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Substantially all rights and benefits under preexisting bankruptcy Chapter 7
laws remain viable, so long as each debtor qualifies under the new means
testing requirement. The body of bankruptcy Chapter 7 laws appears in
under Title 11, beginning with Section 101, and also includes many
global sections enacted throughout the title, as well as a substantial
number of related laws appearing in other sections of the United states
Code.
New changes to Tile 11 (the Bankruptcy Code) were primarily contained
in the Abuse Prevention Act of 2005, and are subject to periodic
amendment. The Code also contains numerous benefits and opportunities
for anyone considering Chapter 7. Laws for discharge are virtually the
same and are explained elsewhere, while the means testing and credit
counseling requirements are the two most remarkable changes.
New Bankruptcy Chapter 7 Laws
Means testing is a relatively new requirement based upon income
earned during the 180 days before filing. Total income, the ratio of
disposable income to unsecured debt, and a maximum limit formula are
included. Each person who files Chapter 7 must satisfy all three
portions of the test. In general, anyone who earned total income equal
to or above the median earnings within their state of residency cannot
file Chapter 7. The two other test requirements are based on disposable
income, times 60, which must be below 25% of total unsecured debts, and
below either $10,000 or $6,000 (depending on total income).
As a condition of filing bankruptcy, Chapter 7 laws now include a
mandatory condition of completing a course, during 180 days before
filing a petition, in credit management, counseling assistance and
budget analysis. The course must be documented by a certificate of
completion prepared by one of the course providers that appears on the
official list maintained by the clerk.
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