Monterey Bankruptcy Attorney Discusses California Court Official Predicts More Bankruptcy Filings In 2007
Monterey Bankruptcy Attorney Discusses California Court Official Predicts More Bankruptcy Filings In 2007
Richard Heltzel, chief executive officer of the U.S. Bankruptcy Court for the Eastern District of California, said he thinks that bankruptcy filings will increase again. The number of bankruptcies filed in the last fiscal year had dropped after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
Following the enactment of this law in October 2005, courts in Modesto, Sacramento, and Fresno only took in 8163 cases over the next year—a 79% drop from the year before.
Hetzel believes bankruptcy filings will increase because of a stalled housing market and rising interest rates.
In the Eastern District of California—due to the new bankruptcy law—people who wish to file for bankruptcy must pass a means test in order to file under Chapter 7. If they exceed the median income for this district—$43,107 for a single person or $57,237 for a married couple—they are encouraged to file for Chapter 13 bankruptcy. While Chapter 7 erases debt, Chapter 13 requires that filers repay their debts over a period of time.
Californiabankruptcyinfo.com offers the following information regarding the advantages and disadvantages to filing a Chapter 7 bankruptcy as opposed to a Chapter 13 bankruptcy and vice versa.
Advantages to a California Chapter 7 filing:
1. You receive a complete fresh start. After the bankruptcy is discharged the only debts you owe will be for secured assets on which you choose to sign a "Reaffirmation Agreement."
2. You have immediate protection against creditor's collection efforts and wage garnishment on the date of filing.
3. Wages you earn and property you acquire (except for inheritances) after the bankruptcy filing date are yours, not the creditors or bankruptcy court.
4. There is no minimum amount of debt required.
5. Your case is often over and completely discharged in about 3-6 months.
Disadvantages to a California Chapter 7 filing:
1. You lose your non-exempt property which is sold by the trustee. If you want to keep a secured asset, such as a car or home, and it is not completely covered by your California bankruptcy exemptions then Chapter 7 is not an option.
2. If facing foreclosure on your home, the automatic stay created by your Chapter 7 filing only serves as a temporary defense against foreclosure.
3. Co-signors of a loan can be stuck with your debt unless they also file for bankruptcy protection.
You can file a Chapter 7 bankruptcy once every six years.
Advantages to a California Chapter 13 payment plan:
1. If you choose and you can afford the payment plan, you can keep all your property, exempt and non-exempt.
2. While debts are not canceled as in a Chapter 7 discharge they can be reduced under a Chapter 13 payment plan.
3. You have immediate protection against creditor's collection efforts and wage garnishment.
4. More debts are considered to be dischargeable (including debt you incurred on the basis of fraud and credit card charges for luxury items of $1,150 or more made within 60 days of filing).
If the Chapter 13 plan provides for full payment, any co-signers are immune from the creditor’s efforts.
5. You have protection against foreclosure on your home by your lender as long as you meet the terms of the plan.
6. You have more time to pay debts that can't be discharged by either chapter (like taxes or back child support).
7. You can file a Chapter 13 at any time.
8. You can file repeatedly.
9. You can separate your creditors by class where different classes of creditors receive different percentages of payment. This enables you to treat debts where there is a co-debtor involved on a different basis than debts incurred on your own.
Disadvantages to a California Chapter 13 payment plan:
1. You create a payment plan where you use your post bankruptcy income. This ties up your cash over the Chapter 13 plan period.
2. Legal fees are higher since a Chapter 13 filing is more complex.
2. Your debt must be under $1,000,000 (e.g., unsecured debts are less than $250,000 and secured debts less than $750,000).
3. Your plan and therefore your debt will last for 3 to five years.
4.You are involved in the bankruptcy court process for the term of the 3-5 year plan.
5. Stockbrokers, and commodity brokers cannot file a Chapter 13 bankruptcy petition.
In the Central Valley, bankruptcy filings increased from 4,507 people and businesses in September 2005 to 12,748 in October 2005. In November 2005, after the new bankruptcy law was enacted, just 115 cases were filed.
At Sagaria Law, P.C., our clients have years of experience successfully representing people and businesses seeking bankruptcy protection. To set up an appointment for your free consultation, contact Sagaria Law, P.C. today. We have offices that are conveniently located in Fremont, San Jose, and Monterey.
California Chapter 7 Bankruptcy or California Chapter 13 Bankruptcy? , California Bankruptcy Law
Increase in Bankruptcies is Predicted: Court Official Says Slump in Housing May Fuel Rise, blackenterprise.com, January 6, 2007
Related Web Resource:
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) , USdoj.gov
