Many people today who file for bankruptcy do not even realize that bankruptcy is under federal jurisdiction. The US Constitution required Congress to enact uniform bankruptcy laws. Although bankruptcy is under federal law, it will vary from state to state. The central structure was created by Congress and administered by the US Bankruptcy Court, which is federal. Regardless of whether the code is federal in nature, each state will have its own provisions under the law. As an example, filing for Chapter 7 bankruptcy requires that a person now qualify under the means test. Basically, the means test looks back at six months of one’s income and then divides that by six and multiplies by 12 giving the individual their average annual income. To qualify, the person filing for bankruptcy must earn less than the state median income. The federal government’s website has a median income table that is usually updated twice a year. So someone who lives in California and earns $50,000 a year will qualify to file for Chapter 7 bankruptcy, while someone in Arizona will not.
The areas of bankruptcy law that differ most notably are in the bankruptcy exemption laws. The bankruptcy code has a standard federal exemption that one can use, but most people opt out and use their state’s bankruptcy exemptions. Depending on the state you reside in, the exemptions can be very generous for some. Some states will allow a person to protect anything related to the job, such as her tools, while other states will limit it to a few thousand dollars. Rural areas will generally have special provisions for farm equipment and things associated with that. One of the most popular exemptions that many people have heard about is the homestead. Again, the homestead exemption will vary from state to state and is usually labeled with property values. Some states, like Texas, allow an unlimited amount of equity in a home and some smaller states can go as low as $25,000.
Due to the complexity of the laws, it is important for the person filing for bankruptcy to consult with a bankruptcy attorney in their area. A local bankruptcy attorney will know the ins and outs of the bankruptcy code for your state and even the district where the person is filing. Being represented by legal counsel allows the person to attend the 341 meeting with confidence knowing that they are protected to the fullest extent of the law. It is legal and possible to file for bankruptcy on your own, but it is not advisable, especially since the major review of the bankruptcy code in 2005. A bankruptcy attorney will know what is expected of the bankruptcy court in that area and will know what they are. acceptable bankruptcy exemptions to use. If someone were to have an operation, they would not ask their neighbor for help, they would seek the help of a surgeon. Similarly, with filing for bankruptcy, to reap maximum benefits, one should be represented by professional legal counsel.
