Bankruptcy Laws

Bankruptcies are filed in a federal court and are under federal jurisdiction even though some laws can vary by state. The bankruptcy laws were rewritten in 2005 so it is imperative that you have the most up-to-date information available. One of the biggest changes in the bankruptcy laws is the requirement for credit counseling. The credit counseling must be approved by an agency approved by the Department of Justice. The main purpose of the counseling is to help you determine if you actually need to file for bankruptcy or if one of the many bankruptcy alternatives would be a better choice for you. In addition to the pre-filing counseling session you will also be required to attend another counseling session upon discharge. The second counseling session helps you learn the finer points of personal financial management including budgeting.

The eligibility rules have also changed to determine who may qualify to file for bankruptcy. The first is to determine if you meet the income requirements to file a chapter 7 bankruptcy. You will determine your average income over the previous six months and compare it with the median income for a family of your size in your state. If your income is less than or equal to the median income then you qualify to file for a chapter 7 bankruptcy. If your income is higher than the median then you must pass the means test.