Filing bankruptcy is not an easy decision to make in California or any other state in the U.S. However, it might be the best decision you would ever make for yourself when facing foreclosure threats and other threats from your creditors. With the high cost of living in Pacoima and a struggling economy, especially with the global COVID-19 pandemic effect, many hardworking people survive with debts due to loss of employment.
Formal bankruptcy declaration can stop your creditors from taking any form of debt collection step against you, even if there is an ongoing lawsuit against you. To meet the eligibility requirements for a formal bankruptcy declaration in California, you need to consult with an attorney for legal guidance on your way forward.
At Los Angeles Bankruptcy Attorney, we take pride in helping hardworking people with overwhelming debts manage their financial life through bankruptcy declaration, and we can help you too.
What You Should Know About Bankruptcy Declaration in California
California bankruptcy code allows eligible individuals to seek debt relief by filing a bankruptcy petition in a federal court for a fresh financial start. There is a stereotype perception among many people that a bankruptcy declaration is for a particular class of individuals with poor financial management skills, but that is untrue.
Due to life uncertainties like loss of employment or catastrophic injury, you might find yourself in very overwhelming debts due to responsibilities and bills you cannot neglect. In that kind of circumstance, it might be worth considering filing bankruptcy to halt all debt collection efforts by your creditors as you take charge of your financial life.
Before making up your mind on a bankruptcy declaration, it is advisable to try other debt-relief options because a bankruptcy declaration will show on your credit record for years, but it's not permanent. You will need the services of a Pacoima bankruptcy attorney to know whether this path of debt relief is the right way to go, considering your financial situation and circumstances.
Signs/Indicators to Show That You are Heading Towards Bankruptcy Declaration
The need to declare yourself bankrupt does not begin gradually, which means you might be able to protect yourself from bankruptcy declaration. When you notice the following signs/indicators, you might be on your path to filing bankruptcy:
It is Difficult for You to Save Money
Saving money for your future needs is an integral part of a good and healthy life. The money you save now will significantly help you in the future when you retire or when you need to take a vacation to enjoy yourself.
However, if you find it difficult or overwhelming to save a little money from your income for those kinds of needs, it's high time you consider filing bankruptcy to keep your creditors at bay.
It is Difficult for You to Make Even Little Payments on Your Debts
It is okay to seek financial assistance from creditors when we have financial emergencies like hospital bills, but paying the debts should not be overwhelming if you plan yourself well financially.
If you can't make even a little payment on your debts and at the same time pay your regular bills, you will fall behind on your payment schedule, which might force you to file bankruptcy as a form of debt relief.
You're Using Credit Cards to Make Payments on Your Debts and Regular Bills
Suppose it is difficult for you to pay your regular bills like rent and other debt obligations with your current income without dipping into your credit cards to stay current. In that case, you are definitely on your road to bankruptcy.
Using credit cards for those kinds of payments that you could be making with your income can put you in a debt hole that can become overwhelming to come out of without seeking debt relief through bankruptcy declaration.
Your Creditors are on Your Neck
If you have any due debt, you should anticipate several calls, messages, and even lawsuits from your creditors inquiring about your debt payment plan. Depending on the amount of debt you have, some creditors could contact your family members or your employer to inquire about your whereabouts and employment status.
When you notice the above signs consistently, you might be on your way to bankruptcy declaration. The sooner you take viable action to solve your current financial issues, the better to find other alternatives that don't involve bankruptcy declaration.
How Bankruptcy Declaration Can Help You in Pacoima
Bankruptcy declaration is not a viable option for every financial hardship, and at the same time, it is not the right step for every individual who wants debt relief. However, filing bankruptcy can help you in the following ways:
- Protects you and your loan co-signers from harassment by your creditors
- Protects your assets like house or car from garnishment by debt collectors
- It allows you to improve or rebuild your credit score over time
- It enables you to keep up with your secured debts that are already due, like mortgages
- Remove judgment liens or claims against your property
It's not a guarantee that you will achieve all that through bankruptcy declaration. For that, you need to contact a reliable Pacoima bankruptcy attorney to know if you are eligible for bankruptcy declaration and whether this option is a good idea for your business or personal interests.
Types of Bankruptcy Options in California That You Can Consider
You will need a Pacoima bankruptcy attorney's services to know the viable bankruptcy option for your financial situation and circumstances. There are two main types or chapters of bankruptcy that we will discuss in this article. Both of them offer different protections to those eligible for the petitions under the California bankruptcy statute. These bankruptcy options include:
Chapter 7 Bankruptcy
If you have particular properties that exceed a particular limit known as "exemptions," this type of bankruptcy option can work out in your favor to earn the debt relief you need to keep your creditors at bay.
Most individuals in California filing bankruptcy usually do it under chapter 7 because it doesn't require you to have a steady income as long as you have some non-exempt properties/assets to sell to repay your debts. Under chapter 7, you are allowed to keep the following “exempt” properties:
- Your homestead
- Retirement accounts, for example, pension
- Your primary vehicle
- Household items that are worth less than $675
Filing Chapter 7 bankruptcy is a process with some eligibility requirements that you must meet for court to discharge your debts. For instance, you would be ineligible for this form of debt relief if you had your debts discharged under this chapter in the last eight years.
Chapter 13 Bankruptcy
Unlike chapter 7 bankruptcy that allows you to repay your eligible debts within a few months by liquidating your property, chapter 13 bankruptcy involves reorganization of your due and current debt so that you can settle them within a specific period.
The court you choose to file your bankruptcy petition will appoint a trustee who will work with you to come up with a repayment plan to settle your debts within three to five years. If you have a regular or steady income flow, then you should consider filing Chapter 13 bankruptcy to clear your debts over time.
For every monthly deposit or payment that you make per the agreed repayment plan, the trustee will distribute the money to your creditors to settle your current and due debts. At the end of the repayment plan, the court will discharge your debts as long as you didn't miss the agreed payment.
Bankruptcy declaration in California will discharge most of your debts exempt the following types of debts:
- Child Support
- Some tax obligations
- Student loans
Whether to file chapter 7 bankruptcy or chapter 13 depends on your specific financial circumstances. Therefore, you would want to talk to a bankruptcy attorney before making any significant step towards bankruptcy declaration to help you meet all the eligibility requirements.
Legal Steps for Bankruptcy Declaration in California
If you are thinking of declaring yourself bankrupt, there are major steps you should take, which are very crucial to earn the debt relief that you need. You shouldn't take any of these steps lightly because they can make the judge dismiss your bankruptcy petition. Filing bankruptcy in California involves the following legal steps:
First and foremost, before thinking of submitting your bankruptcy petition in Pacoima, you must attend a mandatory credit counseling class/session. A credit counselor will review your financial situation and circumstances to advise you of other alternatives to seeking debt relief, like venturing into other businesses to increase your income.
When submitting your bankruptcy petition, you must provide proof to show that you have completed this requirement. Filing a bankruptcy petition before attending a credit counseling class or session will make the judge dismiss your case.
Contact a Pacoima Bankruptcy Attorney
Although you can proceed with a bankruptcy petition without an attorney, it is not advisable to do so because it is a multi-step process with some legal terms to understand to meet the eligibility requirements.
An attorney will make this process less of a hassle to you by compiling all the documents you need and attend most court proceedings on your behalf. If you live in Pacoima, we at Los Angeles Bankruptcy Attorney can help you through this confusing and emotional process by explaining what you should expect in your unique financial situation.
Prepare all the Necessary Forms/Documents and File Your Petition
Your attorney will help you prepare the necessary forms and review them to ensure they are accurate. Ensure you provide him/her with the correct documents that he/she requests to avoid your case dismissal and fraud charges. Here are examples of documents that you will need in preparation for your bankruptcy petition:
- Documents showing your income information whether you are an employee or self-employed, for example, six months of Paystubs
- Life insurance statement
- Property insurance statements
- Pension statements
- Mortgage statements
- List of pending/ongoing lawsuits, whether as a defendant or plaintiff
- Asset information
- All your creditors' information
- Past two years filed tax returns statements for chapter 7 bankruptcy and past four years tax returns statements for chapter 13 bankruptcy
The bankruptcy court where your attorney will file the petition depends on where you've resided in the past 180 days. To complete your bankruptcy petition, you will also have to pay the filing fee of $338, but you could also be eligible for a filing fee waiver if you don't have that money.
Attend Meeting of Creditors
In a bankruptcy declaration process, a meeting of creditors, also commonly known as a 341 meeting, is the only mandatory legal proceeding you should attend. The court-appointed trustee who is in charge of your case will review your application documents for accuracy and ask you some questions that you must respond truthfully.
Your bankruptcy attorney will also be present during this hearing to help you answer the trustee's questions truthfully. A meeting of creditors is not long and should take less than fifteen minutes of your time because there are no significant issues to discuss.
Discharge of Your Debts
If your petition is successful, the court will discharge your debts to give you a fresh financial start relieving you from eligible debt burdens. For chapter 7 bankruptcy, the court will discharge your debts after three to four months following your petition.
On the other hand, for chapter 13, your debts will be discharged after confirmation of your court-approved repayment plan by the trustee. Depending on your specific financial circumstances, a chapter 13 repayment plan generally ranges from thirty-six months to sixty months.
The debt discharge will relieve you from the obligation to repay your debts for a certain period to enable you to reorganize your finances and take charge of your financial life.
The Bottom Line
Bankruptcy cases are not uncommon in Pacoima and might be the only reliable solution for some individuals seeking debt relief due to financial hardships. Even if a bankruptcy declaration is visible to everyone who wishes to see your credit record, it is not permanent because it is possible to rebuild your credit score over time for a fresh start.
Find a Pacoima Bankruptcy Attorney Near Me
If you have come to the point considering bankruptcy declaration, you are not the only person in Pacoima experiencing financial hardships. Our experts at Los Angeles Bankruptcy Attorney can review your unique financial situation to determine the right form of bankruptcy that will fix your financial problem. Call us today at 424-285-5525 for an obligation free consultation and case evaluation by our experienced attorneys.