When facing a bad financial situation, you may explore several options, including filing for bankruptcy. The legal process offers relief backed by a judge's directives, giving you a chance to organize your finances and pay off debts. Most people who opt for bankruptcy will require the support and guidance of an experienced attorney. Additionally, the lawyer should have professional knowledge of the various details that entail the filing process to promote a successful procedure. Thus, we recommend taking your time when choosing your attorney to identify his/her qualifications.
At the Los Angeles Bankruptcy Attorney, you will receive top quality services from well trained and widely experienced lawyers. Our team has been in the field for a long time and understands the need for efficient and reliable services that deliver the desired results. Moreover, you can count on us to provide clarification and in-depth explanations on any point of concern.
In doing so, our goal is to instill confidence in the filing process as we strive to deliver the best-case outcome. If you or a loved one wants to file for bankruptcy in Sherman Oaks, we will be happy to take on the case and deliver exemplary support.
The Importance of Filing for Bankruptcy
Usually, being bankrupt means that you cannot afford to make repayments to clear your debts consistently. Nevertheless, you may still be earning a considerable amount of income, meaning that you can repay your creditors under a court-issued plan.
As a result, filing for bankruptcy connects you to court assistance, as the judge will appoint a board of trustees who should be independent parties with no interests in your property.
After the court approves you to declare bankruptcy, the trustees will begin the repayment operations. However, you should note that their functions vary depending on the type of bankruptcy you file for.
Subsequently, you need to learn of the different types of bankruptcy available and their benefits to help you select the best option for your situation. In California, there are two main types of bankruptcy you can file for. The main factor to consider when selecting the best choice is your income price range. Each type of bankruptcy provides a limit that you must observe before filing. These two types of bankruptcy are:
Chapter 7 Bankruptcy
Firstly, you can file for chapter 7 bankruptcy, which is also commonly referred to as liquidation. The process to undertake before filing requires you to gather all relevant documents for the court to assess. Hence, you should provide your bankruptcy attorney with recent tax return documents to validate your compliance with paying taxes.
Additionally, the court will require details about your creditors, and the amounts owed to each. Thus, your Sherman Oaks bankruptcy attorney can help you create an accurate report for the court to refer to.
On top of this, it also helps to avail your monthly income records, including your paycheck receipts, or any received paystubs. The documents will be useful to show that you have valid sources of income and therefore deserve to file for bankruptcy.
Apart from gathering your documents and forwarding them to your lawyer, you will have to undertake a credit counseling program. The classes are mandatory under court directives, as they provide students with better ways to manage finances and avoid taking on unmanageable debt.
Moreover, credit counseling will educate you on the essential details to observe before appearing in court. We recommend attending all classes as required because you will have to present a certificate of completion when filing your petition.
If your Sherman Oaks bankruptcy attorney is ready to draft and file the petition, he/she may do so. You want to work closely with your lawyer, to run through the details in the petition and avoid errors.
Sometimes, these errors may be disadvantageous for your case, giving you and your attorney a harder time in securing your bankruptcy. For example, you may face numerous delays based on the time taken to correct genuine mistakes. Overall, you will have spent a lot of time in the entire process that would have been shortened if no errors were present.
When filing the chapter 7 bankruptcy petition, you also need to pay your filing fees. Completing the transactions is essential before your matter is presented in court, so you want to clear the payment process as soon as possible.
Typically, you should pay around $338 to file the petition, which is inclusive of any further administrative costs. If your lawyer files a petition, you can request the official court receipt as proof of payment. The receipt is a valuable piece of evidence, especially for future reference in case of disputes.
Your board of trustees will also require a copy of filed tax returns to help them begin the liquidation process as chapter 7 bankruptcy requires. Hence, your bankruptcy attorney can organize for copies to reach the trustees on time.
When the judge approves your petition, the bankruptcy process begins with an automatic stay issued against your creditors. The stay will prevent the creditors from pursuing you for outstanding balances, and instead, wait for trustees to distribute your liquidated funds. Thus, you benefit from protection against creditors who may otherwise engage in aggressive tactics to retrieve their money.
Typically, it takes about four to six months for a successful discharge of all debts when filing for chapter 7. Your appointed trustees will take over your unsecured assets and sell them to generate liquidated income for debt repayment. Once all debts are settled, you will receive an official court discharge and get a chance to restart your financial position.
Parties Exempt from Filing for Chapter 7 Bankruptcy
Usually, chapter 7 does not have any minimum monetary limit for people looking to file. As a result, the option is ideal for most people with an income within the national median level. However, some groups of people are prohibited from accessing the benefits of filing for chapter 7. They are:
Anyone Who Received a Bankruptcy Discharge Within the Past 8 Years
If you have previously filed for bankruptcy and received a discharge within 8 years of your current case, you may not be eligible to file for chapter 7. This is because of the recurrent financial position that may lead the court to treat your case as non-urgent.
Persons Intending to Defraud the Court
Additionally, if the board of trustees or any other court-appointed official discovers hidden intentions to defraud the court system, you will not receive chapter 7 bankruptcy benefits. Some of the common activities that translate to fraudulent activities include hiding information on any property you own to prevent it from going to liquidation.
Further, you will also risk losing chapter 7 benefits if you incurred debt from unnecessary luxury expenditures. The trustees may conduct interviews to vet you on your intentions to get away with the expensive bills under the protection from the automatic stay.
Sometimes, you may also engage close relatives and loved ones to purchase your assets. Since they are people known to you, they will develop a personal interest to help you out by buying the property at a reasonable market value.
Subsequently, the trustees may have to abandon the market value goods, as they are not enough to fetch money for repayment. In return, you would keep the money obtained and evade debt repayment. This entire process would be fraudulent, and must therefore be stopped if identified.
Chapter 13 Bankruptcy
The second option involves filing for chapter 13 bankruptcy. The option is also called reorganization or restructuring of funds, as that is how creditors receive the unsettled payments. Under chapter 13, you will face more restrictive eligibility criteria because it offers more exclusive benefits.
The filing process to follow is the same as in chapter 7, starting with the collection and organization of all relevant documents. However, the list of documents may vary under chapter 13, as you must satisfy specific eligibility criteria.
Normally, chapter 13 bankruptcy gives you a chance to retain all your property, as long as you can create a reliable repayment scheme for your debts. Hence, your Sherman Oaks bankruptcy attorney will assist you in drafting a suitable scheme that should cater to all debts.
The court will expect your scheme to cover debt repayments over three to five years. Since you will retain your property, you are not expected to present numerous documents to trustees. However, you must still issue your tax return files and income records to help them validate your credit and repayment strategy.
You should note that while the court allows you to structure your repayment plan, it will issue strict regulations and supervision to uphold the creditors' interests. Consequently, a failure to make repayments even for a single month may lead to your chapter 13 bankruptcy agreement terminating.
In its place, the court will direct trustees to treat your case like a chapter 7 bankruptcy, where your property will be in their possession for liquidation. Thus, you should be careful to comply with the expectations and reduce the possibility of facing these consequences.
Requirements to Satisfy Before Filing for Chapter 13
Based on the advantages that chapter 13 provides, you will have to fit the eligibility criteria. The presiding judge checks on your qualifications to ensure that you can repay your debts as required to avoid defaulting. The main qualifications for chapter 13 are:
Having a Reliable Source of Income
As mentioned, chapter 13 entails restructuring your debt repayment strategy to accommodate your creditors and repay them within the 3-5 year period. Hence, you must have a reliable source of income to help you acquire funds continuously.
The judge will request payment slips and receipts that indicate a steady source of income. You can therefore inform your Sherman Oaks bankruptcy attorney to compile the necessary documents before proceeding to court. If they are satisfied with the information given, you will have a high chance of chapter 13 protection.
Your Debt Should not be Business Related
Additionally, chapter 13 is exclusively for debts incurred on personal expenditures. Therefore, you cannot file for this type of bankruptcy to help save your business. Instead, you may focus on filing for Chapter 11 bankruptcy, as it is a more suitable solution for impending bankruptcy in your business.
Your Total Debt Should be Within the Limits
Further, you should ensure that your debt amount is within the limit set for chapter 13 bankruptcy. Usually, the maximum secured debt allowed is $1,257,850 while the limit for unsecured debts is $419,275. The limit for secured debts is higher because you will have provided collateral for the borrowed money. Hence, collateral acts as security for the debt in case of default in payments, giving the creditor an option to possess the property. Therefore, creditors are more secure when issuing the secured debt and a high borrowing limit is acceptable.
When you complete repaying your debts under chapter 13, you will receive a discharge from court, similar to that provided in chapter 7. With the discharge, you are free from your creditors as all debts are settled. Your Sherman Oaks bankruptcy attorney will guide you through every step of the way to secure a discharge, which frees you from creditors.
Contact a Bankruptcy Attorney Near Me
Receiving bankruptcy services from a certified and experienced attorney is essential for a successful debt repayment process. Since the presiding judge holds discretion on whether to grant your requests, we recommend partnering with the best bankruptcy legal team available. This way, you will have better chances of settling your debts in a civil and organized way.
At the Los Angeles Bankruptcy Attorney, we understand the complexity of filing for bankruptcy, especially because of the numerous requirements to satisfy. Therefore, we do our best to provide excellent legal advice and execution to our clients. You can rely on us for a beneficial partnership that will last beyond your debt discharges. If you or a loved one needs to file for bankruptcy in San Fernando Valley, give us a call at 424-285-5525.