A New Bill Could Be a Real Life Saver for Californians
Like other parts of the country, many people in California are still feeling aftershocks of the 2008 financial crisis. While the economy may be in a slightly better position than it was seven years ago, that is of little consolation to those individuals who suffered so much during the downturn. Even now, numerous Californians are dealing with significant amounts of debt and medical bills incurred while unemployed and uninsured. Many people are also working at jobs that pay far less than the jobs they had prior to the economic downturn.
In some cases, people hurt by the economy have been able to improve their financial situation by taking advantage of the protections afforded under the U.S. Bankruptcy Code. For other folks however, the current protections are insufficient. The good news for all Californians is that reform may be just around the corner. Earlier this month, a bill sponsored by Sen. Democrat Bob Wieckowski was passed by the state Senate. The bill attempts to make key improvements to the bankruptcy exemptions so as to help Californians who are in financial distress. The following are a few of the main areas the proposed law would modify:
• Increase homestead exemption: One of the biggest proposed changes in the proposed bill would be an increase in the homestead exemption. Currently, the average single filer can only protect $75,000 worth of equity in his or her home. The current maximum filing amount, limited to older and select married filers, is only $175,000. Given the average home price in California, the current exemption amounts do not afford much protection to filers. Under the proposed bill, all filers, including single filers, would be allowed to protect up to $300,000 worth of home equity.
• Remove the reinvestment clause: At this time, there is a 6 month reinvestment clause for bankruptcy filers to reinvest the proceeds they receive as part of their homestead exemption, after the sale of their home. Under the current laws, if a filer fails to reinvest the proceeds into a new home purchase within the time frame, he or she loses his or her exemption. As most filers are not able to purchase a new home so soon after filing for bankruptcy due to poor credit or the presence of a bankruptcy filing on their credit history, this change is much needed.
• Allow more filers to keep their vehicles: When a person files for bankruptcy he or she is allowed a vehicle exemption in amount of either $2,900 or $5,100 depending on the particular exemption chosen. The proposed bill would raise the exemption limit to $6,000. This new exemption amount is much more realistic given what it costs to purchase a reliable vehicle. The proposed bill also has a provision that would prohibit repossession of a vehicle simply on the grounds the owner filed for bankruptcy.
To become law a vote on the bill will need to pass in the State Assembly and be signed by the Governor. Stay tuned to this website for updates on the status of the bill.
If you are experiencing extreme financial hardship, you do not have to continue to struggle. Too often debtors fail to consider filing for bankruptcy protection because they wrongly think that they will have to give up all interest in their home and other assets. Southern California Bankruptcy Attorney Jane Cervantes has helped numerous clients get a fresh financial start with bankruptcy while at the same time, protecting their assets. To see how Jane Cervantes can help you, call her today at (909) 626-3595 to schedule a consultation. The Law Offices of Jane Cervantes is conveniently located in the Village of Claremont and serves clients in Los Angeles, Orange, Riverside and San Bernardino counties.