With the CORONA virus having caused millions of job losses and businesses’ closure, many people cannot pay bills or take control of their financial life. They have been forced to borrow debts that they can no longer repay. If you find yourself in this situation, bankruptcy laws provide a legal tool to help you find your financial footing.
When considering filing for bankruptcy in Brea, the Los Angeles Bankruptcy Attorney is here to guide you through the bankruptcy process and help you find a sound financial footing.
Learn Bankruptcy Basics
The U.S. has six types of insolvency that offer financial relief to its citizens. Each of these forms has its benefits and shortcomings and is intended for a specific group of individuals or businesses.
One form of bankruptcy is Chapter 7, where most of your property is sold off to repay your debts. The option allows you to clear the debt in months, but you must surrender non-exempt property for sale.
Elsewhere, there is Chapter 13 bankruptcy, a legal tool that allows you to retain your property and instead develop a debt repayment plan. The option enables you five years to clear the debt. Lastly, there is Chapter 11 bankruptcy, which allows to cut expenses and shed debts through reorganization.
While each of the above kinds of bankruptcy can help you put your finances in order and get a fresh start, they have their shortcomings. The shortcomings of bankruptcy include:
- Damages your future credit score
- The cost of declaring bankruptcy is prohibitive for many individuals.
- Issues in the bankruptcy process, like leaving out some assets or debts form, resulting in a denial of debt discharge
Understanding these shortcomings before making a significant decision to declare bankruptcy is an excellent move because it ensures you don’t regret your future decision.
Suppose you are struggling with debt repayment or reorganization in Los Angeles, whether an organization or individual, you must consult with a Brea bankruptcy attorney. The attorneys will help you negotiate the best deals with trustees and the court and make the bankruptcy process seamless. A profound attorney will guide you through the bankruptcy process step by step.
Additionally, a Brea bankruptcy attorney will walk you through all bankruptcy alternatives. That way, you can be sure that opting for bankruptcy is your last resort. If other options are available, you don’t necessarily need to declare bankruptcy to get out of debt because of some of the above shortcomings mentioned since there is a better solution.
Find Out Your Eligibility for Bankruptcy
You have understood the basics of bankruptcy, its shortcoming, and alternatives don’t qualify you for the process. You must meet particular requirements before wiping debt. In Los Angeles, you must pass the means test to be eligible for bankruptcy. In the test forms, you will provide your income. If it exceeds the median for a California median-income family, you are ineligible.
However, you can still subtract specific income expenses to ensure it’s below the Californian household’s median income. You can also compare your income with expenses under the test to demonstrate your earnings aren’t enough to repay debt. When you prove that you don’t make enough money to repay debtors, you will be eligible for Chapter 7 bankruptcy.
The bankruptcy test is also used to establish eligibility under Chapter 13. The test provides the data you need to determine the length and payment plan for this bankruptcy form. To qualify, you need to show your income exceeds the median income family, and you have enough disposable income to pay your creditors. Further, to be eligible for this bankruptcy, you must be current in tax filing for the last four years and that your debt is below the limit set by the California bankruptcy code.
When not familiar with the test, talk to your attorney to conduct the test together.
Collect the Relevant Documents
After passing the bankruptcy test, the next step is to prepare for the bankruptcy process. A lot of documents are needed as part of the preparations. Remember you need to complete bankruptcy forms, which you will file with the court to begin your case. You need a lot of information to fill out these forms, thus gathering all relevant documents. If you have all the information you need, filling out the papers will be simplified. Further, aspects like income return forms for the previous year will be required by the trustee.
To correct your monthly wages, you will need to gather all your paycheck stubs for the last six months. In case you don’t have a basic salary, put in the paper the amount of money you make in a month.
Remember that failure to disclose some assets or creditors during bankruptcy can result in denial of a discharge. You need to document all your creditors so that the list you submit to the court is complete and no one is missing. When unsure of the number of creditors, a free credit report or mail notices from creditors can help you develop a full list with no omissions.
Complete a Credit Counseling Program
It’s a requirement that all consumer filers and not business debtors must take credit counseling and debt management classes. Credit counseling must be conducted before filing for bankruptcy, while debt management happens after bankruptcy.
Six months before declaring bankruptcy, you must complete a credit counseling program. The condition is mandatory regardless of the type of bankruptcy you are filing. Completing the program alone isn’t enough. You should take the course with a government-approved credit counseling provider.
The good news with the program is that if you enroll for classes, you don’t need to attend in person because the course is offered online or over the phone. The classes last for ninety minutes. And because the course requires the payment of a small fee of up to $100, if you can’t raise the money, enroll in a non-profit agency authorized to offer these courses in Los Angeles. These organizations don’t charge any fees.
Note that when declaring bankruptcy as a couple, your spouse must also take the classes. Upon completion of the course, you will be issued with a certificate, which you will file with the court together with the bankruptcy forms. If you don’t have a certificate or have one, but from an unaccredited institution, you won’t be allowed to file a bankruptcy petition. Therefore, make it a priority to find an approved credit counseling provider to avoid last-minute disappointments.
Fill Out the Bankruptcy Forms
Declaring bankruptcy requires you to fill out or complete loads of paperwork. The forms are the same for everyone, although they differ depending on the Californian district you are declaring bankruptcy. However, particular forms require you to give exempt property details, which can be a little challenging. You can reach out to an attorney for help with filling out the forms with such forms. Hiring an attorney is beneficial because they will ask the questions you need to complete these forms.
Before signing the forms, ensure you review all the details carefully before presenting them to a bankruptcy court. To make sure the details are accurate, you will need to collect all the relevant documents in advance to refer to them before completing the forms. That way, every piece of information you fill out in the forms will be accurate.
Prepare Your Filing Fees
Filing a bankruptcy petition isn’t free. You must pay a filing fee typically ranging from $300 to $400. However, if your income is below 150 percent of the federal poverty guidelines, the filing fee will be waived. And if your income is above the limit by the federal poverty guidelines, but you can’t raise the filing fee because of garnishment or something else, you can apply to the court requesting to pay the fee in installments.
When you can raise the fees in full, bring it with you to the court along with other bankruptcy forms. You can pay the fee in cash, through postal service money orders, or cashier’s checks from a major banking institution. However, with the current CORONA virus pandemic, courts are not accepting cash payments. The court doesn’t receive personal checks and credit or debit card.
File Your Forms With a Bankruptcy Court
If you have filled out all the relevant forms and the filing fee is ready, print out the documents and file them with the correct bankruptcy court. When filing bankruptcy from Los Angeles, file the forms with the Central District bankruptcy court. You can also contact a Brea bankruptcy attorney to find out the local district court to file your petition with. An attorney will provide you with additional information like the rules and the requirements for filing a petition with the court.
The forms can be filed in person, or you can mail them to the Central District court. When going in person, make sure you don’t visit on a public holiday because the court is located in a federal building. Security will not allow you in; you won’t file your petition.
Mail the Paperwork to a Trustee
The hardest part of the bankruptcy process is filing the petition. Once you have done that, the remaining part is easy. The court will assign you a bankruptcy trustee who will sell your non-exempt property or lead the head of the creditors’ meeting.
The trustee will send a letter requesting all the relevant documents used to fill out the bankruptcy form plus your income tax return for the previous year. The court-assigned trustee immediately asks for access to these documents and mail them right away because they will be required in the 341 hearing. When it comes to the bankruptcy trustee, let your Brea bankruptcy attorney handle all communications because they have done so multiple times.
Complete the Second Bankruptcy Course
Under Chapter 7 bankruptcy, you need a bankruptcy course two certificates to be eligible for a discharge. Therefore, after filing a petition, enroll with an approved provider for this course, although it’s not a requirement for the 341 hearing.
After completing the course, talk to your Brea bankruptcy attorney to file the certificate with the bankruptcy court. The certificate is very critical when it comes to debt discharge. Remember, the main benefit of declaring bankruptcy is to get a credit discharge. Without the certificate, you will be denied discharge even though the administration process will continue as usual. Therefore, don’t forget to take the second bankruptcy course.
Attend Your Creditor or 341 Meeting
The only time you will appear in a bankruptcy court is during the 341 hearing, a meeting with your creditors and not the judge. The bankruptcy trustee assigned to you by the court is the one that presides over this meeting. In the forum, the trustee will ask you questions regarding the information you have provided in the bankruptcy forms. Creditors will also be present in the meeting to ask their questions.
Remember that you don’t just show up for the 341 hearing. The trustee will ask you to bring particular documents. The documents you need for this meeting include paycheck stubs, bank statements, copies of your mortgage paperwork, property ownership documents, and tax returns for the last four years. If the trustee doesn’t ask for these documents, bring your valid ID and proof of your social security number.
File Motions, Objections, and Responses
Complications might arise after filing the petition requiring you to file motions or responses. In case this happens, you need a Brea bankruptcy attorney by your side so that they can file the motions on your behalf.
Complete a Personal Finance Management Course
You must complete debt management classes within 45 days after the meeting with creditors. After completing the course, you will be issued a certificate, which you will file with the bankruptcy court. Otherwise, your case will be dismissed.
Once you have filed the certificate, any dischargeable debt will be erased, and you will have a fresh financial start.
Find the Best Bankruptcy Attorney Near Me
After declaring bankruptcy, you are undoubtedly eager to regain your everyday life. However, whether you will receive the financial relief you are looking for depends on whether you filed for bankruptcy correctly. Incorrect filing can lead you to further financial problems. The Los Angeles Bankruptcy Attorney is here to ensure you file for bankruptcy correctly. Reach out to us today at 424-285-5525 for a face-to-face or over-the-phone meeting.