People with high incomes
Under the new rules, the first step in figuring out whether you can file for Chapter 7 bankruptcy is to measure your "current monthly income" against the median income for a family of your size in your state. Your "current monthly income" is your average income over the last six months before you file. If your income is less than or equal to the median, the law presumes that you are eligible for Chapter 7 bankruptcy (assuming you meet the other Chapter 7 eligibility criteria listed below). If your income is more than the median, however, you must pass "the means test" another requirement of the new law -- in order to file for Chapter 7 bankruptcy. For more information, see The Means Test & Other Chapter 7 Eligibility Issues.
If you don't pass the means test, you are limited to using Chapter 13 bankruptcy, which requires you to make monthly payments over a three- to five-year period according to a strict budget monitored by the court. Most people who file for bankruptcy prefer Chapter 7, which requires no repayment. However, Chapter 13 bankruptcy is still the best way to handle specific types of problems, like curing a default on a mortgage
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