California bankruptcies diverse
With California contributing significantly to the number of personal and business bankruptcy filings over the past year, lawyers in the region are scrambling to try and attract as much attention for their services as possible.
With California contributing significantly to the number of personal and business bankruptcy filings over the past year, lawyers in the region are scrambling to try and attract as much attention for their services as possible.
Even municipal bankruptcies, once considered rare, have been featured in California twice in as many decades. But according to Dow Jones, municipal filings under Chapter 9 bankruptcy law are unlikely to gain frequency.
"You can't force it; you can't force a debtor to sell its assets; you can't force liquidation," Rebecca Winthrop, a public finance lawyer with Ballard Spahr, told the news source. "Municipalities must go through a five-part test to determine if [they are] eligible for Chapter 9, while the state acts as a gatekeeper and picks and chooses what municipalities can enter Chapter 9."
Consumers in debt most commonly file Chapter 7 or Chapter 13 bankruptcy. Although Chapter 7 is the most sought after because it is the quickest form of filing, recent laws enacted in 2005 made it more difficult for consumers to become eligible for this type of bankruptcy. Chapter 13 is often referred to as the "wage earner's plan" because it allows the debtor to put his or her income toward a repayment plan that has been approved by the bankruptcy court.
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