How do the New Bankruptcy Laws Affect You in California?
Californians were amongst the first to really feel the pain of the “Great Recession”. In 2008, California lost more jobs than any other state. In 2009, California job loss continued to be high, and still shows no signs of truly slowing down. When even the company holding the rights to Governor Schwarzenegger’s former powerhouse – the “Terminator” movie franchise – declares bankruptcy, it’s no wonder that many average Californians are starting to seriously consider declaring bankruptcy.
However,new bankruptcy laws that went into effect in 2005 have confused many average people. Exactly who can declare bankruptcy? How do the new bankruptcy laws work? Is bankruptcy even right for you? The smartest way for Californians to navigate the confusing new bankruptcy laws is to hire a California bankruptcy attorney.
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Types of Bankruptcy
As you may know, there are different classifications of bankruptcy, including Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy is best suited for people with modest income, few assets, but comparatively high debts. In most cases, not all types of debts are eliminated by Chapter 7; Chapter 7 allows you to discharge most debts while still being responsible to pay back a few. In Chapter 13 bankruptcy, designed for individuals with regular incomes, you repay a portion of your debt to your creditors according to a payment plan set up by the court.
But which type of bankruptcy should you file for? Again, getting the help of a California bankruptcy lawyer is the best way to figure out which type of bankruptcy is right for you.
The New Bankruptcy Laws: What’s Changed?
Under the new bankruptcy laws, anyone who wants to file for bankruptcy must first undergo credit counseling, provided by a government-approved program. Additionally, individuals who want to file for Chapter 7 bankruptcy must meet stricter eligibility requirements, including proof that your income is less than the median income for your state. If your income is greater than your state’s median, you must file for Chapter 13 instead.
Many people don’t realize that they are still eligible for a Chapter 7 bankruptcy. Rather than assume you’re only eligible for Chapter 13 due to the new bankruptcy laws, contact a California bankruptcy attorney to help you determine what your eligibility actually is.
Other changes include fewer protections from creditors, such as debt collection and lawsuits; a new priority for unpaid child support and alimony, in which these debts take priority over other debts; and mandatory financial management education.
In short, any Californian looking to declare bankruptcy should begin by finding a California bankruptcy lawyer. Because the courts, judges, and laws can interpret the law differently from state to state, and because your creditors will definitely have a professional legal team working against you, a California bankruptcy attorney is best-suited to help you determine how to proceed with filing for bankruptcy.
If you live in the Bakersfield, Fresno, San Jose, San Diego Riverside, Orange County, or Los Angeles vicinity, consider calling on the help of the DeptFreeLawFirm. California bankruptcy lawyers with many years of experience in bankruptcy law, the DeptFreeLawFirm stands ready to help as you work your way out of financial distress.