Posted on July 13, 2005 at 17:48:46:
On April 20, President Bush signed a bankruptcy reform law creating big changes for those trying to wipe out their debts. A key feature is a complicated “means test” that will prohibit many from filing a liquidation bankruptcy under the “clean slate” Chapter 7. The law takes effect on October 17.
If income is over a certain level—usually the state’s median income—and/or the individual is able, after essential living expenses, to pay 25 percent of unsecured debt, the court may require filing under the more stringent Chapter 13. Rather than actual expenses, though, the court will assume living standards established by the IRS.
Other requirements: a briefing from an approved credit counseling agency at least six months before filing and an approved class in debt management techniques before receiving the bankruptcy discharge. The debtor is required to pay for this education.