Is it true that Congress made it impossible to file for chapter 7 bankruptcy?
In a word, no.
As of 2005 there is a means test for bankruptcy filing, a calculation of how much disposable income you have each month. The test considers income “disposable” if it’s more than how much you are paying each month for qualified expenses which include housing, child support, health care, and basic living costs. It also takes into consideration how many dependents you have.
The exact thresholds are based on the median income where the debtor lives. Here in New York, the median is $49,086 for a single person as of this writing, and rises as the family size goes up. The means test is the reason why we need to get a full six months’ worth of pay stubs as the first step.
If your recent income and qualified expenses show that you’re under the limits (like 88% of people who take the means test), we can file a chapter 7 bankruptcy case which will result in your debts being discharged. Failing the means test means that chapter 13 bankruptcy is needed; this will result in a plan to pay back some of your creditors.
Each person’s situation is unique, and setting up a free consultation is the best way to get legal advice on the best strategy for you.