In the recent past, some of the rules and regulations surrounding who is eligible for filing for bankruptcy have been changed. This may or may not affect you and your personal decision to file for bankruptcy, but you should be aware of these changes and take steps to make them work in your own life and with the choice you have made.

Before you can even begin to note the effect this change will have on you personally, you must know which type of bankruptcy you intend to file for. In the past, individuals generally had a choice between filing for personal or Chapter 7 Bankruptcy, also called liquidation, or filing for Chapter 13 Bankruptcy or repayment. While most of the rules surrounding Chapter 13 Bankruptcy have remained the same, recent changes to the liquidation procedure may have an effect on you.

Your eligibility for Chapter 7 Bankruptcy will depend greatly on your current monthly income. In order to assess whether you are eligible for Chapter 7 proceedings, you will need to obtain this figure and then compare it to the current median or average income in your state. The size of your household, meaning the number of people currently living in your residence or who you are directly responsible for, must also be taken into consideration when ascertaining these numbers. If your median household income is the same amount as the average or lower than the average, you can proceed with filing for Chapter 7 Bankruptcy. If, however, your income is more than the median, you will need to take and pass what is commonly known as a “means test.”

This test is the final step in determining whether or not you may file for personal bankruptcy. You will have to use a form or an online tool, often called a “means calculator,”  to subtract any allowed expenses and debt payments from your current monthly income. This will determine how much disposable income you have left and whether or not it will be enough to make payments on a Chapter 13 plan. If it is, then you will only be eligible for Chapter 13 bankruptcy and not Chapter 7 Bankruptcy. If, however, the amount is below a certain previously selected figure (which varies from state to state), you will be able to file for Chapter 7 Bankruptcy.

These changes can seem difficult to navigate through and to understand, but with the help of a bankruptcy attorney or with enough research and preparation on your part, the process does not have to be long and arduous. In fact, figuring out whether or not you are eligible for bankruptcy and which type of bankruptcy you may file is actually one of the simplest steps in the bankruptcy process. You should always be up to date on the latest rules and changes in rules for your particular state of residence, and you should seek legal help or assistance whenever you do not understand something. Knowing the rules and regulations of Bankruptcy and abiding by them is the best way to make the entire process faster and more comprehensive.