Filing for bankruptcy is not an easy decision for most people. Admitting one has gotten into more debt than he or she can handled can be difficult. However, there may be good reasons for starting a personal bankruptcy case, and there are many New York residents who need to use this legal process due to a period of unemployment or unexpected medical expenses. Even so, there are certain requirements that may need to be met for certain types of bankruptcy cases.
Chapter 7 liquidation cases, for example do require that the debtor take certain steps prior to filing for bankruptcy as well as during the process. This can include taking certain courses on debt counseling and creditor education. Chapter 7 cases may also require that the debtor meet certain income requirements.
These income requirements are known as a ‘means test’ and have been in place since the new federal bankruptcy law was passed in 2005. This test purports to prevent people from ‘abusing’ the bankruptcy system by making sure that their incomes truly are insufficient to pay their debts. Basically, the bankruptcy court will need to know that the debtor’s income is less than the state median income, or that his or her projected 5-year disposable income will not meet a certain formula that will be applied.
If these income requirements are not met, then the individual will not be able to file chapter 7 bankruptcy However, such a bankruptcy petition may be converted into a chapter 11 reorganization case. What kind of bankruptcy relief any individual New Yorker may be eligible to file may not be immediately obvious to a consumer. Because of this, there are experienced bankruptcy attorneys on Long Island, such as those at Macco & Stern LLP, who can lend aid in making this determination. These legal professionals have guided prior clients through this complex process and helped those clients make a better financial future for themselves. People who wish more information on this issue are invited to view our bankruptcy web page.