California Means Test

On April 20, 2005, President George W. Bush signed legislation that will significantly effect debtors across America. The following are some of the changes the new law requires:

QUALIFICATION FOR CHAPTER 7: MEANS TESTING

• If your household income is greater than the state median, the bankruptcy trustee may request that the court dismiss your case due to "ABUSE"
• The court will presume that you are ineligible for Chapter 7 if your disposable income is greater than $100.00 per month.
• The court can dismiss or convert your case if your expenses exceed "allowable expenses" unless you justify "special circumstances."
• To determine your income, the court will use your average income over the last 6 months.

Additional Documents Required To Be Provided

• Certificate of credit counseling
• Pay stubs for the last 60 days
• Tax returns for the current year to the Trustee and all creditors who request
• Tax returns that were not filed prior to the bankruptcy
• Photo Identification

Filing Bankruptcy May Not Stop Creditors:

• If you filed a bankruptcy within the last year, creditors can begin collection activities again 30 days after the new case is filed.
• If two or more bankruptcies were filed in the last year and dismissed, their is no protection against collection activities unless a hearing is held and the court orders it.
• Creditor protection does not apply unless a statement of intention is filed within 30 days of the case being filed.
• A landlord can continue with eviction proceedings if new rental payments are late.

REQUIRED CREDIT COUNSELING & EDUCATION

• Every debtor who files for bankruptcy must complete an "approved credit counseling course" within 6 months of filing
• Debtors cannot obtain a discharge unless a mandatory debtor education course in personal financial management approved by the U.S. Trustee is completed

PROTECTING YOUR HOME & REPEAT FILING

• You cannot receive a discharge in a Chapter 7 if you received a discharge within the last 8 years of the filing of the petition.
• You cannot receive a Chapter 13 discharge if you received a Chapter 13 discharge within 2 years of filing your current case.
• You may not be able to protect your home if you lived in another state within the last 730 days.

Please note that the above law changes are an abbreviated summary and not meant to be taken as legal advice. There are many other significant law changes that may effect a potential debtor's decision to file.