Bankruptcy laws have been changed in the United States during the past decade. It has become tougher to file under the most popular Chapter 7 of Bankruptcy. Although these laws have been formulated in order to protect people against harassment from creditors, there were certain loopholes in the system, which debtors abused to cheat creditors out of their rightful money. In order to prevent such mishaps, rules have been made more stringent.
Eligibility criteria
Before 2005, it was the judge who decided if the applicant was eligible to apply under Chapter 7. Now, if you are a citizen of Conyers, GA and want to file bankruptcy case under Chapter 7, you have to be found eligible under the new regime. Here are the important ones.
* You cannot apply under chapter 7 bankruptcy in Wellington FL if you have filed a bankruptcy within the past eight years
* If the court has reason to believe that you are abusing the facility to cheat your creditors, the application is rejected straight away
* If you have adequate disposable income which can be used to repay certain debts over the coming five years, you are not eligible for chapter 7 but you get a easy go ahead if you file under Chapter 13
* You cannot apply if your previous application was dismissed less than 180 days, or six months, from the date of the new application
* You are found ineligible if your debts are due to luxury spending even when your finances did not allow such splurging
Many people who are in debt try to get rid of all their outstanding loans by faking bankruptcy. If the court finds such discrepancies in the case, you are in big trouble. You cannot transfer your assets to relatives and friends to show nil assets in the court. It is also against the law to use fake social security numbers.
How is the calculation made?
If your monthly income is more than a fixed limit, you have to undergo a means test. Here is how the calculation is done.
* First, your current monthly income is calculated as the mean of your income for the past six years
* Next, this figure is compared with the mean income of families in America which are the same size as yours
* If your current monthly income is lower than the national mean or equal to it, you are found eligible for filing under this chapter
The only exceptions to the law are people whose income is less than a fixed figure. If your income is more than this, then the means test is done on your income to see if you are eligible. Disabled veterans have a slight edge here, in case they were injured when on duty. Although they do have to satisfy the basic criteria, they get a faster and easier go ahead from the court. People who suffer major business losses, which drive them to bankruptcy filing, also get an easier go ahead in a bankruptcy case..
