Debts could be terrifying. Unexpected events like divorce, sudden illness, identity theft, or unemployment could leave your financial conditions spiraling out of control. Often panic sets in as your bills start mounting up without relief. Fortunately, the U.S. Bankruptcy Code provides relief, and you can protect your assets, retirement savings, eliminate your credit card debt, stop repossession and foreclosure, and stop creditor harassment depending on the bankruptcy chapter you file. However, deciding the best exemptions and filing the right Chapter at the right time could be tricky and should be done strategically to maximize your protection. At the Los Angeles Bankruptcy Attorney, we know about Huntington Beach bankruptcy and could help you figure out the most practical option for your financial situation.
Filing Joint Bankruptcy Cases
When an individual brings a joint bankruptcy, both them and their partner file one set of paperwork with the bankruptcy court. The person reviews assets, debt, expenses, and the income they own together in the petition.
You should outline all your loans, including joint loans and loans owed individually. The joint bankruptcy allows you to wipe out the dischargeable debt without the need to bring two separate bankruptcy cases. Nonetheless, the form of your debts and if they’re individually or jointly owed could considerably affect whether bankruptcy is in the best interest.
How a Joint Bankruptcy Case Affects Your Assets
Additionally, an individual should disclose all their assets, whether individually or jointly owned. It might pose a challenge if their combined property’s value is above the exemption available to the debtor in bankruptcy.
Advantages of Bringing the Joint Bankruptcy Case
There are numerous factors to put into account when filing joint bankruptcy. Here are the advantages of the move.
- Reduced bankruptcy costs — The filing fees are the same irrespective of whether you bring a joint or individual Huntington Beach bankruptcy case. That means if you plan to file as a couple, you’ll save a few bucks on filing charges with the joint bankruptcy. You will also save money on lawyer fees by bringing a joint case.
- Eliminates Your Dischargeable debt—If only you file bankruptcy, your spouse (non-filing) is still accountable for their separate loans and share of joint debts. Joint bankruptcy wipes out the dischargeable debts the couple owes.
- Efficiency — Filing the joint bankruptcy is more effective because you’ll only collect your documents on one occasion and show up in all bankruptcy hearings together.
What are the Cons of Filing the Joint Bankruptcy?
Here are the cons you need to consider before bringing your joint bankruptcy:
- A single partner owes huge priority debt —Priority debts like taxes, child support, and alimony should be cleared in your joint Chapter 13 even when only a single partner owes the loan. It could significantly increase the plan payments. Therefore, if the income is too low to clear the debts through a repayment plan, a separate bankruptcy by your spouse might be the solution.
- One partner has many assets — If your spouse has a lot of individual assets, you might not exempt all your joint property in the joint bankruptcy. Therefore, you should file bankruptcy alone because your spouse’s separate property won’t be part of your bankruptcy.
Can a Noncitizen (Legal Resident) File Bankruptcy?
Generally, there are no requirements that you should be a United States citizen to file bankruptcy. You could bring a bankruptcy matter if you have a domicile, live, own property, or have a business in the U.S. That means you can file a Huntington Beach bankruptcy provided you’re a legal resident.
However, if you are applying to become a United States citizen, bankruptcy could adversely affect your application. All immigration decisions are made depending on the circumstances surrounding the case. As a result, it is advisable to consult with an experienced bankruptcy lawyer before filing the case.
Will Your Bankruptcy Be Published in the Local Newspaper? Who will Find Out about Your Bankruptcy?
Whatever is filed in your bankruptcy matter is a public record (apart from confidential information like Social Security number). Therefore, the bankruptcy filing will be accessible to any person willing to follow the steps to check it. However, most people do not bother.
After bringing your bankruptcy paperwork with the court, the court clerk uploads it into the Federal court’s Pacer system that stores court documents. Any person who can access Pacer could search the system and see bankruptcy cases, among other documents.
However, you require a password to access Pacer, and few persons other than legal professionals need the system to warrant obtaining the password. Even so, the possibility of a loved one stumbling upon the bankruptcy case is low.
Nonetheless, small courts publish bankruptcy notices in the newspapers and online. The practice is not prevalent and does not occur in large jurisdictions where bankruptcy case filing volume is enormous.
One way to put your fear at rest is consulting with an attorney and discussing the case and publication practice in the district. Alternatively, you can call the court clerk and inquire about the publishing practice in the area.
You Transferred Assets Out of Your Name. Should You Bring Bankruptcy Later or Now?
Well, it depends. There are valid reasons for transferring your property before filing bankruptcy. However, the trustee might stop your transfer and acquire your assets back for your creditors’ benefit.
Whether the bankruptcy trustee can reverse the property transfer depends on:
- Whether a debtor wanted to engage in bankruptcy fraud
- Whether a borrower transferred or sold the asset for an amount less than the worth
- When the transfer happened
- What a debtor bought with the sale proceeds
You Could Sell Assets to Foot Bills
Sometimes a property transfer is not unsuitable. If you want to pay essential bills like utility bills, food, clothing, or rent, you can sell any of your property to do so.
If an individual is contemplating Huntington Beach bankruptcy immediately after that, they can avoid the issue by:
- disposing of the asset for its worth, and
- keeping a record indicating that you bought essential commodities with the money.
You should disclose your property transfer when filing your bankruptcy. Remember to bring the record to your 341 meeting of creditors. It will help you answer all questions asked by the trustee.
Engaging in Fraud Could Negatively Affect You
If a person plans to defraud their lenders by making a transfer, the judge could deny the discharge altogether. They might also face bankruptcy fraud criminal charges.
Suppose the trustee learns that a debtor transferred an asset out of their name within a year of bankruptcy intending to delay, hinder, or defraud the creditors. In that case, the trustee has a ground to oppose the discharge. The bankruptcy trustee could also object if the debtor hid, harmed, or destroyed their property.
The Trustee Could Reverse a Property Transfer
Moreover, the trustee could reverse your property transfer if:
- Your transfer was within the duration permitted for setting aside the fraudulent transfers under California laws or within two (2) years of the bankruptcy filing, whichever is longer.
- You transferred your assets intending to hinder, defraud, or delay your lenders.
- You transferred your asset for an amount that is less than its value while you were insolvent or planned to have more debts than you could repay.
Even when the transfer occurred more than a year before the bankruptcy case, under any of the circumstances mentioned above, the trustee in your Chapter 7 bankruptcy could recover the asset, liquidate it and then distribute the sale proceeds to the creditors.
If a debtor transferred property without equity or one that they can exempt in bankruptcy, the bankruptcy trustee would not prevent their transfer.
Delaying Your Bankruptcy Filing to Safeguard Your Property Transfers
If a borrower made a property transfer that could result in loss of debt discharge or allow the bankruptcy trustee to acquire the asset, delaying your bankruptcy filing might prevent these adverse consequences.
However, no matter the duration you delay bringing, you could face criminal charges if you want to commit fraud. Always seek legal assistance if you have transferred assets and are planning to bring bankruptcy.
The Relationship Between Bankruptcy and Unemployment
While bankruptcy does not explicitly need a debtor to have a job, the current and previous income status could affect the capability to be eligible for various bankruptcy chapters in different ways. Chapter 7 allows debtors to cancel debts, while Chapter 13 permits you to keep your assets in return for paying your repayment plan.
Since every Chapter has diverse eligibility standards, how the unemployment will impact a Huntington Beach bankruptcy depends on factors, such as:
- The duration the unemployment
- Whether the debtor will start working soon
- How much a borrower made at their former job
- The bankruptcy chapter the filer finds best.
- Whether the debtor has another income source
How a Chapter 7 Case Works
A Chapter 7 case wipes out all eligible unsecured debts like medical expenses and credit cards. The Chapter works best for low-earners with no or little assets.
You will not lose anything in Chapter 7. You will maintain the assets you require to keep your job and household, known as exempt property. On the other hand, you cannot protect a non-exempt property with exemptions. It is sold and proceeds distributed to lenders.
More often than not, lenders do not get anything because filers do not have non-exempt assets to sell.
Typically, Chapter 7 cases take about three months to complete.
How to Qualify for Chapter 7
Not all filers are eligible for debt discharge. Nevertheless, being unemployed might make the Huntington Beach bankruptcy filing process more straightforward.
You should pass a means test that compares your income against California’s median income. Here is what the means test involves:
- Comparing your income to California median income— You will add your gross income for the last six months before filing for bankruptcy. If the amount is less than the median, you will qualify. And if it is above the California median, you will proceed to step two.
- Deducting allowable expenses from the gross income— The step determines the disposable income by deducting costs like income taxes, utilities, food, rent, and childcare from the gross income. If following completing your calculation, you do not have the adequate disposable income to pay your lenders, you will pass the test.
A Debtor Might Not Be Eligible If They Are Recently Unemployed
Passing your test could be difficult if you have just lost a well-paying job. Remember, you have to indicate the income you made during the last six (6) months on your means test. If the total figure is too high, you might fail.
It is, therefore, advisable to wait a couple of months before filing your bankruptcy case.
A Debtor Not Be Eligible If They Secure Employment
If you acquire a lucrative job and your total expenses are little, you might have a considerable income monthly. In this case, the trustee might request the bankruptcy court to convert the Chapter 7 case to Chapter 13.
Understanding How a Chapter 13 Case Works
If you’re bringing a Chapter 13 case and are unemployed, you might have challenges getting the case approved. Chapter 13 bankruptcy lets debtors repay lenders for three (3) to five (5) years, and it requires income to realize this.
You Will Require Income to Be Eligible for a Chapter 13 Bankruptcy Matter
You could still qualify for Chapter 13 even if you are unemployed. Nonetheless, if you do not have employment income, you have to establish that you have income from demonstrable sources and can afford the repayment plan. Or else the bankruptcy case will be dismissed.
For example, you can use your rental or business income to fund your Chapter 13 repayment plan. Moreover, you could use your retirement benefits, Social Security funds, or unemployment benefits.
Find an Experienced Bankruptcy Attorney Near Me
Throughout your lifetime, you work to protect yourself and your loved ones from financial struggles. However, despite your meticulous planning and intentions, difficult times could come and go with and without your mistakes. If your debts exceed your assets’ value and income, bankruptcy could be a fresh start for you and help you wipe out your debts. However, bankruptcy is not for everyone and comes with consequences. The qualified counsels at the Los Angeles Bankruptcy Attorney could review your case details, rights, obligations and find a financial solution that suits your needs. We invite you to contact us today at 424-285-5525 to schedule your initial consultation and allow us to assist you in making a step toward finding the peace of mind and debt relief you require.