The new changes to the bankruptcy law was enacted in 2005 by Congress and the Senate. The reason they have changed the law is to allow people who can make some payments to creditors not be able to file a Chapter 7 bankruptcy which would eliminate all the debt. It means that those who receive a higher income have to file a Chapter 13 bankruptcy . All debtors now also have some new guidelines to follow regarding the bankruptcy process which is another reason why hiring a Bankruptcy Attorney in Los Angeles is still the best way to go. Changes include a Means Test to verify which chapter they should file, as well as counseling has to be taken before and after filing on budgeting and debt management before the California Bankruptcy Courts will allow their Bankruptcy to be complete.

Means Test
The means test was invented to figure out whether you have enough disposable income allowing to either have to file a Chapter 7 (a complete liquidation) or Chapter 13 (repayment plan) Bankruptcy. It subtracts certain allowed expenses and required debt payments, to see if you can make payments on a Chapter 13 plan. To find out whether you pass the means test, you subtract certain allowed expenses and debt payments from your current monthly income. If the income that’s left over after these calculations is below a certain amount, you can file for Chapter 7 . This test is specific to the State that you live in using the Median Household Income. In California the median is $47,234 for a single person household and increases with the number of dependents and income of the household.

Counseling
Before you can file for bankruptcy under either Chapter 7 or Chapter 13 bankruptcy , you must complete credit counseling with an agency approved by the United States Trustee’s office. This is easily done online and helps the debtor learn about what is going on in the process to help avoid future pitfalls. Local attorneys can assist one with the proper tools to go about the counseling. This step is required to determine as well which type of bankruptcy you have to file. At the end of filing the bankruptcy you are required to take a personal financial management course before the California Bankruptcy Court can discharge your debts.

In order to thoroughly work out your eligibility, meeting with a bankruptcy lawyer from the Law Office of Alon Darvish is essential to beginning financial freedom and have the dedicated viewpoint you will need when confronting your financial circumstances. Our office cares about you and ultimately wants to have your debt situation handled and see you moving forward in life with a better financial outlook.