Bankruptcy Lawyer Discusses Chapter 13 and 7 with Client from Elk Grove

I was discussing bankruptcy choices in my Sacramento law office with a client from
Elk Grove and was struck by the fact that the reforms of a few years ago have had
little affect on the percentage of Chapter 7 versus Chapter 13 bankruptcies being
filed.

Reform

The Bankruptcy Abuse Prevention and Consumer Protection Act was designed to
make it more difficult for people to file for Chapter 7 and write off their credit card
debt. Prior to the new law the breakdown between Chapter 7 and Chapter 13 was
around 83% to 17%. These days, it stands with Chapter 7 at 87% and 13 at 13%.
This overall increase in Chapter 7 filings has some people saying that the new law is
ineffective.

Is it the Law’s Fault?

One of the things the present economy has people doing is questioning the
effectiveness of the changes in the bankruptcy laws. But the breakdown in
percentages does not mean that the law isn’t working. Under Chapter 7 reform,
petitioners have more responsibilities to creditors. Also, it’s not as easy as it was to
file for Chapter 7 as it used to be.

But the economy is so bad that Chapter 7 is now the recourse for most. The fact is if
someone meets the mean’s test for Chapter 7, then they may file for it. That’s what
happened when I met in my Sacramento office with my client from Elk Grove.

Chapter 7 Versus Chapter 13

Certainly as a bankruptcy lawyer, I explain the reasons why one should file for
Chapter 7 or Chapter 13. There are good reasons for both, but as I told my client
from Orangevale, filing for Chapter 13 only makes sense if you can pay back much of
the debt on a regular basis over three to five years. These days, many people simply
lack the means to do so.

Please contact our bankruptcy offices in Sacramento, San Francisco, Santa Clara, and
San Francisco California, at info@california-bankruptcyattorney.com or at 888-589-
1977 if you have any questions regarding bankruptcy.