must obtain a “Credit Counseling Certificate" which consists of a review of your current financial situation. 2) Before the discharge is entered you must complete a second course and obtain a “Debtor Education Certificate”, that provides you with more insight on how to handle your finances. You can do both classes online in about ninety minutes. The purpose of these two courses is to make you examine your finances and make sure that you have done everything to avoid filing bankruptcy, and second, that you have some minimal financial skills so that once you are completed, you will never have to go through the process again. Once we accept your case, we will ask you to fill out a questionnaire and return it to our offices to begin.
To Learn More About the Bankruptcy Process, and understand how the Bankrtupcy Process wroks, you can take our crash course by Going to Bankruptcy 101>>>