What is a requirement imposed by the Bankruptcy Reform Act before filing for Chapter 7 bankruptcy?

The requirement imposed by the Bankruptcy Reform Act before filing for Chapter 7 bankruptcy is to undergo a means test. This test is designed to ensure that individuals who seek to file for Chapter 7 bankruptcy genuinely qualify based on their income level. The means test evaluates whether an individual’s income is below the median income for their state; if it is, they may proceed with filing for Chapter 7. If their income exceeds the median, they must demonstrate that they do not have enough disposable income to repay a portion of their debts through a Chapter 13 repayment plan.

This framework aims to prevent abuse of the bankruptcy system by individuals who have the financial means to pay off their debts but are opting for bankruptcy instead. The means test serves as a financial assessment tool, making it a critical step in the bankruptcy application process. Other options, while they may relate to bankruptcy, are not mandated requirements for Chapter 7 filings specifically under the Bankruptcy Reform Act.