Most Americans have been plagued with debt to the point of considering bankruptcy as the only way of survival. Getting debt relief through bankruptcy is a reasonable decision, but it is necessary to hire a bankruptcy attorney to smoothly handle this process and avoid any compromising decisions. It doesn't matter whether you are an Oscar-winning or an ordinary citizen trying to make a life in the Golden State; filing for bankruptcy is the best solution towards a fresh start.
At the Los Angeles Bankruptcy Attorney, we proud ourselves as the best Studio City bankruptcy attorney and its surroundings. Our years of experience has taught us the right way to help our clients sail through their financial woes by filing for bankruptcy. Schedule an appointment with us and let us help you file bankruptcy in the most comfortable way.
California Bankruptcy in a Nutshell
Bankruptcy is a legal process that remedies debts beyond the lender's ability to repay them. This process is governed by federal law, specifically Title 11 of the United States Code. Since it is a federal law, no state laws can conflict with its provision. However, the exemptions that apply in the bankruptcy process vary from state to state, but all other laws and requirements remain.
The intention of bankruptcy in California and the United States is to benefit debtors and creditors by ensuring that debtors are relieved from debts they can't pay, and creditors are paid from assets that debtors do not need for basic living.
Four types of bankruptcy can impact individuals and businesses. These types of bankruptcy are referred to by the Federal Bankruptcy Code of the United States constitution. Let's have a closer look at these Chapters.
Chapter 7 Bankruptcy
Chapter 7 is the most common type of bankruptcy. It involves the sale of the debtor's non-exempt asset and having the proceeds distributed to creditors based on the priorities established in the code. This code is available for married couples, partnerships, corporations, and individuals. Individuals can get a discharge within four to six months after filing bankruptcy.
For non-exempted estates, trustees usually control them, sell and pay creditors according to the permit provided for the proceeds. However, the debtor's wages earned after the case has begun belong to the debtor, and creditors have no claim on them.
Please note, Chapter 7 bankruptcy is not the best option for debtors who wish to keep their homes or cars. This is because Chapter 7 does not eliminate the right of mortgage lenders or car loan creditors to take your property and cover your debts. However, our Studio city bankruptcy attorney can help you sign a reaffirmation agreement to keep these properties. Reaffirming your debt means that you will continue to pay the debts as previously agreed before you decided to file bankruptcy. However, once you reaffirm your debts, you cannot wipe out or file bankruptcy again for eight years.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy primarily focuses on reorganization proceedings for partnerships and corporations. Individuals should use Chapter 11 bankruptcy if they have debts that exceed Chapter 13 and 11 limits.
In Chapter 11, debtors retain their assets and continue to operate their business, subject to oversight by the court and the creditors' committee. However, it expects the debtor to plan a reorganization plan, which binds the creditor and debtor to specific repayment plans once most creditors accept it. The plans can include repayment through future profits, sales of all or some assets, recapitalization, or mergers.
Chapter 12 Bankruptcy
Chapter 12 bankruptcy provides ways that family farmers and fishermen can pay back their debt due to their trade's seasonal nature. It offers a more flexible payment plan than a standard Chapter 11 or 13 plan. For instance, the court does not appoint a trustee but involves a meeting of creditors where questions about your financial affairs and petition are raised. This information is then used to set up a payment plan. It also provides a 'hardship discharge' unlike other bankruptcy cases. Our Studio City bankruptcy attorney will help you prove that they failed to honor their payment plans due to faults beyond their control to have the hardship discharge.
Chapter 13 Bankruptcy
Under Chapter 13, you can propose a three to five-year repayment plan to pay loans to creditors offering to repay part or all debts from your future income. Chapter 13 is a suitable option for debtors who intend to prevent a house foreclosure, pay back taxes, stop interest from accruing on text debts, and mortgage payment.
Under this bankruptcy plan, debtors can have the dischargeable debts released at the end of the plan. The amount that debtors have to pay also varies depending on the disposable income agreed upon after the California mean test. The amount of money that creditors receive under this plan should be at least as much as they would have received by filing Chapter 7 bankruptcy. This means that you should have a regular income source and have the disposable income to apply towards the payment plan. Generally, this plan helps debtors make up their overdue payments and reinstate their original agreement. However, most debtors opt for the Chapter 7 option since they do not want to carry the heavy burden of paying back.
California's Bankruptcy Courts
Since California is a large state, it has four bankruptcy courts that serve multiple locations in their various geographical areas. Since we are talking about our Studio city bankruptcy attorney, the nearest court is the central district that serves Los Angeles, Riverside, Santa Ana, Santa Barbara, and San Fernando Valley. Currently, the presiding judge is Chief Judge Sheri Bluebond.
Other California bankruptcy courts serve the Northern district (Oakland, San Francisco, Santa Rosa, and San Jose), Southern District (San Diego), and Eastern District (Fresno, Modesto, Bakersfield, and Sacramento). Use the Court locator map to learn more about the Central district courts. From here, you can access the following information that can help you in filing bankruptcy:
- The physical address, mailing address, court's hours, and parking
- Local forms and fees provided by the court clerk
- The bankruptcy trustees
- 341 meetings of creditors
Bankruptcy Exemptions in California
There are particular properties that debtors can exempt from creditors while filing bankruptcy in California. This means that you can keep the exempted property even after filing bankruptcy. However, there are particular debts that you cannot erase in bankruptcy. These are referred to as non-dischargeable debts.
Exemption limits apply to equities that you have on a property. Equity is the difference between the property value and the amount owed on it. For instance, if a car is worth $50,000 and has a $45,000 loan, the equity value amounts to $500.
If you secured a particular property like a car or home by loan, current on payment, and have your equity covered by the exemption, you can choose to keep servicing the loan and keep it through the bankruptcy process. However, if your equity is not part of the exemption, the trustee might decide to liquidate your asset and distribute the proceeds.
In California, bankruptcy exemptions are divided into systems 1 and 2. Each system includes certain types of assets and a particular equity cap. Debtors are expected to pick the system that suits them best, depending on their amount owed to their creditors.
Non- dischargeable Debts in California
Non-dischargeable debts cannot be discharged either through a Chapter 7 or 13 bankruptcy plan. Once you opt to file Chapter 7, you will still have to repay your debts after discharging them. On the other hand, filing Chapter 13 will ensure that you pay these debts in full. Failure to honor these debts retains the balance even after completing the case. These non-dischargeable California debts are as follows:
- Alimony obligation, child support, and other dedicated family support
- Debts incurred through personal injury or death that resulted from driving while intoxicated
- Student loans, unless you are facing challenges through your repayment
- Fines and penalties for violating laws, criminal restitution, and traffic tickets
- Current income tax debt accrued within three years
- Unlisted debts in your bankruptcy paper
Although particular debts are still dischargeable under Chapter 7, the court might declare them non-dischargeable after the creditor challenges your discharge request. These debts are as follows:
- Credit purchase worth $1,150 or more for luxury goods or services made within sixty days of filing
- Debts incurred through fraud
- Loans and cash advances worth $1,150 or more taken within sixty days of filing
- Debts accrued from malicious injuring another person or property
- Debts accrued from breach of trust, larceny, and embezzlement
- Debts owed under a settlement or decree unless you can repay them once your bankruptcy process sails through
Some dischargeable debts can be considered non-dischargeable once your creditor asks for this. You need to contact our Studio City bankruptcy attorney to learn more about this and have these kinds of debts discharged.
Frequency in Filing California Bankruptcy
Since there are several bankruptcy options to choose from, most debtors wonder how often they can file for California bankruptcy. Well, it depends on the type of bankruptcy plan you pick. For successive Chapter 7 cases, you can only have your debts discharged after eight years. This means that you can file for bankruptcy the next day after your first Chapter 7 discharge but will have to wait for eight years for a second discharge.
Debtors that opt for Chapter 13 bankruptcy plans have much shorter since it takes only two years to file a second Chapter 13 bankruptcy. This short period results from the repayment plan that debtors have to set up, which lasts for three to five years. For a successive Chapter 11, you can file bankruptcy after eight years.
If you intend to switch two different types of bankruptcy options, the eligibility of switching from Chapter 7 to 13 is four years. If you want to switch from Chapter 13 to 7, you must wait six years after the original filing date. However, an exemption can be granted if you have repaid at least 70% of your debt through your Chapter 13 payment plan.
How to File for Bankruptcy in California
Once you have decided on the Chapter that is right for you, you have to start preparing for the bankruptcy process. Here is a detailed process that you should follow.
Gathering All Necessary Documents
Similar to other legal proceedings, you should provide certain information to start your bankruptcy filing process. Below is some of the information you need to file your petition.
- Valid identification, which includes your Social Security card, birth certificate, and driver's license
- A list of all bank accounts in which you have an interest
- A list of all insurance policies that might file a claim against you
- All your tax return files for the last two years (For those that are behind on submitting their returns, they should file their taxes before filing for bankruptcy
- Proof of ownership to all the valuable assets that you own. This includes your title deeds to your real estates and car registration
- Proof of your income for the past six months. For those who have not been employed, they must submit any money that they have made in the last six month
- Any evidence that proves your particular circumstances that led to the need to file bankruptcy. This includes unusual expenses like medical care and divorce
Ensure that You Meet the Credit Counseling Requirement
Before you start the bankruptcy process, you have to attend a court-approved credit counseling session. During this session, the counselors will help you go over your finances and decide whether bankruptcy is the best decision that you should make. Failure to attend the credit counseling session can have your case dismissed.
Consult an Attorney
You can file bankruptcy without an attorney's help, but the success rate of people who do not consider the help of a lawyer is low. Our Studio City bankruptcy attorney will help you go through your paperwork and address any issues that the creditors might raise. Their familiarity with the bankruptcy process will help you go through the bankruptcy process smoothly more than you could have done by yourself.
Find an Experienced Bankruptcy Attorney Near Me
The need to file bankruptcy is undeniable if you are on the verge of being financially crippled by your debts. However, it is recommendable to hire an experienced bankruptcy attorney that can help you with this process. At the Los Angeles Bankruptcy Attorney, we understand the urgency needed in filing bankruptcy and are ready to put our best foot forward to achieve the best results for our clients in Studio City, CA. For more information, contact us at 424-285-5525 and schedule an appointment with us.