Bankruptcy law has greatly changed over the years. It is now much more difficult to get through to obtain a discharge and even to enter. The information below is summarized and the actual statute must always be considered. Much of the language in the statute is so vague, contradictory or poorly structured that many years will be required for the appellate courts to reach decisions and if contradictory opinions are issued the Supreme Court may need to hear cases to make final binding determinations of what the law means.
1.) A person must obtain counseling from a non-profit counselor approved by the United States Trustee Office within the 180 immediately prior to filing for bankruptcy.
2.) Before a debtor (someone who has filed for bankruptcy) can obtain discharge of debts, the debtor must attend a 90 minute class on budgeting. Again the instructions must be from an approved instructor.
3.) Qualifications- There are two new tests an attorney must consider. If someone who wants or needs to file for bankruptcy the attorney must first compare your total income to the state median income. If your household income is less than the median income of the state the person or couple may file under Chapter 7. If the income is above the median a second test must be met in order to file under Chapter 7. It is called the means test.
This test uses many modified and/or artificial numbers. It starts with your income for the prior six months totaled and then divided by six. The budget numbers used are from the IRS tables for households of the same size. Ultimately if you have $100 or more disposable income you must file under chapter 13.
4.) A debtor must file copies of all “payment advices” (which is interpreted to mean paystubs, 1099s, employer payment register, etc.) received within 60 days prior to filing for bankruptcy; § 521 a(1)(B). Failure to so file all of these copies requires the dismissal of the case.
5.) Debtor must file the certificate obtained from the Credit Counselor prior to filing bankruptcy with the Court Clerk within 45 days of filing for bankruptcy or the case must be dismissed;
6.) Debtor must provide the most recent federal income tax return or tax transcript to the Trustee at least seven days prior to the Creditor Meeting and must also provide the return or transcript to any creditor who asks at least 15 days prior to the Creditor Meeting (failure to comply requires the case be dismissed);
7.) Any subsequent tax return or amendment of a tax return must be provided to the trustee and to any creditor who requests a copy concurrent with the filing of the return.