I’ve heard that there are stricter criteria for certain kinds of bankruptcy filings. What are some of the key changes under the new bankruptcy law?
• Debtors who wish to file under Chapter 7 bankruptcy must meet the requirements as set forth under a new “means test.” Under this test, if your current monthly income is less than the median income in your state, you can file under Chapter 7. But if your current monthly income is higher than the median in your state, and you can afford to pay $100 per month toward your debt, you must file under Chapter 13. The main distinction between Chapter 7 and Chapter 13 is that under Chapter 13, the debtor (person filing for bankruptcy) enters into a 5-year repayment plan in which he or she must pay a certain amount toward creditors based on a strict expenses-to-income formula.
