What Is Bankruptcy?
Bankruptcy is a legal proceeding in which a person who cannot pay their creditors can get a fresh financial start. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you—at least for a limited period of time. The right to file bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court.
Most people who are unfamiliar with this area of the law have the impression that bankruptcy is the result of profligate spending. While that can certainly be the case, it’s important to understand that many hard-working and financially conscientious people are forced to declare bankruptcy after sudden hardships such as job loss and unexpected medical expenses. Interest payments and fees on credit cards alone can quickly grow into unmanageable debt.
Before filing for bankruptcy, you should consult with an attorney to verify that this complex legal proceeding is the best option for you or your small business. A professional Bankruptcy Lawyer will help you explore the different avenues available in order to untether you from your mounting debt and the high-stress levels that often come from financial insecurity. While filing for bankruptcy might seem overwhelming, an experienced attorney who’s knowledgeable in both bankruptcy law and finance can ensure that filing gives you the clean financial slate you deserve.
How Will a Bankruptcy Attorney Determine If Declaring Bankruptcy Is Right for Me?
As a bankruptcy attorney in Downey, CA, who serves the greater Los Angeles County area, I have clients from many walks of life. When determining whether bankruptcy is the right decision for a client, one of the first questions I ask is: What is your income compared to your expenses? If the client is making enough money and is able to keep current on their bills, a judge will question why a declaration of bankruptcy is necessary.
The second important question I ask is: How much of your assets do you own? For most people, their biggest asset is their home. If a client has a sizable amount of equity in the home, it does not make them ineligible to file for bankruptcy. However, whether they can keep their home will depend on whether they can use an exemption to protect it. Exemptions are laws that protect your property when filing for bankruptcy. Property that is exempt can’t be sold for the benefit of your unsecured creditors.
If you’re struggling to pay your mortgage or car payments, or if you’re facing accumulating medical bills or credit card debt, filing for a Chapter 13 or Chapter 7 Bankruptcy might be right for you. From the moment that you file for bankruptcy protection, the federal court issues a notice of automatic stay to your creditors. This prevents any and all creditors mentioned in your bankruptcy petition from pursuing your debts further, meaning those harassing phone calls stop. Whether or not you will be able to keep your home moving forward will depend on your circumstances, so it’s best to consult an expert attorney.
At Resolve Law Firm, APC, we get to know our clients as individuals and seek to understand their financial goals to help them make informed decisions about how best to move forward after facing demanding debts. If we determine that Chapter 13 or Chapter 7 Bankruptcy is right for you, we will be on hand throughout the entire process. The laws of bankruptcy are complex and evolve frequently, but our firm stays current in our knowledge to offer you the expertise you need to start a fresh financial future.
What Is Chapter 13 Bankruptcy Versus Chapter 7 Bankruptcy?
Chapter 13 is a repayment plan, where you will repay all or a portion of your debt over a three- to five-year period. It allows you to keep your home and possibly your automobile while repaying your creditors. Chapter 13 is intended for those individuals who have a secure or steady income that allows them to make payments over time to resolve their financial dilemma. If a client doesn’t have enough income to cover the payments in this bankruptcy plan and doesn’t have access to contributors who can provide financial assistance, then filing for Chapter 13 bankruptcy isn’t an option.
A Chapter 7 Bankruptcy is a way for a person to liquidate their estate when they have a lot of unsecured debt (e.g., credit card debt, medical bills, student loans, etc.). Clients who file for Chapter 7 Bankruptcy generally do not make enough money to cover their expenses each month. In essence, Chapter 7 is a tool that can be used to discharge unsecured debt without losing exemptible assets. That means credit card bills and medical bills will be erased. Another advantage to Chapter 7 is the typically short turnover time, with debts potentially being discharged in as little as four to six months (compared to the three to five years during which an individual who has filed for Chapter 13 will be making payments).
Both Chapter 13 Bankruptcy and Chapter 7 Bankruptcy have financial benefits and drawbacks. It’s important that you speak to an experienced bankruptcy attorney in Downey, CA, before making any decisions regarding bankruptcy.
What Should I Do (or Not Do) Prior to Filing for Bankruptcy?
Before filing for bankruptcy in Los Angeles County, it’s important to list all debts that will be included in the bankruptcy. In addition, all creditors must be notified of the bankruptcy in order for debts to be discharged.
If you’re married, then talk to your spouse about the bankruptcy, even if your spouse isn’t filing with you. This is because the spouse’s information might be requested, and some of the assets they own might be affected by the bankruptcy.
By all means, do not transfer assets to family members or try to hide assets in any way before filing for bankruptcy. This will be considered fraudulent behavior by the court and will invalidate your bankruptcy declaration proceedings.
The bottom line is that you should be honest at all times before and during the bankruptcy process. Your bankruptcy attorney can only help you if you are completely honest about everything. Remember, your attorney is not there to judge you but to help defend your rights and help you get back on your feet again.
What Types of Debt Cannot Be Discharged in Bankruptcy?
There are some types of debt that cannot be discharged, even if you successfully declare bankruptcy. Here’s a list of debts that will not be discharged in Los Angeles County:
- Most federal and state taxes
- Child support and alimony payments
- Student loans
- Court fines and criminal restitution
- Debts associated with DUI-related accidents
Get Back on Solid Financial Footing with Resolve Law Firm, APC
Bankruptcy lawyer Le’Roy Roberson is committed to assisting the people of Downey, California, to achieve financial stability by overcoming their debt. At Resolve Law Firm, APC, we’ve built a reputation in the industry for providing successful results coupled with outstanding customer service through our transparent communication, reliability, and honest legal counsel. We don’t consider our job complete until we’ve facilitated a more successful financial future for the client.
To best serve you, we offer great services at affordable prices. We’re happy to offer free initial consultations and answer all of your questions about bankruptcy. During that initial consultation, we like to get a full picture of your finances by discussing your income, cost of living, and debts. Doing so helps us offer personalized guidance to discharging your debts. We employ the utmost discretion in handling your financial information, as we understand the importance of your privacy.
After meeting with you and understanding your unique needs and goals, we will help you determine whether filing Chapter 13 or Chapter 7 Bankruptcy is your best option. If so, our firm will assist you throughout the entire process, from efficiently filing your petition with the federal court to notifying your creditors.
If you’re suffering from mounting debt and unmanageable financial burdens, it’s time to be proactive; take control of your financial future by contacting an experienced and discrete attorney to help you explore your options. You deserve a clean financial slate.
For more information on Filing For Bankruptcy, a free consultation with a Downey, CA bankruptcy attorney is your next best step. Get the information and legal answers you need by calling 213-583-5547 today.