Jeffrey Paul Judge Bankruptcy Law Blog on Lawyers.com

Can I still file bankruptcy under the new laws?

Tuesday, August 11, 2009 by Jeffrey Paul Judge

The simple answer is yes, you can still file for personal bankruptcy under The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. But the steps may be more complex and the hurdles a little higher. Under the new law, some people with bigger incomes cannot apply for Chapter 7 and simply liquidate and discharge most of their debt. Instead, they must repay at least some of their debts under Chapter 13 through a scheduled repayment plan over time. For example, a Tucson bankruptcy filing might be for Chapter 13 bankruptcy if you know your income is higher than average.

How does this work? First, you must measure your current monthly income against the median income for a household of your size in Arizona. If your calculations show that your income is less than or equal to the median, then you are eligible for Chapter 7 bankruptcy in Tucson or another location. However, if your math proves that you are above the median, then you must pass “the means test,” another requirement of the new law in order to file Chapter 7 bankruptcy. The means test determines whether you have enough disposable income to make payments on a Chapter 13 plan. Before the new law took effect, a bankruptcy court judge evaluated the particular circumstances that led to a bankruptcy situation.

The new bankruptcy law includes other requirements which previously did not exist. For example, before you file for Chapter 7 or Chapter 13 in Tuscon you must complete credit counseling with an agency approved by the United States Trustee’s office. Toward the end of your case, you must also attend a personal financial management session from an approved counselor.

The new law in 2005 added a fair amount of paperwork and additional requirements. It has doubled the attorney fees and the filing fees from pre-2005 numbers.

Judge Law Firm, 1647 N. Alvernon Way, Suite 1 Tucson, AZ Pima Co. 85712-3361, tel: 866-958-4389

Posted at 18:00 PM

Topic: Bankruptcy