The decision to file for bankruptcy is never an easy one. While it is within your constitutional rights to file as many times as you deem necessary, and the process will even afford you the much-needed relief from debt, coming to terms with money problems is challenging. Most people make the bold move to file after things go from bad to worse, and their accounts are frozen, or their wages levied. At Los Angeles Bankruptcy Attorney, we believe that bankruptcy is not the end. On the contrary, filing an Irvine bankruptcy petition may just give you a fresh start.

If you are interested in filing for personal bankruptcy, you have the option of choosing between Chapter 7 and Chapter 13. Our skilled lawyers will help you understand these options in-depth to help you make decisions that suit your unique financial situation. Reach out to us, and let’s start with a free initial consultation.

Common Causes of Bankruptcy

Money problems are not as isolated as you may assume. Each day, hundreds of people in the United States find themselves battling grave debt issues that can only be resolved by filing for bankruptcy relief.

So, what is the root cause of money issues?

Well, money problems can be caused by a range of concerns. Each client faces unique challenges, so there is no one-suits-all kind of approach to regaining financial freedom. Some people fall into money issues because of unavoidable circumstances that spin things out of control, while others make grave financial mistakes.

Understanding the root cause of your money issues will play a key role in ensuring that bankruptcy offers practical solutions and a fresh start.

Here are the most common causes of bankruptcy:


Going through a divorce is traumatic on a personal level. Additionally, the process is not cheap, not to mention that splitting your assets and income can leave you unable to control your expenses.

If terminating your marriage has dramatically increased your expenses, this doesn’t necessarily mean that filing for bankruptcy is the best solution. You need to consult with an experienced Irvine bankruptcy attorney before deciding on the best way forward.

Medical Concerns

While good health is never guaranteed, injury or illnesses are not foreseeable issues. Merely having comprehensive medical insurance coverage cannot assure you that matters will not spin out of control. This is more so if you have to stop working for a prolonged period and still cater for expenses allied with hospital trips, household bills, and pending debts.

Unanticipated Job Loss

Sudden loss of employment is not a rare occurrence. In most cases, company losses can leave whole departments closed without considering fired employees’ financial obligations. In such situations, the lucky few may be forced to take pay cuts, which may also cause debt issues.

All is not lost if you suffer an unexpected job loss or a significant pay cut without warning. It may be wise to consider bankruptcy, especially if the situation is not likely to turn around soon. With all the stress of drowning in debt, constant harassment from creditors may only make things worse.

Our team of experienced Irvine bankruptcy lawyers can study your situation and offer solutions that can stop creditor harassment. Seeking bankruptcy relief could make the difference between starting your quest to enjoy a debt-free life and wallowing in financial problems for years on end.

Mismanagement of Finances

Unfortunately, not all people fall into money problems because of disasters and issues that are not in their control. To err is human. While some indulge in spending credit without thinking about the potential consequences, others purchase assets such as cars and homes that are not within their financial means.

If you are ready to start fighting debt, begin by scheduling a consultation with a bankruptcy attorney. We will provide compassionate legal assistance and inform you about the options you have to get your finances in order. In this case, nothing is as important as ensuring that filing for bankruptcy brings home the desired outcome.

When Should You Consider Bankruptcy?

Coming to terms with the fact that filing for bankruptcy is your only option is not easy. Most people remain in denial until something serious happens, such as receiving a foreclosure notice. Unfortunately, no amount of aspirin can alleviate the enormous stress that comes with extreme financial difficulties. Sometimes, declaring bankruptcy is the best way out of debt.

Let’s have a look at some of the surefire signs of grave money problems that can only be solved through seeking bankruptcy relief:

  • You spend all your income within a few days of receiving it.
  • Credit cards are your sole means of purchasing crucial necessities.
  • Constant creditor harassment is taking a toll on your mental health.
  • Each credit card is at its max limit, yet making the minimum monthly repayments is a hassle.
  • You borrow from one creditor to pay another.
  • Institutions that offer debt consolidation turn down your applications.
  • You cannot make the required minimum monthly repayments on an existing debt consolidation plan.

Benefits of Filing for Personal Bankruptcy

Despite its destructive stigma, filing for personal bankruptcy offers many benefits for people struggling with debt. Of course, debt relief comes at a price, but we can also not overlook the perks allied with the process.

They include:

Discharge from Eligible Debts

The discharge of certain unsecured debts is perhaps the main benefit of filing for bankruptcy. Under federal bankruptcy laws, persons eligible for personal bankruptcy qualify to have some of their debt burdens and obligations lifted.

For instance, Chapter 7 bankruptcy releases a debtor from repaying unpaid balances that are not settled after liquidation. This means you can enjoy a fresh start in as little as three months.

Regain Your Peace of Mind

Bankruptcy laws protect debtors from creditor harassment and collection efforts. The courts issue an automatic stay immediately after filing, and this instantly stops the calls and advances of creditors and collection agencies.

The automatic stay’s purpose is to give you some breathing space to choose a systematic approach to clearing your debts. For some people, this is just the peace they need to begin rebuilding their credit and financial muscle.

Retention of Exempted Property

Irrespective of whether you file under Chapter 7 or Chapter 13, certain property classes are considered exempt, hence out of the grasp of your creditors. The assets you can keep will highly depend on the type of bankruptcy relief you choose.

Drawbacks of Filing Bankruptcy

As aforementioned, filing for bankruptcy relief comes at a price. This is why you must seek the counsel of an Irvine bankruptcy attorney to ensure that filing is your best option.

Some of the negative consequences of filing include:

A Poor Credit Rating

Gaining access to reliable lines of credit requires you to have a good credit rating. Filing for bankruptcy hurts your credit score, meaning that most lenders will flee when they see your permanent public record.

Having little or no access to credit for a while is not necessarily a bad thing. This will help you learn how to pay for items in cash and perhaps push you to make some necessary lifestyle changes. Additionally, some companies will still be willing to work with you using secured credit cards, although their interest rates may be higher. You can always use such credit to spruce up your credit score and rating.

A Bankruptcy Record Will Be Displayed On Your Credit Report

The Fair Credit Reporting Act stipulates that your bankruptcy record should be accessible by credit agencies. This may impact your ability to access loans in the future. Fortunately, most lenders come around once your credit records suggest that you are making deliberate efforts to regain excellent financial credibility.

Limited Career Opportunities

Finding suitable employment is challenging enough without negative records popping up on your background checks. Depending on your line of profession, potential employers may not consider your job application if they find out you have a bankruptcy record when running your credit check.

Legally, you cannot be denied employment based on your credit record. However, a bankruptcy can be a silent killer of opportunities, especially if prospective employers can find more financially credible employees.

Your Self-Image May Suffer

A strong financial persona can rub your ego in the right way, giving you high self-esteem. On the other hand, it is quite normal for money problems to harm how you view yourself, especially if you feel partly to blame for going bankrupt. Counseling is necessary if you find yourself battling with unexpected internal conflicts.

Alternatives to Filing for Bankruptcy

Filing for Irvine bankruptcy should only be considered after everything else has failed. After all, the process comes bearing both benefits and drawbacks. If you are unsure whether to file or not, maybe the most sensible thing you can do is first know about the alternative options you have. They include:

Negotiate For Debt Management Plans

Even creditors understand that they may receive very little or no repayment if debtors file for bankruptcy. While some may strongly oppose changing debtors’ repayment plans, most of them eventually see a reason to bend their own rules.

Negotiating a debt management plan may work for the benefit of both the creditor and the debtor. The idea is to pay back the full principal under new terms that suit your current financial situation. With a newly structured monthly payment plan, some people can pull themselves out of debt.

Debt Consolidation

Another suitable alternative is to consider debt consolidation. This allows you to combine your debts to reduce the ever-increasing interest rates and the accumulation of penalties. Typically, people find it easier to manage one huge loan than several credit companies.

Debt Settlement

Debt settlement allows you to make one lump sum payment that is lesser than the original debt. Some creditors will allow debtors to settle 50 to75% of the debt value as long as they can pay it all at once. Unfortunately, creditors will report that a specific debt was “settled for less than agreed.” This will remain on your credit report for a minimum of 7 years.

How Much Does It Cost To File For Personal Bankruptcy?

When filing for personal bankruptcy, you have two main expenses. They include:

  • Attorney fees
  • Filing fees

Attorney fees vary from one expert to another. While some experts charge a flat rate, others charge by the hour. Additionally, some of the factors that may affect attorney fees include your case’s complexity and location. It remains imperative to focus mainly on the quality and overall value of potential lawyers’ services.

Filing fees are standard nationwide. They range at about $300, although other costs can arise during the filing cost.

The cost of filing could quickly sum up to $2,000 or more. It remains crucial to consider the amount of debt bankruptcy can erase, and the process’s costs before deciding whether to file is a good idea. If the difference is minimal, perhaps you should consider the alternatives to filing for bankruptcy.

 How About Using a DIY Bankruptcy Filing Approach?

Are you thinking about dodging attorney fees and filing for bankruptcy without seeking any legal assistance?

Here’s our advice to you: Don’t!

Bankruptcy laws have plenty of technical stuff and jargon that even a well-educated and articulate individual may not fully understand. Additionally, the process of filing is emotionally demanding that even lawyers who want to file are forced to hire other lawyers to ease the psychological burden.

Statistics show that in 2012, only 1.4% of people filed without any legal assistance received a discharge. This means that a devastating number of cases were turned down because of paperwork mistakes or other common blunders. If the possibility of the courts throwing your case out can make your situation go from bad to worse, you owe yourself the favor of working with the best Los Angeles Bankruptcy Attorney.

Find a Los Angeles Bankruptcy Attorney Near Me

You deserve the fresh start that bankruptcy can offer. Filing can be the end of your debts and a new financial beginning. At Los Angeles Bankruptcy Attorney, we believe that anyone can fix their financial situation with the right counsel. Whether you need relief to eliminate a large portion of your debts with Chapter 7, want to get into a reorganization plan with Chapter 13, or you are not sure bankruptcy is the right solution, we can help. To talk to an experienced Irvine bankruptcy attorney, call us at 424-285-5525.