Means Testing And Credit Counseling In Bankruptcy Proceedings
Are you contemplating filing for bankruptcy in the state of Arizona? Then try to think a few essential things over first. Filing for bankruptcy shouldn’t be done haphazardly. It’s something that requires serious thought and planning as well. Usually, a person who is suffering severe and almost irreversible financial difficulties is one who should properly contemplate bankruptcy proceedings. But if you still have enough assets to cover your debts, then there may still be other better options for you to consider. That’s why it’s highly recommended that you should talk things out with a licensed bankruptcy lawyer in the state before actually going for it.
An experienced bankruptcy lawyer in Arizona will most likely require you to first undergo the means test and mandatory credit counseling before he will consider filing your bankruptcy petition. Why is this so? Stemming from the 2005 Reform Laws, these requirements were incorporated to the United States Bankruptcy Code in order to prevent abuses on the system. In the past, filing for bankruptcy was resorted to by more than just a few individuals to just frivolously avoid their financial obligations. This opened the doors to abuse which is why these tests were introduced as amendments to the existing legislation.
Essentially, the means test is for the purpose of evaluating the present income of the person as well as his remaining assets, assuming any are still left. The result of such assessment will determine whether he can file for bankruptcy under Chapter 7 or if he has no choice but to pursue a Chapter 13 bankruptcy instead. A Chapter 7 bankruptcy can only be filed if after undergoing the means test, the individual is found to be with very minimal to no assets left to cover his outstanding debts to his creditors. Your current income will also be calculated and reviewed accordingly to see if it can still be sufficient enough to meet your outstanding financial obligations.
As for the mandatory credit counseling, this lays down several crucial requirements for you to fulfill before you can file your petition. By the very term “mandatory,” failure to meet such requirements would lead to the dismissal of your petition by the bankruptcy courts. These requirements include:
- Meeting with an approved credit counselor for a 90-minute session within 6 months before filing your bankruptcy petition;
- Completing money management classes before your debts will be discharged; and
- Developing a debt repayment schedule in case you’re filing under Chapter 13
Failure to undergo the means test or to fulfill any of the requirements for mandatory credit counseling will most likely lead the courts to dismiss your petition and at times, with prejudice as well. Thus, you have to be very prudent and discuss your bankruptcy plans thoroughly with a bankruptcy attorney in Arizona to make sure that you’re literally doing the right thing. Consult with your bankruptcy attorney today and put your financial burdens to rest for good.
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