What Effect Will The Proposed Bankruptcy Reforms Have on Me?
The main features of the proposed legislation which would affect debtors are the following:
- Your ability to file a Chapter 7 Bankruptcy would be "needs based." There would be a current monthly income requirement that would have to be satisfied before one would qualify for filing. The figure currently being looked at in the committee is $6000 per month. Apparently anyone with a monthly income above that would not be allowed to file Chapter 7 and could only do a Chapter 13.
- The bill would create a "means test." The court would be allowed to convert a Chapter 7 case to a Chapter 13 based on income and other factors. Under existing law, such a conversion only takes place if the debtor asks for it.
- The homestead exemption would be capped at $100,000.00 if the home was acquired during the two year period preceding the filing of the bankruptcy.
Nearly 1.6 million people filed for bankruptcy in 2003. The new reform legislation will apparently effect only a small number of the people who file for bankruptcy each year, the ultimate consequences of the proposed legislation will remain unknown until the final version is signed into law.
About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.