The most significant change to the bankruptcy law changes in 2005 was the implementation of what is called the "Means Test".
Broadly speaking the Means Test determines two things: 1) whether a debtor can qualify for Chapter 7 bankruptcy, and 2) if not, how much they will be required to pay to their unsecured creditors in Chapter 13 bankruptcy.
If your gross income is above the median for the state that you file in, you will be subject to the means test.
Just because your gross income is above the median does not mean you don't qualify for Chapter 7. A good number of our clients have gross income above the median for their household size in Oregon and still qualify for Chapter 7 bankruptcy. However, in these cases it is critical that the means test be accurate.
There are several online places that claim to be able to perform the means test. In my experience clients who attempt to do their own means test do not do it correctly. The means test formula is extremely complicated, and there can be variances in how your local jurisdiction interprets the means test. In my opinion it is worth having an experienced bankruptcy attorney do the initial means test formula to determine your eligibility.
If a client is on the border for qualifying for Chapter 7 our firm performs an initial means test for an affordable fee, and can then discuss the client's options based on the result of the means test. Many of our clients start with this, and then proceed to file Chapter 7, or Chapter 13 bankruptcy.
If you would like more information about our consumer bankruptcy firm visit www.pacificbankruptcy.com.