Declaring bankruptcy isn’t as simple walking into the courthouse and signing your name. Before you are allowed to file you must complete certain steps to be eligible. We’ll go over some of those steps with you here, and so that you can better know what to expect when you file bankruptcy.
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In 2005, the bankruptcy laws were rewritten, and a new requirement was added for anyone wanting to file.
Before you may file you must complete a credit counseling briefing from an approved agency. This counseling must be completed sometime in the six-months before your actual filing date.
There are several options for completing the counseling requirement. The counseling may be done in-person, over the phone or online, and will include financial education.
You will have to pay for this service, and all approved counselors are required to disclose the fees upfront and may not charge extra fees for the certificate.
Once completed, you will receive a certificate which must be filed with the court.
If you are filing Chapter 7 bankruptcy, you will need to pass the means test to be eligible to file. The means test is not an exam like you had in school. Rather, this is an examination of your income and debts used to establish true financial need.
In most cases, if your annual income is under the median in your state then you will qualify for Chapter 7 bankruptcy. Bankruptcy means test requirements do vary by state, and your lawyer can give you more information on the laws where you live.
Other tasks to complete before you can file.
Also, within 180 days of your bankruptcy filing, you must receive an individual or group briefing from an approved nonprofit budget and credit counseling agency. Also, within the 180-day period before your bankruptcy, you must receive a briefing from a certified credit counseling agency to explain financial management to you, alternatives to bankruptcy, and how to do a budget analysis.
You must be a resident of the state in which you intend to file your bankruptcy case for at least 90 days before the filing. If you have not lived in the state in which you intend to file your case for at least 90 days, you may only file your case in the state where you have resided, or which has been the location of your principal assets, for a majority of the prior 180 days.
Your bankruptcy attorney will file your credit counseling certificate along with your bankruptcy petition to show that court that you have complied with the pre-filing requirement.