San Jose Bankruptcy Attorney Discusses Bankruptcy Filings Decrease One Year After New U.S. Law
San Jose Bankruptcy Attorney Discusses Bankruptcy Filings Decrease One Year After New U.S. Law
In the United States, the number of people filing bankruptcy to erase their debts has decreased since the country revised its bankruptcy laws last year and Congress began mandating an income-based test for measuring a debtor’s ability to repay his or her financial obligations.
Because of this, less people are able to file a Chapter 7 bankruptcy, and debtors who have an income higher than their state’s median and can pay at least $6,000 over a five-year period must file Chapter 13 bankruptcy nd repay some of their debt.
In California, the median for a single earner is $43,107. The median for a family of four is $70,172.
From January to June 2006, According to the American Bankruptcy Institute:
-263,600 people filed for bankruptcy in comparison to the 851,683 people who filed from January to June 2005.
-58.8% of this year’s filings were Chapter 7 filings.
-41% of the filings were Chapter 13 debt reorganizations.
-Bankruptcy filers are required to pay for and take a court-approved credit counseling class and a court-approved class on debt education.
Nolo.com sites the following differences between Chapter 7 and Chapter 13 bankruptcies:
With Chapter 7 bankruptcy, you ask the bankruptcy court to discharge most of the debts you owe. In exchange for this discharge, the bankruptcy trustee can take any property you own that is not exempt from collection (see "What property might I lose if I file for bankruptcy?" below), sell it, and distribute the proceeds to your creditors.
With Chapter 13 bankruptcy, you file a repayment plan with the bankruptcy court to pay back your debts over time. The amount you'll have to repay depends on how much you earn, the amount and types of debt you owe, and how much property you own. For more information about Chapter 13.
The U.S. Department of Justice offers the following information on what type of debts you cannot get discharged on. This means that you must pay for these kinds of debt:
· most taxes;
· child support;
· alimony;
· most student loans;
· court fines and criminal restitution;
· personal injury caused by driving drunk or under the influence of drugs.
The Law Offices of Scott Sagaria represents clients in all areas of Bankruptcy Law and Business Formation. If you live in Santa Clara County, Alameda County, or Monterey County, contact the Law Offices of Scott Sagaria for a free consultation.
Bankruptcy Filings Drop After Changes In Law, Latimes.com, October 14, 2006
Court Quiet A Year After New Bankruptcy Law, Ocregister.com, October 14, 2006
Bankruptcy Information Sheet, U.S. Department of Justice
Bankruptcy Fact Sheet, Nolo.com
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