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Bounce Back with a Bankruptcy

You know how that old horror story goes -- it's 2020.  Job prospects are at zero but credit card balances are far from that.  Electric bills are through the roof because of a never-ending heat wave.  Landlords are patiently waiting for eviction moratoriums to expire because people just aren't paying rent.

For some, unemployment provides brief but necessary respite from creditors.  But what happens when jobs come back, and unemployment benefits disappear without taking all of those bills with them?

It is time to bury bankruptcy taboo, for good.  Long, long gone are the days of "debtor's prisons" and "poorhouses" -- mechanisms for shaming people who could not pay their bills. United States bankruptcy laws were enacted to eliminate those methods and protect those who are earning, and spending, but had a run of bad luck -- a medical issue; a divorce; a business venture that did not work out; a pandemic.  

We, as Californians, have had little control over what happened to us, and our state, this year.  The COVID-19 pandemic laughed at our collective efforts to work hard and earn income, and the recent fires (among other culprits) have destroyed homes and businesses across our beautiful state.  

None of this was your fault.  You worked hard, you filled out the paperwork, you hunkered down and tried to figure out what to do next.  What you can do now, though, is think about seeking federal bankruptcy protections, which the United States Constitution instructs Congress to enact for this very reason.

It is time to realize that a bankruptcy discharge -- not stringing yourself along on unemployment benefits -- is the way out of this nightmare.

For when it comes to bankruptcy, "F" does not mean failure.  In bankruptcy, "F" means Fresh Start. 

In a typical Chapter 7 bankruptcy, unsecured debts -- such as credit card debt -- are discharged. In other words, personal obligations to repay those unsecured debts are removed. If relocation (due to non-payment of rent or mortgage) is required, bankruptcy protections may include a homestead exemption that may be applied to a new home for you and your family. In this way, a fresh start in bankruptcy feels like fresh sheets -- a clean break from last week, last month, or even last year

My office provides free half hour, virtual consultations, during which we consider a potential client's assets and liabilities to see if bankruptcy is a viable option. If it is, a bankruptcy attorney will work to assist in every step of the bankruptcy process -- which typically lasts for just a few months. That means, by early 2021, you could wake up from this nightmare with something unemployment benefits are hard-pressed to provide -- a "reset" button on your finances.  

Start the next decade with no debt. We can only go up from here.  

Leah Michele Kaufman, Esq. is a Bankruptcy and business litigation attorney at Kaufman & Kaufman in Santa Ana, California. She practices with her father and mentor, Leslie Keith Kaufman, Esq.

Disclaimer. The content of this article is not legal advice, nor legal opinion, and should not be relied upon for individual situations. Legal counsel should be consulted for legal planning and advice. No lawyer-client relationship with Kaufman & Kaufman will be formed, and no information you want to keep confidential should be disclosed - through e-mail links or otherwise - to Kaufman & Kaufman, until the firm has conducted a "conflicts check" and you and the firm have signed a retainer agreement or an engagement letter.

Kaufman & Kaufman is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code, in the Central District of California. Kaufman & Kaufman does not practice or offer legal services in jurisdictions where firm lawyers are not licensed.

Questions about this article should be directed to Kaufman & Kaufman in writing. 

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by Leslie Keith Kaufman

It is fairly commonly known from extensive coverage in the main-

stream media that the Bankruptcy Abuse Prevention and Consumer

Protection Act of 2005 (BAPCPA), which was signed by President Bush

eight years ago today, on April 20, 2005 . This new law took

effect 6 months later, on October 17, 2005.

2005 saw a record number of approximately 2 million bankruptcies

filed by debtors seeking bankruptcy protection under the old law in

advance of the new law taking effect.

The purpose of BAPCPA was to prevent perceived abuses of then-

existing bankruptcy law, in which some legislators perceived that

filing a Bankruptcy Petition under Chapter 7 of the old law was

"too easy". These efforts to make filing bankruptcy more difficult

resulted in a huge increase in bankruptcy filings that year.

Approximately 2 million bankruptcies were filed in 2005.

Among other eligibility requirements, Debtors who filed cases after

October 17, 2005 were required to obtain a certificate of

completion of a credit counseling course, and also pass a Means

Test in order to file a Chapter 7 Petition.

Bankruptcy cases filed after October 17, 2005 were also accompanied

by higher filing fees, and, due to the more complicated Petition

and Schedules, higher attorney's fees, as well as navigate other

changes to the Bankruptcy Code.

One of these changes to bankruptcy is about to have an effect now.

Under the old law, a debtor would be eligible to file a Chapter 7

case if they had not filed a previous case within the six years

prior. Under the new law this filing restraint was increased to

All those approximately 2 million bankruptcies which were filed in

2005 to beat the operative date of the new law, have been barred

from filing another Chapter 7 for eight years since their last

This eight year waiting period included the crash of 2008, and the

ensuing worst economic recession in the United States since the

Great Depression.

All those debtors who filed a Chapter 7 case to beat the new

bankruptcy law in 2005, have been precluded by that same new law

from filing again, even though they may have suffered great losses

to their investments, businesses, or jobs in the last five years of

economic recession.

This eight year waiting period is about to come to an end for many

who filed in advance of the new law taking effect.

Although bankruptcy filing statistics have shown a recent decrease

in the number of filings (since 2011), those who have been

prevented by the Bankruptcy Abuse Prevention and Consumer

Protection Act of 2005 from filing another bankruptcy will soon get

their chance at another fresh start.

While most of the surge in cases in 2005 occurred toward the end of

summer that year, as consumers hastened to beat the implementation

of the new law, the eight year prohibition period for these cases

is coming to a close by no later than October 14, 2013 (As October

17, 2005 was a Monday, the latest date that a case could be filed

under the old law was October 14, 2005).

I expect that many of those who rushed to beat the old law, who

have been effected by the recession over the last five years but

were barred from filing for protection under the new bankruptcy

law, will soon be seeking this protection as soon as they again

become eligible through the summer and fall of 2013.

Les Kaufman of The Law Offices of Kaufman & Kaufman has been

assisting debtors file for bankurptcy protection since 1983




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