When you are no longer able to keep up with your payments, you may be wondering what options are out there that can offer you a fresh financial start. California bankruptcy is one option that has enabled many people to manage their debts to start life again on a cleaner slate. However, it is not an option for everyone that is facing financial difficulties. Thus, you need to speak to an experienced bankruptcy attorney to understand whether bankruptcy is the right solution to your financial needs.
If you contemplate bankruptcy in Villa Park, we could offer the much needed legal help and advice for a successful outcome at Los Angeles Bankruptcy Attorney. But first, take time to understand California bankruptcy law in detail and whether it is the remedy you seek or not.
An Overview of California Bankruptcy Law
Bankruptcy is defined as the process in which a person unable to pay his/her debts and bills can receive legal help to manage and clear those debts. Everyone has a right to seek the help of a bankruptcy court as provided under Federal Law. All bankruptcy cases are handled in federal courts. However, specific bankruptcy matters are unique to California, which all applicants must understand in detail before filing their documents in court. To understand California bankruptcy laws even better, here are some of the issues you must bear in mind. Additionally, the help of an experienced Villa Park bankruptcy attorney will go a long way in helping you get started and for a successful outcome.
Determining Whether Bankruptcy is Right For You
Many people struggle for a very long time with debts before deciding whether to apply for bankruptcy or not. While this is okay as long as you seek other alternatives to manage your debts, staying in debt for a long time could take a toll on your life. Remember that you’ll be dealing with constant calls and messages from creditors and collecting agencies all this while. Harassment from creditors and debt collectors are enough to take away your peace and joy. Take action as soon as you realize that filing for bankruptcy could be your best option at that time.
For many people, filing for bankruptcy will affect their credit score and, consequently, their ability to acquire credit in the future. While this is true, it is also true that struggling with debts for a long time will also affect your credit score. The benefit of bankruptcy is that you are given a second opportunity to start life again, free of debts. After the repayment of your debts, you can begin rebuilding your credit and saving for a better future.
However, all this is dependent on your economic situation and the amount you owe. The expertise of an experienced Villa Park bankruptcy attorney will help you make an informed decision.
A mention of the word bankruptcy triggers only negative reactions to a lot of people. However, many people have benefitted from it in the past and are willing to share their experiences. There is a lot that bankruptcy can do for you, for instance:
- Eliminating your legal responsibility to pay some debts — You are allowed by law to request the court to discharge some or most of your debts when filing for bankruptcy. If your request is granted, the court will help you to clear your unsecured debts, and creditors or collecting agencies will no longer try to collect money from you. If all your debts are discharged, you will be free to start afresh, with no obligations. But if you’ve more debts that the court cannot discharge, you’ll only be required to pay those.
- Bankruptcy can stop foreclosure or repossession of your assets — The risk of losing your valuable assets is high when you file for bankruptcy. However, Chapter 13 enables you to save those assets as long as you are making a good income and can keep to a repayment plan. Your Villa Park bankruptcy attorney could help you exempt some of those assets.
- Bankruptcy stops harassment from creditors and wage garnishments — The court immediately issues an automatic stay as soon as it receives your documents. Moving forward, and until the conclusion of your case, it will be unlawful for creditors and collecting agencies to attempt to collect their money.
- Filing for bankruptcy will prevent or restore termination of utility services — If you’ve not been keeping up with utility services payments, and some have been terminated or are about to be terminated, bankruptcy could help. You will continue enjoying the services until the determination of your case.
What Bankruptcy Can’t Do
Before you are carried away with the excitement of freedom from debts that bankruptcy offers, think of what the process cannot do for you. Remember that bankruptcy should only be a solution if other ways of managing debts have failed. Even though it has helped solve many people’s financial difficulties, it cannot cure all your financial problems. Additionally, bankruptcy does not work for everyone. Therefore, only consider it if you believe that it will work for your situation and help you achieve your financial goals. Let us look at what bankruptcy cannot do:
- Bankruptcy cannot eliminate the rights of all creditors, more so secured creditors. If you acquired a secured loan, your obligation to pay the loan remains intact even if the court declared you bankrupt. Applicants of Chapter 7 bankruptcy might have to dispose of their valuable assets to repay those non-dischargeable debts. Those who qualify for Chapter 13 will have to come up with a repayment plan of about three or five years within which they must clear non-dischargeable debts.
- Bankruptcy doesn’t eliminate your obligation to pay child support or alimony. These obligations are also categorized under non-dischargeable debts. If you’ve not been making child support or alimony payments, you’ll still be required to update your payments even after the court declares you bankrupt. The same applies to some taxes and criminal court fines.
- Bankruptcy doesn’t protect your co-signers. If some individuals agreed to pay if you couldn’t pay your debt, the law expects them to honor their promise. The only way they can escape paying your debts is if they also filed for bankruptcy.
California Bankruptcy Under Chapter 7
If you’re an individual, a corporation, a partnership, or any other business, and you have no financial means of repaying your debts, you might qualify for bankruptcy Chapter 7. Chapter 7 Bankruptcy involves petitioning the court to discharge your obligations as you have no means to make payments as required. If the court grants your request, it will provide a clear guideline on how you will wipe out your debts. However, you must meet specific criteria for the bankruptcy court to grant your request:
- You must earn below the median wage. It is the only way the court can be convinced of your inability to repay your creditors. Those that earn above the median wage must take a means test to qualify. If you’re not eligible for bankruptcy under Chapter 7, the court advises you to try bankruptcy Chapter 13.
- You must be willing to give up some of your valued properties — Under this chapter, the court will discharge most of your debts, mostly unsecured debts like credit card debt and personal loans. If you obtained a mortgage or an auto loan, the court would assign trustees to your case, who will be in charge of selling off some of your assets to raise money to clear your other secured debts.
California Bankruptcy Under Chapter 13
If you don’t qualify for bankruptcy under Chapter 7, you will be free to try filing under Chapter 13. However, you must be eligible for this chapter, too, for a bankruptcy court to grant your petition. Chapter 13 requires the applicant to have a good and stable income that will enable them to keep a steady payment plan of about three to five years. The court will require you to develop a plan showing how you will pay off your debts over a given period without compromising your other financial needs.
This is also the bankruptcy chapter that enables the applicant to keep some of their valuable assets. The court can discharge some of your unsecured debts, leaving you with secured debts to pay. For example, if you took a mortgage, you’ll be given the option of keeping your home as long as you can repay the mortgage over the planned period.
California bankruptcy under Chapter 13 is all about debt reorganization. If your financial ability to repay debts is good, but you require a better repayment plan, this might be the right option for you. But the court needs proof that you have enough income to cater to your other financial needs and extra for debt repayment.
Life After Bankruptcy
Life after bankruptcy is a significant concern for many people. It explains why some people are still skeptical even when they are deep down in debts and could benefit from bankruptcy relief. Indeed, bankruptcy doesn’t work for all people, but many benefits are worth considering. The truth is that there is hope after bankruptcy, and you can own as much as you need after clearing your debts.
Applicants of bankruptcy under Chapter 7 are at liberty to start life afresh at the end of the bankruptcy period. Whatever income you make and assets you accumulate after that will be yours to keep and enjoy. The court will not interfere with your income after that. Those that apply for bankruptcy under Chapter 13 might have to wait until the end of the repayment plan to start life afresh. Anything you earn within the bankruptcy period will be considered as income meant for debt repayment. However, you are allowed to keep your assets after clearing your debts.
Under Chapter 13, the court exempts some of your assets from bankruptcy. You can keep that property and anything else you acquire after bankruptcy. However, you have to repay your debts in full to keep those assets that were not exempted. Working with an experienced Villa Park bankruptcy attorney will make it easier for you to understand more about bankruptcy exemptions and how the law works.
Effects of Bankruptcy On Your Credit
No one wants to have bad credit as it affects your ability to obtain credit. Loan lenders will look at your credit to determine whether you are suitable for credit or not. A bad credit report means that you are a high-risk borrower. Most lenders will hesitate to loan you. A few who extend credit to you will charge a higher interest rate and shorten the payment period.
Your credit is affected by many factors, not just bankruptcy. A bankruptcy report on your credit will lower your credit score, but other factors come into play. For example, taking a long time to repay a loan will lower your credit score.
When deciding on filing for bankruptcy, it is best to consider other possibilities and then weigh down what will work best for your situation. That is why you need the help of a competent Villa Park bankruptcy attorney for guidance. If you’re already deep in debts, your credit is probably low. Staying in that situation will worsen your situation and could lower your credit score even more.
Bankruptcy wipes out all your debts, thereby giving you a chance for a fresh financial start. You are in a better position to rebuild your credit score after bankruptcy than if you remained in debt.
Find a Villa Park Bankruptcy Attorney Near Me
If you’re in debt and wonder if bankruptcy is right for you, an experienced bankruptcy attorney can answer all your questions to help you make an informed decision. If you think of filing bankruptcy in Villa Park, consider our services at Los Angeles bankruptcy Attorney. We have highly skilled and experienced bankruptcy attorneys that will guide and advise you throughout the legal procedure for a successful outcome. Call us at 424-285-5525 and allow us to break it down for you.