Due to the new bankruptcy act of 2005, all those who are filing for a bankruptcy are required by law to attend credit counseling six months prior to filing for bankruptcy. An instructional course in financial management will then be required after bankruptcy has been filed. Also under the 2005 Bankruptcy Act a means test will be applied to determine which kind of bankruptcy the individual apply qualifies for.

Types of Bankruptcy
Maine has two different types of bankruptcy that individuals are able to qualify for. Other types of bankruptcy are for businesses and farming industries. The individual bankruptcy categories include Chapter Thirteen bankruptcy and Chapter Seven bankruptcy.

Chapter Seven bankruptcy allows individuals to sell their property through an assigned trustee and use the acquired funds to pay creditors. Certain items of property will be excluded from being sold and can often include motor vehicles, some forms of real estate, homes, and other particular items. Chapter Seven bankruptcy allows creditors to be eliminated within a three-month time line and will almost automatically solve the problems of foreclosure. The trustee involved with the case will be paid through commission of the property sold.

Chapter Thirteen bankruptcy is the other form of bankruptcy for individuals. In this type of bankruptcy no property is to be sold, instead a payment plan is created especially for the individual's needs. This depends on how much debt is outstanding and the current income capabilities. This payment plan will specify how much of the income will be used to pay off the debts and will last usually as little as three years and no more than five years.

Maine law requires that all the payments be made with the five-year plan or consequences will follow. Both these types of bankruptcy can be filed through a single individual or through a husband and a wife at the same time in a joint filing.

The Means Test
The means test will not specify which type of bankruptcy meets an individual's needs and will do so through calculations. The average income for the six months before bankruptcy filing will be analyzed along with Maine's median income. Chapter Seven bankruptcy can usually be the outcome if a minimum of six thousand dollars can be paid in a five-year span. This allows for the individuals to continue financial balance after debts have been cleared through sale.

Chapter Thirteen bankruptcy will be the end result if the court concludes that a minimum of ten thousand dollars can be acquired in a five-year span. Because individuals will be able to have higher finances, they are then deemed stable enough to pay their own debts.

When an individual falls between the six thousand and ten thousand dollars mark for five years, the court will then calculate if Chapter Seven bankruptcy is an adequate possibility. The court will consider if twenty-five percent of the debt can be paid or not. If not then Chapter Seven bankruptcy is possible. Outstand expenses can include on-going medical bills and credit card bills.