Filing bankruptcy involves multiple legal processes that may be difficult to navigate alone. Nevertheless, choosing to declare bankruptcy is beneficial, especially when facing extreme financial constraints. With the help of an experienced bankruptcy attorney, you will easily navigate the procedures and obtain the financial remedies you seek.
Additionally, you need to choose a competent bankruptcy attorney who understands the requirements and procedures. At Los Angeles Bankruptcy Attorney, we strive to provide excellent legal bankruptcy services to all clients filing for bankruptcy in Encino. Our skilled and highly experienced team of professionals is ready to provide support and court representation if need be.
Understanding What Bankruptcy Entails
Declaring bankruptcy involves a legal process that enables a debtor to stop making original debt repayments. Instead, the court will authorize the liquidation of the debtor's assets to cater to the creditors' demands. Afterward, the money obtained after the liquidation is divided equally by third parties called trustees and distributed to verified creditors.
Alternatively, bankruptcy may involve restructuring your finances and making debt repayments under a different plan. The court will also appoint third parties to oversee your repayment procedure for compliance.
Usually, a bankruptcy court must authorize you to file for bankruptcy upon assessing your evidential sources. Filing evidentiary material as you seek to declare bankruptcy is important to validate your claims of financial constraints. Therefore, your Encino bankruptcy attorney should help you combine all relevant sources for the court presentations.
After successfully filing for bankruptcy, the repayment process begins, depending on the type you filed for. The procedure also follows a particular system, whereby the courts require you to pay all priority unsecured debts first. Afterward, your trustees can repay the secured debts, meaning that you will have discharged all your debts. Thus, understanding your current financial situation and filing for the most appropriate type of bankruptcy is crucial.
The Two Main Types of Bankruptcy
While different bankruptcy options are available, two main types are more common, thanks to the advantages they provide. They are chapter 7 and chapter 13 bankruptcy. Often, the distinguishing factor between these two options is your ability to make repayments in cash instead of using liquidated funds.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the first option and is also known as the liquidation process. After filing for this type of bankruptcy, you will hand over-determined assets to court-appointed trustees who then liquidate them. Afterward, they will use the monetary gains to repay your creditors through equal distribution.
Often, Chapter 7 bankruptcy is suitable for debtors who have a lower income range and are ready to start their financial lives afresh. This is because the liquidation process will take up a significant number of assets, meaning that you may not have enough to fall back on.
Consequently, planning before filing for chapter 7 will equip you with the information you need to make a correct decision. For example, you should note that the court will subject you to a means test that checks your income records. Ultimately, the test is beneficial in verifying that you have met the filing requirements for Chapter 7. Additionally, you are eligible to file for chapter 7 again within six years, meaning you can enjoy the protection and benefits it provides for the long term.
Advantages of Filing for Chapter 7 Bankruptcy
Filing for chapter 7 also brings about several advantages, which will help you repay your creditors and start a fresh record. Some advantages include:
Chapter 7 Protects you From Creditors
Usually, your creditors want to deal with your first hand and issue their demands. When your debt payments delay significantly, the creditors may also opt to include intimidating tactics to scare you into making repayments on time.
As a result, dealing with your creditors may become stressful, especially if you are already trying your best to look for funds with little success. Therefore, upon filing for Chapter 7 bankruptcy, the court protects you from directly dealing with creditors who demand their debts, arrears, and other wages.
Instead, the court will direct independent trustees to act on your behalf and handle any transactions to the creditors. Since the court will have allowed your bankruptcy petition, the creditors will have a lower chance of making admissible claims.
Consequently, they will therefore have to wait for the trustees' distribution of liquidated funds in repayments. Your Encino bankruptcy attorney will also help enforce the court's directives and will help you avoid dealing with creditors directly.
You Keep all Wages Earned After Filing for Bankruptcy
Additionally, you will secure all subsequent earnings made after filing for Chapter 7 bankruptcy. The protection allows you to begin restructuring your financial responsibilities, even as the repayments continue.
Thus, we recommend working with an Encino bankruptcy attorney who can offer proper financial management insight. In doing so, you avoid going through the bankruptcy filing process again.
Your Repayments Only Involve Unsecured Debt
Upon filing for Chapter 7 bankruptcy, the appointed trustees classify your debt as secured and unsecured debts. For any existing secured debts, your creditor holds a collateral asset that he/she can exercise legal rights over in case of defaulted payments.
Therefore, secured debts do not need to be included in your chapter 7 repayment plan, as the collateral assets cover any eventualities. Examples of secured debt include house mortgages and car loans.
On the other hand, unsecured debts are more volatile, as no collateral exists. Consequently, your creditor can initiate action to recover the outstanding balances. Chapter 7 bankruptcy, therefore, focuses on repaying the unsecured debts to prevent creditors from lodging a separate suit. Examples of these debts include medical expenses, credit card bills, and home utility costs.
No Monetary Prerequisites are Required for Chapter 7 Bankruptcy
Unlike other forms of bankruptcy, you do not need a minimum income amount to file for chapter 7. The bankruptcy option is available to citizens working or depending on business income for upkeep. All that the court needs to verify is that you face severe financial constraints that are directly linked to your petition for bankruptcy.
Chapter 13 Bankruptcy
The second most common type of bankruptcy that your Encino bankruptcy attorney may advise on is chapter 13. Usually, this type of bankruptcy is available for working-class citizens who meet several eligibility criteria.
The option, also known as restructuring, works by holding off your creditors as you restructure your financial assets for easier debt repayment. Hence, you do not have to lose any valuable assets when making chapter 13 repayments as the court will approve an elaborate plan.
Therefore, you want to work closely with your Encino bankruptcy attorney to develop a payment plan you find comfortable while also making regular payments.
As a result, it is more exclusive than chapter 7, although it also provides advantageous benefits that help you keep your property. Some requirements to satisfy before filing for chapter 13 are:
You must prove that you have a reliable source of income.
You should create a payment structure with your attorney's help.
You should be within the income range designated for chapter 13 applicants; approximately $ 394,000 to $1,100,000
Advantages of Chapter 13 Bankruptcy
Like other types of bankruptcy, chapter 13 offers a decent amount of advantages to you. Upon the court's approval, you can enjoy the benefits of chapter 13 as you implement your restructuring plan. Advantages include:
Your Home and Other Properties are Safe from Foreclosure
Since chapter 13 gives a debtor the chance to restructure his/her finances, the court will hold off foreclosures that lead to loss of homes. However, the protection is subject to making consistent payments to creditors, as any default may attract penalties.
In adverse cases of defaulted payments, the court may also direct creditors to take further action, leading to possible foreclosure. Any attempts to evade your financial responsibilities could, therefore, waive your protection. Subsequently, you need to remember that the court serves to remedy the creditors first and strive to comply with issued directives.
You Benefit from Debt Reduction
Moreover, you will enjoy reduced debt amounts under chapter 13. The remedy does not cancel your financial responsibilities, as the court presumes that you can comfortably handle the subsidized payments. Instead, you will have to pay your secured and unsecured debts alike, but in a subsidized amount to receive a discharge from chapter 13.
Creditors Cannot Make Demands to Your Property Cosigners
Further, if you purchased any property with a co-signers help, he/she is exempt from the creditors' demands. Since you are responsible for restructuring your finances, the court restricts the creditors to your case alone.
The restriction is beneficial where the co-signer was an investment partner. Without Chapter 13 exclusion, your investors would decide to pull out of a project when they have to deal with creditors.
Filing for Bankruptcy
Normally, court procedures when filing for bankruptcy are similar regardless of the type you want to file for. The standard procedures apply to ensure that all applicants meet all requirements before appearing in court. This way, you save time and resources and avoid petition rejections when it is too late. The steps to take when filing for bankruptcy are:
Gather Relevant Bankruptcy Documents
The documents you require when filing for bankruptcy include the application forms, bank statements, and official loan statements from creditors. You may have to add other documents, depending on specific court instructions.
Enroll in Credit Counseling
Credit counseling is a course offered to bankruptcy petitioners. It aims at educating you on money management strategies to prevent future incidents that push you to file for bankruptcy. The court will need a certificate to ascertain that you took the course before approving your petition.
Fill the Filing Documents
When filing the petition documents, you may ask your Encino bankruptcy attorney for help in filling some sections, as they may be asking for technical details. On top of that, you want to provide accurate information in the filled documents to avoid complications.
Pay the Court Filing Fee
Paying the filing fee on time is crucial, as it validates your application forms and initiates your official court records. When working with an Encino bankruptcy attorney, you do not have to worry about paying the court fees upfront. Usually, the law firm will handle the costs and later include them in the final legal service fee charge. Additionally, we will provide original receipts for verification after making the payments.
File Documents in Court
Upon completing payments, you can then file the bankruptcy documents in court. Filing the petition brings your documents to the judge's attention for them to set a hearing date.
When you receive the hearing date, you will have to make adequate preparations to appear in court. You can do this by providing any evidential material to your lawyer. Meeting with your attorney to discuss several expectations for your case is also beneficial before facing the judge in court.
Why You Should Hire an Encino Bankruptcy Attorney
Doubtless, working with a bankruptcy attorney is beneficial to your case, as he/she is experienced in the field. When you hire an attorney to help in bankruptcy matters, you will access the following benefits:
You receive an elaborate guide concerning your case.
Your lawyer recommends the most appropriate bankruptcy to file for.
You can have a property valuation done.
Your attorney deals with creditors directly.
All paperwork and evidential sources are compiled on time.
Contact an Los Angeles Bankruptcy Attorney Near Me
When you or a loved one needs to file for bankruptcy, we recommend working with an attorney for an easier process. Handling court procedures by yourself may cause delays and other inconveniences, including a petition dismissal. You want your lawyer to take over your case and conduct due diligence for the best-case outcome.
At Los Angeles Bankruptcy Attorney, we provide quality services to our clients in Encino. With our help, you can successfully file for bankruptcy and repay your creditors in a less stressful process. To talk to a bankruptcy attorney, call us today at 424-285-5525.