Statistically, over 740,000 bankruptcy petitions were filed by non-businesses in 2017. Sixty-one percent of these individuals that declared bankruptcy did so under Chapter 7, where the debtor’s assets are liquidated to pay all or part of the debt. Thirty-eight percent of the individuals declared bankruptcy under Chapter 13, where debtors with regular income come up with a repayment plan to make payment in installments. The statistics also show that more individuals declare bankruptcy than businesses.
If you are thinking of bankruptcy as an option to organize your debt in Fullerton, you need to choose a local bankruptcy attorney specialized in laws that apply to your case. Attorneys, on the other end, might decide to work with individual consumers or big businesses. Based on your unique situation, you want an attorney who has represented many individuals in cases like yours.
At Los Angeles Bankruptcy Attorney, we encourage you to reach out to an attorney if you have explored other options and discovered the only way to get financial relief is by bankruptcy. Unfortunately, not all licensed bankruptcy attorneys are right for you. We have provided a guide below to help you choose the right bankruptcy attorney for your case.
Understanding Yourself First
Before going out to look for an attorney, you must conduct a self-assessment and understand yourself and your unique financial situation. The first questions your attorney will ask include:
- Are you single or married?
- Are you a business owner?
- Are you a business owner declaring bankruptcy individually?
- Do you own property or assets?
- Are you interested in keeping the assets or property?
- Do you have a renewable source of income?
The answers to the questions will assist you in picking the right legal professional for the job. Bankruptcy attorneys in Los Angeles focus exclusively on either commercial or consumer bankruptcy. These laws are distinct enough that an attorney must choose to specialize in a specific area.
Single or Married Individuals
For a married couple considering bankruptcy, you can choose to do it as an entity or separately. Whether you opt to do it in person or with your spouse, you must speak to a bankruptcy attorney capable of guiding you through debt settlement and liquidation. You should opt for an attorney with an in-depth understanding of Chapter 7 and Chapter 13 and one who is knowledgeable about California consumer laws.
The right attorney should help your family decide whether you qualify for bankruptcy under Chapter 7 or 13. A married couple can save more property if they file for Chapter 7 as a married entity than separately. In case you are married, a profound attorney will also need to ensure you are applying for the correct exemptions.
Note that you have the option to declare bankruptcy under Chapter 7 on your own, although it’s only advisable if you don’t own properties or assets. You should only choose to go on your own if your debt is so much that liquidation of the property is the only option or because you don’t own any property, so you will have nothing much to lose. When you have nothing to lose, Chapter 7 is the way to go.
However, suppose you own assets, renewable income, or properties. In that case, you should opt for Chapter 7 because you keep all the properties and develop a repayment program acceptable by both creditors and a bankruptcy judge. However, this chapter’s problem is that it is more complex, and you will need someone with knowledge of the bankruptcy code to represent you in court or guide the process.
Small Businesses and Consumer Bankruptcy Attorneys
Most small entities are sole proprietorships, which means that it’s under the business owner’s name when the business takes a loan. Therefore, as a sole proprietor with 100 percent ownership of your business, you should consider hiring a consumer bankruptcy attorney because the unpaid debt will be your responsibility and not that of your business. Your attorney has the option to file a petition under Chapter 7, 11, and 13.
When the small business has multiple owners, the court-appointed trustee will liquidate your assets. However, as the sole owner, you will keep your exempt property, including all assets or property that will enable you to keep working. Contact a local Fullerton bankruptcy attorney capable of guiding you on the exempt property you will save if you declare liquidation bankruptcy.
Small Business Owners and Chapter 11 and 13 Bankruptcy
As a small business owner, you also have the option to declare bankruptcy under Chapter 11 and 13. All individuals, including big businesses, LLC, and corporations, can file for bankruptcy under Chapter 11. The only problem for small businesses is that this chapter is geared more towards high-earning individuals or big corporations, and it’s a lengthy process of reorganizing debt.
You can declare Chapter 13 bankruptcy if you own unsecured debts amounting to $394,725 and secured debts whose value is $1,184,200. Remember, big corporations are not eligible for Chapter 13 bankruptcy. You will therefore file the petition as an individual.
The good thing about declaring bankruptcy under these two chapters as a small business is you can still run the business as you reorganize your debt. They enable you to keep assets and decide to sell some that are not critical to the company’s settlement. Chapter 13 also lets you design a repayment plan that allows you to pay the debt in installments for up to five years. After that, they will discharge any remaining amount of debt.
If you want to retain as many assets in your small entity as possible, speak to a Fullerton bankruptcy attorney. Ensure the attorney understands consumer bankruptcy laws to protect your rights to file as a single entity.
Big Business, LLC and Corporations
On the issue of corporations, big entities, or partnerships, it’s advisable to talk to a Fullerton bankruptcy attorney who understands commercial bankruptcy. Individuals do not own these organizations, so a commercial bankruptcy attorney who understands Chapter 7 and 11 bankruptcy are necessary. You should choose a commercial attorney because they can develop a repayment plan under Chapter 11 that will enable you to resettle all the debt.
Big corporations own complex assets and properties that need thorough evaluation and scheduling to develop a repayment plan acceptable to stakeholders, bankruptcy judges, and the creditors.
When a big corporation or partnership declares bankruptcy under Chapter 7, a different set of laws apply. For a corporation, the entire organization is transferred to the trustee, who controls the business. Once the corporation stops its operations, the trustee liquidates all the assets and properties with no exempt property. After complete liquidations, the earnings are distributed among creditors, and the corporation is freed of its debt obligations.
Note that when executive employees of a big corporation are personally responsible for the bankruptcy, they become personally liable for the debt. If these individuals are unable to repay the debt, they must file a separate personal bankruptcy.
When a corporation is operating normally but overwhelmed with debt, you can declare bankruptcy under Chapter 11. Under this chapter, you can have the debt resettled and enjoy automatic stay protection after declaring bankruptcy. Chapter 11 is the most economical affair for your corporation because it continues functioning but under the oversight of a trustee appointed by the court.
You must speak to your Fullerton bankruptcy attorney about your economic situation in the corporation or partnership so that they can elaborate on the laws that guide your organization. If you have a considerable amount of debt but can repay the debt, your attorney will recommend declaring Chapter 11 bankruptcy to reorganize your debt.
When choosing a bankruptcy attorney, it’s critical to consider a local attorney. Although every court handling bankruptcy cases follows the federal statutes, district courts adhere to different rules and procedures. In Los Angeles or Orange County, you will need to work with a Fullerton bankruptcy attorney who understands the Central District of California bankruptcy court procedures. These attorneys are also familiar with the local court-appointed trustees, which is an advantage for your case.
Similarly, bankruptcy exemptions differ with the location. So, you must work with a local practice to apply for the bankruptcy exemption right. Exemptions are critical in filing any type of bankruptcy petition. You must ensure your attorney is familiar with the specific exemptions of your state. When you file for bankruptcy under Chapter 7, you will liquidate only your property that is not exempt and assets while keeping the exempt property.
Federal and state exemptions differ. For instance, in California, any vehicle whose value is below $4,880 is exempt. Further, the court allows you to keep professional tools and books whose value doesn’t exceed $7,175. On the other hand, the federal exemptions allow debtors to retain vehicles worth less than $2,400 and no more than $1,500 tools and books that would enable you to keep working after bankruptcy.
With this in mind, you realize that California exemptions allow you to retain more property after Chapter 7 than the federal exemptions. If you speak to a Fullerton bankruptcy attorney, they understand the difference in exemptions and, therefore, will apply local exemption laws so you can win big at the end of the automatic stay.
Exemption laws also apply in Chapter 13. Remember, your exempt property is used to calculate how much installments you should pay the creditors. And because Chapter 13 is a bankruptcy that requires you to develop a debt repayment program acceptable to both creditors and the court, you will need a local attorney who will apply the right exemptions to bespoke the repayment plan for approval.
In Chapter 13, the court allows you to retain all your property. However, all your non-exempt property under Chapter 7 will be used to estimate the amount you pay to unsecured debtors. Chapter 7 and 13 bankruptcy can also help you save a lot of money and property at the end of the automatic stay period if you utilize local exemptions. When hiring an attorney for your case, they must understand local exemptions. If not, look elsewhere.
Other Qualities Your Attorney Must Possess
When choosing an attorney for your case, the experience is just as essential as the location. If you declare liquidation bankruptcy, you want an attorney with experience in this area. Ask your attorney about the bankruptcy cases they have handled in the past year. If the number is reasonable, find out how many of these cases are similar to yours.
The bankruptcy process is complex and a long one. You want to know if the attorney will be available throughout or what parts of the process they will be handling to avoid disappointments. If the attorney is not filing the petition, you might want to look elsewhere.
Chapter 7 takes a minimum of three to four months, while Chapter 7 takes three to five years. You will be working with an attorney for a long duration, so you must be comfortable around them. You need an attorney you like and one that makes you feel comfortable. You want to work with a trustworthy and honest attorney to communicate and share any concerns easily.
The bankruptcy process can be emotional, which is why you need someone who genuinely cares about what you are going through and gives you the proper attention. Follow your gut when deciding on an attorney. If an attorney isn’t personal and doesn’t make you comfortable, look elsewhere, regardless of their experience.
As a debtor, you need to consider many aspects when filing for bankruptcy. You must evaluate your situation and understand how bankruptcy codes will guide the type of bankruptcy you choose. An attorney is essential in this stage, which is why you need to hire the best in Los Angeles.
Speak to a Bankruptcy Attorney Near Me
The Los Angeles Bankruptcy Attorney can represent big entities and individuals looking for financial relief. Our attorneys take time to fully understand your unique economic situation and help you to file the right petition so that creditors and the court accept it. To speak to one of our attorneys about your case, call the office at 424-285-5525.