In 2005, new bankruptcy laws went into effect.  I know, it’s 2008, almost 2009 and the laws aren’t necessarily new but for the first time in someone’s life, there’s someone out there looking to declare bankruptcy.  I’m sure if you’re getting information on bankruptcies, you’ve heard that the rules have changed.  I just want to go through a quick summary on how they have changed so that you can better understand the system.

Higher Income = Harder Time

Before the new rules, if you made a lot of money, it didn’t matter.  You could declare Chapter 7 just like anyone else.  Today, that rule has changed.  The court system is going to look at your montly income and decide on how you’re going to declare.  If you make enough money, the courts are going to make you pay it back, no questions asked.  If you’re under the average in your area, you’ll have a better chance of declaring Chapter 7.

Test taking

With the new law again, you’re going to have to take something called the “Means Test”.  What the Means Test is, is a test that will figure out if you have enough disposable income to pay off your particular debts.  After you take the test, the state will have a better idea on how much they can take from you in order to pay off your debts.  Check out this means test calculator for a better understanding on how it works.

Credit counseling is required

Yes, just like when you get traffic tickets or get a DUI, now you’re going to have to take counseling if you plan on declaring bankruptcy.  These counseling sessions will be approved by the US Treasury office and you must go to see if you are eligible for any type of declaring.  Here, you’ll get a lot more information on the situation to see if you qualify.

These are the main three things that have changed that weren’t required before the change in 2005.  As you may note now, it is going to be a lot tougher to declare and just by looking at it in the government’s eye, it should be tough.  You shouldn’t just show up to court and declare, it’s not that easy.  Before you declare, just make sure you do your homework before you waste anyone’s time.