Credit Counseling
All debtors will must get credit counseling before they will be able to
file for a
bankruptcy case -- additional counseling for budgeting and debt
management issues will be required before their debts can be wiped out.
Before one can file for bankruptcy under Chapter 7
or Chapter
13, theymust complete credit counseling courses with an agency approved
by the
United States Trustee's office.
The purpose for this credit counseling is to
give the potential filer an idea of whether they need to file for
bankruptcy or whether another informal solution such as a repayment
plan would get them back on a more stabe economic footing.
Eligibility for
Chapter 7 Restricted
Some bankruptcy filers with high incomes will not be permitted to
use Chapter 7, but
will instead will be required to repay at least some of their debt
under Chapter 13.
Under the new law, the first step in figuring out
whether one can
file for Chapter 7 bankruptcy is to measure their "current monthly
income" against
the median income for a family of the same size in the same state.
Their "current monthly income" is not the income at the time of the
filing, it is the average income over the last six months before the
filing.
If ncome is less than or equal to the state
median, Chapter 7 bankruptcy is permitted. If it is more than the
median, they must pass a "means test" -- another requirement of the new
law -- in order to file
for Chapter 7.
The purpose of this means test is to figure out
whether a potential filer has enough
disposable income - after subtracting certain allowed expenses and
required debt payments -to make payments under a Chapter 13 plan.
FInding a
Bankruptcy Lawyer
Because the law imposes new requirements on all bankruptcy lawyers, it
may be tougher
to find an attorney to represent your bankruptcy case.
The new rules add complicated requirements to the bankruptcy
field . This is going to make it
much more expensive for lawyers to represent clients in bankruptcy
cases,
simply because of the increased time it will take to handle these
cases. In short, this means attorney fees will be going up.
