Bankruptcy Laws since 2005, Limits on Bankruptcy Filing Options

Q: Do the laws enacted in 2005 affect what type of bankruptcy I can file?
A:
Yes. In order to be eligible receive a discharge in a Chapter 7 Bankruptcy your household income must be lower than the average income for that household size in Ohio, or you must “qualify” through the “means test.” The “means test” Form-22A is now part of the consumer’s bankruptcy petition and it compares your last six months gross actual household income to the IRS median household income level for families of the same size in your area. If your household income is above the median, then your household expenses are examined as well. Business filers do not have to complete the Form 22A.

Q: Does this Form 22A or means test affect my bankruptcy?
A:
Yes. If your household income is below the median income or you can “pass” the means test, you can receive a discharge in a chapter 7 or a chapter 13 bankruptcy. If, however, your income is above the median (assuming yours is a consumer debt bankruptcy), and your household expenses allowed by the means test result in excess income for your household, then you will not have the option of filing a Chapter 7 bankruptcy. Instead, you will be limited to filing either a Chapter 13 or Chapter 11 repayment plan.

Q: What are the differences between the types of bankruptcy?
A:
In a Chapter 7 bankruptcy, most of your debts are discharged. In a chapter 13 bankruptcy, you will make a payment to a trustee for a period of 3 to 5 years and repay a portion of your debts over time.

Q: Do I have to take a class if I intend to file for bankruptcy?
A:
Yes. You are now required to have two credit counseling sessions, one before filing your case and one afterward. If you complete the first credit counseling session and file a bankruptcy case, but do not complete the second session after filing, you will not receive your bankruptcy discharge.

Q: What happens during counseling?
A:
Before filing for bankruptcy, you must review your bills and budget with a credit counselor who will discuss non-bankruptcy alternatives (called the “Credit Counseling Course). The second counseling session (called the “Financial Management Course”) must occur after you have filed your case, but before the 45th day following your first scheduled hearing with the bankruptcy trustee (called a “341” hearing).

Q: What types of documents will I need when I file bankruptcy?
A:
In addition to your pre-bankruptcy counseling certificate, you will:

  • 6 months of your paystubs
  • 3 years of tax returns
  • Auto Titles
  • Deed, Mortgage and any recorded liens on real estate
  • 3 months worth of bank statements
  • any divorce or child support records, and records of any lawsuits or judgments; and
  • the last two of months of bills and all three of your credit reports (to ensure that all debts have been listed).

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