If you are in the very unfortunate position of having to consider bankruptcy, then the chances are that you are at the very end of your tether and that your financial situation is unrecoverable by any other means. If you have therefore considered bankruptcy as a serious and real option, you are probably aware of the recent reforms passed by congress in 2005 to the bankruptcy code. These reforms make it more difficult for consumers to file and include a compulsory bankruptcy means test. The bankruptcy means test was introduced by way of establishing whether a consumer really has no other option than bankruptcy.
There is a long standing fight between creditors and debtors when it comes to bankruptcy. While some financial related laws have favoured consumers in the past, the 2005 reforms came after extensive campaigning by the credit card industry and thus favour the industry more than the consumers.
The reforms mean that it is harder to file for chapter 7 bankruptcy, whereby most of your debt is entirely wiped out. The biggest part of the reforms came in the form of the bankruptcy means test to determine whether or not you could afford to pay off what you owe.
The first thing to consider is the fact that if your income is lower than the median income in the state in which you are filing, the bankruptcy means test is nothing for you to worry about. If you have a lower than median income, as far as the law is concerned, you are unlikely to be able to pay off debts owed.
However, if your income is higher, then you will be subject to more rigorous checks. This will include verification of your income, expenses and creditors and will require very detailed documentation.
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