The Effects Of Consumer Bankruptcy Reform Act In California
Understanding the CBRA is becoming more crucial for Americans under the Biden administration. The consumer bankruptcy reform act of 2020 is affecting the way that people are filing for bankruptcy especially in states like California. If you’re planning on applying for bankruptcy in the coming year, it’s very important to speak with a bankruptcy attorney to understand the background of the consumer bankruptcy reform act in California and the changes to bankruptcy law.
Before Biden was elected, there was a confirmation that he and his administration would be supporting a plan for the CBRA. Sen. Elizabeth Warren and the Biden administration worked together to introduce the CBRA which could result in massive differences to the way that people file for bankruptcy, the way the debts are discharged and the amount of property that will be protected.
These changes to bankruptcy law will make it easier and more affordable for people to access financial relief in the process of bankruptcy.
You can also ensure that a person filing for bankruptcy can care for themselves and their household throughout the process. It frees up a lot of the funds that may be required to manage a household and pay for the basic costs that a person needs to live rather than requiring ongoing trustee approval.
- The CBRA also sets to change gender and racial disparities within the bankruptcy system.
- Edit helps to address loopholes that could allow wealthy individuals to protect more of their assets to exploit the system.
- CBRA requirements will also change the way that corporate bankruptcies work ensuring that people perpetrating white-collar crime will be held accountable for illegal activities.
- Predatory practices in debt reconciliation will also be addressed in the new bill.
The bill is proposed at 188 pages and it will effectively change the way that a person files for bankruptcy. When people file for bankruptcy today they can choose between Chapter 7 and Chapter 13 and under the CBRA, chapter 10 would be introduced. Under Chapter 10 bankruptcy it would be possible for a person with little assets and a low income to move forward without having to make payments. Individuals that have high-value assets or a substantial income that the hundred and 35% of the state median for bankruptcy would have to pay a minimum payment.
The Main Reason The CBRA Is Introduced
There are current obstacles in the bankruptcy process and introducing the CBRA would eliminate a large number of these obstacles for people. Credit counselling is one of the main obstacles for some people and this would be eliminated as part of a bankruptcy filing. There’s also the upfront costs of bankruptcy and the fact that for people with lower income and little assets, it’s actually detrimental to file for bankruptcy and face the initial removal of funds through chapter 7. Introducing chapter 10 and other options in bankruptcy could lead to improvements for the whole system.
If you’d like to learn more about the consumer bankruptcy reform act in California and the bankruptcy process, contact us today.