Becoming bankrupt is not uncommon, based on the numerous financial challenges that may arise in your life. These difficult financial situations often come from unforeseen situations, including sudden medical problems that lead to high medical expenses. Moreover, you may lose your job suddenly, leading to significant budget changes.
Regardless of your reason for filing for bankruptcy, you should aim to work with an experienced attorney who understands your predicament. Moreover, the bankruptcy lawyer you hire should be diligent enough to conduct sufficient research on your matter and give the best advice.
At Los Angeles Bankruptcy Attorney, we have worked with numerous clients over the years to provide exceptional legal services in the field of bankruptcy. Thanks to our skilled team of attorneys, we have successfully led our clients to debt discharges, helping them to start their financial lives afresh. Our services are available for anyone seeking to file for bankruptcy in North Hollywood for the best legal experience.
The Concept of Filing For Bankruptcy
Usually, anyone can take out loans or buy property on credit, leading to accumulated debt. Therefore, you will owe specific amounts of money to individual creditors to be paid in stages. However, sometimes the financial burden becomes overwhelming, leading to possible defaults in making payments on time. Subsequently, most of your debtors may opt to sue you or reclaim the property they had leased you.
Since the option to surrender your property is detrimental to you, you have the choice to seek legal protection from persistent creditors by filing for bankruptcy. Typically, the court will issue directives to your creditors, instructing them not to target you for the outstanding debt balance.
Instead, the rules of bankruptcy will let your creditors work with trustees appointed by the court. Therefore, filing for bankruptcy allows you to avoid the constant probes and demands from your creditors, as trustees take over your assets and pay off the debts.
Nevertheless, filing for bankruptcy can be a tedious and draining process, as it involves fulfilling a lot of legal demands. Moreover, you should note that filing for bankruptcy does not guarantee that the judge will grant it, so you should consider working with an attorney for the best chances of success.
Usually, the judge holds discretion on declaring bankruptcy primarily because he/she acts in the interests of your creditors. Since you are at fault for falling back with debt payments, it would be unlawful to offer you complete protection, especially when you show no intentions of paying back the owed money.
As a result, you should be adequately prepared before filing a bankruptcy petition to increase the chances of success. Your North Hollywood bankruptcy attorney plays a significant role in ensuring that you provide all relevant documents before proceeding to file. This way, you will not suffer the inconveniences of delayed filing and court proceedings.
The Two Main Types of Bankruptcies To File
Different people have various goals and repayment systems to choose from, meaning that they need different options for bankruptcy. Therefore, the two most suitable types of bankruptcy to file for are:
- Chapter 13
- Chapter 7
Chapter 7 Bankruptcy
Chapter 7 is the most common form of bankruptcy, as it involves asset liquidation and remittance of returns to your creditors. Additionally, the process is fast and will be done within three to six months of filing.
The court identifies your unexempted assets and hands them over to trustees who oversee liquidation and distribution to creditors. Afterward, you will be discharged from your debts and start your life on a clean slate.
Chapter 13 Bankruptcy
Alternatively, you may choose to file for chapter 13, which is often exclusive for people with reliable income sources. Under this strategy, you will have to present a repayment plan in court for the judge to approve of making monthly payments to creditors. Typically, chapter 13 lasts for three to five years, giving you sufficient time to clear your debt.
Since you will be an income earner, you will retain your property, as the court presumes that all you need is to restructure your financial repayments. Thus, you should come up with a more suitable way to repay debts from the money you earn with your attorney’s help.
However, a failure to repay your creditors on time as agreed will prompt the court to reverse your bankruptcy to chapter 7. Consequently, you could lose your property and have it liquidated to generate income for your creditors.
Important Details You Need to Note When Filing for Bankruptcy
One of the most important processes to understand is how to file for bankruptcy, as it initiates the entire legal procedure. If you are working with your lawyer, you do not have to follow through with all the discussed steps below, as he/she takes on most of the paperwork.
Nevertheless, knowing what to expect will help you understand why the court requires specific documents. The steps to take when filing for bankruptcy are:
Look for all Documentary Evidence Required in Court
The first step involves looking for all important documents that will be vital to present in court. When working with a bankruptcy attorney, he/she will create an elaborate requirement list that you can refer to when gathering your documents.
We recommend following the list as accurately as possible because all requested forms will be verified. Hence, if the requirement list states that you should produce an original document, it helps to avoid presenting copies, as they may be rejected.
Some important documents to gather include reports on your assets, as you will have to hand them over if the judge allows you to declare bankruptcy. Usually, your asset details include bank statements and any physical property deeds.
Thus, if you own houses, businesses, or valued vehicles, among other assets, you should include their valid information documents. Asset details should also contain any insurance policies you have for you and your family. The insurance coverage represents untouched assets that may be beneficial to your creditors, especially if you have medical expenses in debt.
Moreover, the court will need information on the list of persons or institutions you owe money to. Hence, you should present an elaborate list of all your creditors along with their contacts and other relevant information like their addresses.
Additionally, listing the exact amount of money you owe to each creditor is advisable, as it will aid the judge in assessing your case and providing a verdict quicker. Your North Hollywood bankruptcy attorney will also help you obtain your credit report to show a sense of accountability before proceeding to court.
Proof of Sources of Income
The court will also require you to present evidence of your income sources to verify that you earned your money legally. Moreover, the proof of income is useful in justifying the claims of having limited funds, hence the need to file for bankruptcy.
We recommend gathering all paychecks or pay stubs you received from your employers within the last six months. The time frame is ideal, as it is recent enough to help you obtain all the documents but long enough to prove legitimacy in receiving your payment. Finding the verification documents is also crucial, as it supports your evidential sources.
Filed Tax Returns
You also want to find your tax reports that indicate your tax returns for the last two to four years, depending on the type of bankruptcy you file for. Normally, the bankruptcy court will not tolerate any tax evasions and cannot grant you bankruptcy benefits. The presiding judge must, therefore, access and approve the filed tax reports.
We recommend presenting the documents to your lawyer first, as he/she can study them and point out any inconsistencies. This way, you can have resolved the problems before the petition is set to begin to prevent setbacks.
Attend a Credit Counseling Program
Once you have presented all documents to your North Hollywood bankruptcy attorney for verification, you should then enroll in credit counseling. The bankruptcy courts insist on the classes because you receive beneficial information on how to manage your funds in the future.
Subsequently, you will have to present a certificate of completion as you file the bankruptcy petition. Luckily, you do not have to worry about the logistics of attending the class, as you can now attend virtual or on-call sessions. Moreover, the threshold for completing the program is appearance for one and a half hours, which is quite short.
When the class instructors clear you to receive your certificate, it will only take a few days before you can collect it and file it. While the short period is convenient, you should be careful to take the class only if you are ready to proceed with the filing. This is because of the six-month time limit within which you should have taken the class and filed your petition.
Prepare a Well Drafted Petition
When you meet all pre-filing requirements, your North Hollywood bankruptcy attorney can then prepare a petition document to file on your behalf in court. During the drafting stage, you can request to provide information that will be useful in presenting your predicament accurately.
Moreover, your lawyer can forward you the draft for approval before filing to counter check that everything is accurately listed. The proofreading process is important to observe, as the final petition draft will be the judge’s reference material during the trial. You should also remember that all information should be accurate to avoid facing perjury charges.
Pay the Filing Fee and File your Petition
Before filing any submissions, the court requires you to pay a fee that facilitates judicial operations. As a result, your attorney can cover the costs for you and later reclaim them under disbursement fees. Alternatively, you may organize to transfer all funds to the court yourself, depending on you and your lawyer’s agreement.
Sometimes, the court will grant you a fee waiver, provided your earnings fall below the 150% poverty line. Thus, your North Hollywood Bankruptcy Attorney can help you gather all necessary documents that prove your eligibility for the fee waiver.
Send Your Tax Returns to The Appointed Board of Trustees
After the court receives your filed petition requesting for bankruptcy, the judge will appoint trustees. They handle your assets and distribute returns to your creditors in an independent process. Therefore, you will receive addresses to send your trustees your tax returns for the stipulated duration.
In doing so, they receive all the required information to vet you as a suitable candidate for a bankruptcy process. If you intend to file for chapter 13, you should avail your tax returns that cover four years, while chapter 7 requires you to present tax returns filed for two years.
The 341 Hearing Attendance
Lastly, you will also be ordered to appear for a 341 hearing, a session that aims to validate all your filed evidentiary documents. During the session, you will appear before the appointed board of trustees to affirm your involvement in producing all documents. For example, you will have to answer whether you read through your credit reports before agreeing to sign them.
Advantages of Working With a Bankruptcy Attorney
From the procedures discussed above, the role that your North Hollywood bankruptcy attorney plays in the entire process is significant. Thus, you can expect some benefits that would otherwise be unavailable without a lawyer’s help. They are:
- Your attorney explains the complex court procedure in detail.
- You can worry less about dealing with creditors directly.
- You are confident that all paperwork will be ready on time.
- The attorney can negotiate in court on your behalf, especially when creditors dispute your repayment strategy in chapter 13.
- The bankruptcy attorney can help you estimate your eligibility for bankruptcy using the means test.
Contact a Bankruptcy Attorney Near Me
Filing for bankruptcy is often the last alternative for anyone facing significant financial constraints, as it offers a suitable legal option in debt repayment. However, navigating the filing process alone may be difficult, especially if you lack specialized legal knowledge. Hence, working with a bankruptcy attorney will reduce the pressure you face and enhance your chances of success.
At Los Angeles Bankruptcy Attorney, we endeavor to provide the best services for anyone looking to file for bankruptcy in Los Angeles, CA. We purpose to put your needs first and offer quality legal support. To get in touch, call us today at 424-285-5525.