• Bankruptcy filers must follow rules provided by the federal bankruptcy code.courthouse image by pearlguy from Fotolia.com
  
  The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 changed the rules to the bankruptcy code that had been on the books for decades. Individuals can still file for both Chapter 7 and Chapter 13 bankruptcy, but the debtor's income determines which chapter of bankruptcy he can file.
  
  

Chapter 7

• The federal bankruptcy code now has a means test that debtors must take to cut down on the number of debtors discharging debts in Chapter 7 cases. A debtor can only file for Chapter 7 bankruptcy if she passes the means test. The debtor compares her family income to the median family income for a family of the same size within her state of residence. If her family income is below the state median, she can file for Chapter 7 bankruptcy. If her family income is above the state median, she must calculate her monthly disposable income by deducting allowed monthly expenses from monthly income. If the debtor's monthly disposable income is less than $100, the debtor can file for Chapter 7 bankruptcy. If the debtor's monthly disposable income is more than $100, but that amount would not pay at least 25 percent of the debtor's debts over the next 60 months, the debtor can file for Chapter 7 bankruptcy.
  
  

Chapter 13

• If the debtor's monthly disposable income is more than $100, and that amount would pay 25 percent of the debtor's debts over the next 60 months, the debtor cannot file for Chapter 7 bankruptcy. It will have been proven that he could repay debts in a Chapter 13 repayment plan. If he decides to file for Chapter 13 bankruptcy, he must propose a debt repayment plan to be approved by the bankruptcy court. If his family income is below the state median, he will spend the next three years repaying his debts. If the debtor's family income is above the state median, he will spend the next five years repaying his debts.
  
  

Filing

• When filing a bankruptcy petition, the debtor must also file schedules of assets and liabilities; income and expenditures; and executory contracts and unexpired leases. The debtor must also file a certificate of credit counseling; debt repayment plan developed through credit counseling; evidence of income from the previous 60 days; a statement of monthly net income and anticipated income increases; and a record of any interest in a qualified education or tuition account.
  
  The bankruptcy trustee plays a significant role in Chapter 7 and Chapter 13 bankruptcy cases. In a Chapter 13 case, the trustee accepts monthly payments from the debtor and distributes these payments to each of the debtor's creditors. After the debtor has made all plan payments, she receives a discharge of her debts. In a Chapter 7 case, the trustee takes legal possession of the debtor's property and sells all property that is not exempt from being sold. The trustee uses the proceeds to pay the debtor's creditors. After the creditors have been paid, the debtor will receive a discharge of debts.