Many Americans face debts, be it a student loan debt, credit card debt, car loan debt, or falling behind on mortgage payment. When you have debt and feel like you have no way out, bankruptcy may be an ideal option for you. Filing for bankruptcy will help you reorganize your finances and give you a fresh start. You pay your lenders what you can afford and what you can’t afford is discharged. However, bankruptcy is a complex topic, and you’ll need an experienced bankruptcy attorney to walk you through it and advise you accordingly.
For one, there are various types of bankruptcy, and you need to make sure you file the kind that suits your situation. Also, we have confusing bankruptcy terms that a layperson may not understand, and without a lawyer’s insight, you may find yourself making costly mistakes that could see your case be dismissed. At Los Angeles Bankruptcy Attorney, our lawyers have represented many clients in Granada Hills, San Fernando Valley, and are aware of the unique problems present in this area. We will be honest in evaluating your situation and walk you through all your options before advising you on the ideal course of action. Please reach out to us before embarking on the bankruptcy filing process.
Bankruptcy is the legal process that helps a debtor obtain relief from most of the debts he/she can’t pay, and at the same time, help a creditor be paid back from whatever assets or property the debtor owns that he/she doesn’t require to live. Opting to declare that you are bankrupt can be a tough decision you’ve had to make. You may feel overwhelmed with debts, and bankruptcy appears to be your only option. However, you should think carefully before settling on it since it could affect various aspects of your life for an extended period. Additionally, bankruptcy doesn’t remove all debts. Certain kinds of debts can’t be eliminated (discharged) even if you declare bankruptcy.
Before settling on filing for bankruptcy as a way to be relieved from your debts, you should first ask yourself the following questions.
What alternatives do you have apart from declaring bankruptcy?
What kind of debts will bankruptcy eliminate?
Which kind of bankruptcy is the ideal choice for you?
Note that bankruptcy cases are filed in bankruptcy courts and not criminal or civil courts. California has four bankruptcy courts that serve various geographical areas. A Granada Hills bankruptcy case is filed in the United States Bankruptcy Court for the Central District of California.
If the court dismisses your case, you have to wait for 180 days before submitting it again. Thus, you want to hire a lawyer to advise and help you with the filing process to increase your case’s approval chances.
Types of Bankruptcy
We have four common types of bankruptcy you can file in Granada Hills. They’re named by the chapter of the federal Bankruptcy law describing them. They are:
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy is the most prevalent bankruptcy type for individuals. It’s sometimes referred to as clean slate or liquidation bankruptcy, meaning the court will sell all your property for cash then pay your creditor/creditors. You’ll only keep those properties that are exempted from sale by California or federal law. Liquidation bankruptcy can eliminate most of the debts you have. There’s bankruptcy means test that determines whether you qualify to file this kind of bankruptcy. The test considers your expenses, income, and family size to establish whether you have enough disposable income to repay your debts.
Speak to a Granada Hills bankruptcy attorney to determine if you’re eligible for a chapter 7 bankruptcy. Also, note that if your Chapter 7 bankruptcy case is successful, you must wait eight years before filing another Chapter 7 case to qualify for another discharge.
Chapter 11 Bankruptcy
A chapter 11 bankruptcy is also known as a reorganization bankruptcy. Generally, this type of bankruptcy provides for the reorganization of debts and assets, and it usually involves partnerships and corporations due to its complexity. Here, you remain with your assets and continue operating the business under the court’s supervision and for the creditors’ benefit. That is, you try working out a repayment plan to repay your creditors. If your management is less than honest or ineffective, a trustee may be appointed.
If you fulfill the terms of the plan, your remaining debts are likely to be discharged. Chapter 11 bankruptcy can benefit you in several ways, including reducing monthly payments and lowering interest rates. This kind of bankruptcy is the most costly to file, and, as we have mentioned, it can be intricate. Before you file, carefully explore and analyze all other options your business might have concerning its debts. If this bankruptcy is the best option, it can help your business secure a solid financial footing again.
Chapter 12 Bankruptcy
Chapter 12 bankruptcy is a new addition to bankruptcy laws. If you are a family farmer or family fisherman, this type of bankruptcy will help you restructure your finances and avoid foreclosure or liquidation. Here, you keep your property and work out a repayment plan with your creditors. It is similar to bankruptcy under chapter 13 but provides you with extra benefits.
You can only file a chapter 12 bankruptcy if you’re a family fisherman or farmer with a regular family income. Regular annual income can be seasonal, provided it’s stable enough to allow you to make payments under the chapter 12 plan.
Chapter 12 debtors can be individuals (single or married), partnerships, or corporations. If you are an individual, you must:
Be involved in commercial fishing or a farming operation.
Derive over 50 percent of your gross income from commercial fishing or farming operations
Have total debts that do not exceed $4,153,150 if you’re a farmer or $1,924,550 if you’re a fisherman
Owe 50 percent of your total debts on farming operations’ account or 80 percent of your total debts of commercial fishing operations’ account (excluding home loans for both cases)
These restrictions will also apply if the fishing or farm operation is owned through corporations and family partnerships. Corporations and partnerships can’t declare a chapter 12 bankruptcy, except if one family owns over 50 percent of their equity or stock interests.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is similar to chapter 11. However, this is for individuals. It’s a repayment plan for individual debtors with regular pay. Here, you’ll keep your assets and pay off your debts over a three- to five-year period. The repayment plan will propose an amount you’ll pay back to your creditors and state the number of times you’ll repay the amount. The amount you’ll propose to repay ranges from 0% to 100%. After filing your bankruptcy case, the first repayment per the plan is due thirty days from the filing date. The trustee appointed to your case will distribute payment to your creditors. There are restrictions on what kind of debt and how much of it you may owe to be eligible for this kind of bankruptcy. Speak to your Granada Hills bankruptcy attorney to find out if you can file bankruptcy under this chapter.
What’s An Automatic Stay?
An automatic stay is a provision under bankruptcy law that temporarily prevents your creditors from coming after you to collect. The automatic stay goes into effect immediately after you declare bankruptcy. It applies to all types of bankruptcy, and both businesses and individuals. However, it doesn’t protect non-debtor entities like corporate officers, corporate affiliates, guarantors, or co-defendants.
An automatic stay protects you against various actions from your lenders, including contacting you, continuing or starting court proceedings against you, foreclosing on your property, creating, enforcing, or perfecting a lien against your property, and trying to repossess your collateral.
You may sue a lender who continues to contact you or tries to sue you after an automatic stay has been effected. However, certain debts such as IRS tax deficiencies, child support, and pension loans (loans from pensions) aren’t stayed.
Discharging Debts in Bankruptcy
Declaring bankruptcy relieves you from being liable for given kinds of debts. Therefore, once a bankruptcy discharge happens, you’re not legally obligated to repay any discharged debts. The discharge forbids your creditors from coming to collect on any debt that the Granada Hills bankruptcy court has discharged. By this, it means that your creditors need to cease any legal action, letters, phone calls, or any other contact with you. The prohibition is permanent for all the discharged debts.
However, note that you can’t discharge all debts by filing bankruptcy. The most prevalent debts you can’t eliminate are:
Those from spousal or child support,
Most tax debts,
Most student loans,
Mortgages and other liens that aren’t paid in the bankruptcy case (however, bankruptcy will eliminate your duty to repay any additional cash if the creditor sells the property)
Damages for any personal injury you caused while DUI of drugs or alcohol,
Debts you owe government bodies for penalties or fines,
Wages you owe individuals who worked for you,
Debts you forget to include in your bankruptcy papers, except if the creditor learns of your bankruptcy case, etc.
Bankruptcy law allows each person who declares that they are bankrupt to retain basic property that they need for their fresh start once the bankruptcy period is over. Those assets are your exempt property. Exempt properties after filing a Granada Hills Bankruptcy include:
Personal effects like jewelry and household items,
Burial and cemetery plot,
Wrongful death and personal injury recovery necessary for support,
Motor vehicle, etc.
Advantages of Filing Bankruptcy
As we have mentioned, one benefit of declaring bankruptcy is it will discharge most of your debts, thus eliminating the legal duty to repay them. Apart from that, a Granada Hills bankruptcy may enable you to:
Prevent foreclosure on your house or mobile home and give you the chance to be up-to-date on your missed payments (however, bankruptcy doesn’t automatically wipe out mortgages and other liens on your property without payment).
Stop debt collection, harassment, wage garnishment, and other actions by your creditor to collect.
Prevent repossession of an auto or other assets, or force your lender to return property even after it’s been repossessed.
Enable you to challenge claims from creditors who’ve committed fraud or those who are otherwise trying to collect more than you owe.
Prevent or restore the termination of utility service.
Alternatives to Filing Bankruptcy
There are various alternatives to bankruptcy, including:
Try figuring out whether you can evade bankruptcy by yourself. For instance, can you cut your expenses, negotiate lower interest rates, increase your salary, or sell given properties? Think first about whether adjusting your situation is possible so you can start repaying your debts by yourself.
Seek a credit counseling agency’s help. They could help you negotiate a payment plan with zero or a reduced interest rate, come up with a budget, and assist you in stopping aggressive debt collection practices that overwhelm you. When looking for a counseling agency, you should be careful because many agencies claim to help customers when, in the real sense, they are taking advantage of them.
Consult a bankruptcy attorney. They may be capable of telling you what options you have and whether or not bankruptcy is an ideal choice for you.
Contact an Experienced Los Angeles Bankruptcy Lawyer Near Me
Every bankruptcy case is different. Because declaring bankruptcy worked for your colleague doesn’t mean you should proceed with it without further consultations. You should first talk to an experienced bankruptcy attorney who will evaluate your situation and give you legal advice. You may find that there are other better options than bankruptcy that will work in your situation. Or, one chapter may have worked better for someone else, but for you, a different chapter would be ideal. You can’t know all this without speaking to a lawyer.
At Los Angeles Bankruptcy Attorney, we are always available to help you solve your financial hardship situation in the best possible way. If bankruptcy is the ideal option for you, we will provide insight into which kind will work better for your case after a thorough evaluation. Call us today at 424-285-5525 to learn more about bankruptcy and share your case. We will serve you irrespective of where you are in Granada Hills.