Q.Does the New Bankruptcy Law make it more difficult to file a Chapter 7 Bankruptcy?
A.Yes. As of October 17, 2005 the new bankruptcy laws require bankruptcy petitioners who wish to file a Chapter 7 bankruptcy to meet certain eligibility requirements or pass a "means test." The first eligibility requirement to file a Chapter 7 Liquidation Bankruptcy is an income test. To qualify, your average monthly income for the six month period before you file for bankruptcy must be less than the "median income" in your state.
If the bankruptcy petitioner's average monthly income is above the median income in his or her state, s/he still may be able to file for Chapter 7 Bankruptcy but only if the bankruptcy applicant cannot afford to pay $100 per month toward the total debt owed. Whether you can afford to pay $100 per month (or $6,000 over a five-year period) is based on a formula that includes your monthly income minus deductions for certain "allowed living expenses," and the total amount of your debt.
In addition, to file for Chapter 13 bankruptcy, the bankruptcy applicant must not have too much debt.
Thus, if you make too much or have too much debt you may be precluded from filing for bankruptcy. To find out more see, Who is Eligible To File For A Chapter 7 Bankruptcy Under The New Bankruptcy Laws? and What Are The Eligibility Requirements To File A Chapter 13 Bankruptcy?