About the New Bankruptcy Law

The fact is that the relief that was once available in California prior to the changes in the bankruptcy laws is still very much available today. The vast majority of people who were eligible for Chapter 7 before the law changes are eligible now. The director of the American Bankruptcy Institute estimated that the new bankruptcy changes will adversely affect less than three percent of all debtors.

You may wonder how the law changes will impact you. Ultimately, you will have to cut through a little more red tape in order to file for bankruptcy. In essence, three more steps have been added to the Chapter 7 process. Each of these new steps may be easier and simpler than they appear.

First, you will now have to complete a credit counseling session before filing. The counseling session could take the form of a simple thirty-minute on line course plus a phone call to a credit counseling agency.

Second, you will have to complete a financial management course after you file, but before you receive your discharge. You will only have to do this if the Trustee's office approves agencies to provide the course, or offers the course itself.

Finally, you will also need to provide more documents to your attorney to file for bankruptcy. These additional documents might have to be made available to creditors under the new legislation. Keep in mind that you can easily obtain these additional documents yourself or with the help of your attorney.

In the worst-case-scenario, the new means test will force some people (up to three percent, as reported by the ABI director as cited above) to file a Chapter 13 bankruptcy. Certainly, it would be desirable to be able to choose your bankruptcy yourself. The fact is, though, some portion of this already small percentile would have likely opted to file a chapter 13 anyway. Besides, a Chapter 13 bankruptcy simply requires you to pay back a percentage of your debts in a payment plan that you can afford. Typically a Chapter 13 plan can still save you money and is less stressful than struggling to pay debts outside of bankruptcy.