Unforeseen events in our life like the loss of a job, catastrophic injuries, or even a divorce can leave our finances escalating out of control. When that happens, you might start panicking as bills continue accumulating, especially if you also have due debts requiring urgent payments.
When you accumulate overwhelming debts and don't have any relief option available to solve the issue, you shouldn't depress yourself by worrying much because you have the option of filing bankruptcy. California bankruptcy law provides hardworking people like you with several relief options to keep your creditors at bay when facing those kinds of financial hardships.
To receive maximum debt relief through bankruptcy declaration, you should seek an attorney's services because filing bankruptcy in California is a multistep process requiring attention to details. At Los Angeles Bankruptcy Attorney, we can use California bankruptcy law to help you achieve the debt relief you need to keep your head above the water during these challenging economic times wherever you are in Sunland-Tujunga.
Understanding California Bankruptcy Law
Bankruptcy is a legal process or proceeding that can help you find relief from overwhelming debts that you cannot pay. You don't have to hit rock bottom when facing financial hardships to consider seeking debt relief through bankruptcy because you heard someone say declaring bankruptcy is for the disreputable or deadbeat people.
When you choose to do a debt settlement negotiation with your creditors, you will not prevent them from filing lawsuits against you, meaning you could lose your property to them. However, you have an option to avoid all this under California bankruptcy law, which gives you various debt relief options under:
- Chapter 7 bankruptcy
- Chapter 13 bankruptcy
- Chapter 11 bankruptcy
The above "chapters" or types of bankruptcy can help you reorganize your finances without harassment or lawsuits from your creditors. This article will discuss Chapter 7 and Chapter 13 bankruptcy, which applies to most individuals and businesses in financial crises.
Filing Bankruptcy in San Fernando Valley can help you eliminate most of your "dischargeable" secured and unsecured debts, and you begin rebuilding your credit score immediately. When the court discharges your debts through bankruptcy, you might even qualify to buy a new vehicle or home afterward.
If you think filing bankruptcy is a good option for your financial situation, you should consider finding a Sunland-Tujunga bankruptcy attorney. An experienced attorney can assess your financial situation keenly to know which type or "chapter" of bankruptcy is right for you under California law.
How to Know You Are on Your Path to Bankruptcy Declaration
Most financial hardships leading most people to consider filing bankruptcy does not start gradually. There are usually some visible indicators or signs that you can quickly notice indicating that your financial status is heading to a crisis. If you notice or realize the following indicators or signs, you should start planning your finances wisely because you are on the way to filing bankruptcy:
You Cannot Qualify for a Debt Management Plan
There are many credit counseling agencies and non-profit organizations that can provide you with debt management. These agencies or organizations negotiate with your creditors to arrange payment plans and lower interest rates to enable you to pay your debts off quicker.
However, if your current credit score is too low or you lack a sustainable income to settle your reduced payments, you will not qualify for this option, and filing bankruptcy might be your only debt relief option.
You Don't Have Much Money Security in the Bank
Everything involves money in this modern world, and every person ought to have some financial security for emergency purposes and other future needs. When you notice your lifestyle is costly and you don't have much to save in your monthly income, you should watch out because all is not well.
Most folks live their entire life like this, and when one financial emergency comes, you have no other choice other than filing bankruptcy because you don't have much of a nest-egg in your bank accounts.
Saving is an integral part of everyone's life nowadays to be ready for any life uncertainty. When you find it difficult to clear your current regular bills and make some savings simultaneously, you should consider seeking debt relief through bankruptcy declaration for a fresh start.
A Catastrophic Injury is Preventing You From Maintaining a Sustainable Source of Income
Most people are hardworking and dynamic people, making us prone to several work-related injuries, mostly if you work in a manufacturing industry where there are moving machines. It is possible to receive a remedy with workers’ compensation to cover your expenses in some cases.
However, this remedy under workers’ compensation might not allow you to meet your financial obligations of settling due debts. Even worse, it is not a guarantee that you will receive workers' compensation when you suffer an injury that prevents you from working as usual.
A bankruptcy declaration might be the only remedy that can help you keep your head above the water if you are in that kind of situation because it stops all your creditors' debt collection plans.
Creditors are Messaging and Calling You Consistently
If you have unsettled due debts, your creditors will not let you stay in peace because they are usually eager to know your deal with their money, which is already past the due date. Therefore, you should expect constant threatening messages and calls from them or their hired hands even when you are in a meeting or asleep at night.
Apart from these annoying text messages and calls from the creditors, they could also start lawsuits against you to recover their money. However, you have an option to prevent all this from happening under California bankruptcy law.
A Sunland-Tujunga bankruptcy attorney can help you understand how a bankruptcy declaration can work out in your favor during these challenging financial times. Ensure you contact a reliable attorney offering these services within your area of residence to discuss your bankruptcy options.
Many people often fail to declare bankruptcy early because they are unaware of the above signals or warning signs that you are heading towards a financial crisis. If you notice the above bankruptcy indicators or signs early, you should seek the services of a reliable Sunland-Tujunga bankruptcy legal expert to know your options before you hit rock bottom.
Deciding What Type of Bankruptcy to File in California
The type or chapter of bankruptcy to declare depends much on your unique financial circumstances and situation. If you are not familiar with California bankruptcy law, you should not proceed with this process without an attorney to guide you on the right type or chapter of bankruptcy to declare.
Most hardworking individuals and businesses in California experiencing financial difficulties usually prefer to file the following types or chapters of bankruptcy:
Chapter 7 Bankruptcy
Most Americans struggling with debts due to unforeseen life circumstances like the current COVID-19 pandemic prefer to file Chapter 7 or liquidation bankruptcy to find relief from overwhelming debts.
The primary idea of Chapter 7 bankruptcy is to wipe out or discharge your debts in exchange for your properties except for particular "exempt" properties that California law allows you to keep, for example:
- Primary vehicle
- Pensions and other retirement benefits
- Home furnishings
- Disability and social security benefits
- Tools of business or trade
In liquidation bankruptcy, you can be able to protect the above exempt properties and also wipe out or discharge some of your unsecured and secured debts such as:
- Business debt
- Payday loans
- Medical bills
- Utility bills
- Personal loans
- Credit card loans
Unfortunately, not every individual or business can qualify to file Chapter 7 bankruptcy because there is a “means test” you must pass or meet. It is wise to consult a Sunland-Tujunga bankruptcy attorney before embarking on this legal procedure to help you pass the California “means test” for declaration of this chapter of bankruptcy.
Chapter 13 or Reorganization Bankruptcy
Unlike in Chapter 7, where you can eliminate your debts by selling "non-exempt" properties, in Chapter 13, you have to follow a court-approved reorganization plan to repay your debts over time.
The bankruptcy court that you decide to file your petition papers will appoint a trustee who will help you create a plan to repay your debts over a period of up to five years, depending on your income flow.
The trustee will distribute the money to your creditors on every monthly payment you manage to make according to the agreed reorganization plan. Chapter 13, also commonly known as reorganization bankruptcy, can help you catch-up on regular payments and mortgages without compromising other important aspects of your daily life.
If you have a renewable or sustainable income, Chapter 13 bankruptcy can work in your favor to wipe out some of your secured and unsecured debts.
Steps to Follow When Filing Bankruptcy in California
Once you figure out which type or chapter of bankruptcy is right for your financial circumstances and situation, your attorney will help you through the following crucial steps of filing bankruptcy in California:
Gathering the Necessary Documents
As mentioned above, filing bankruptcy is a multistep process requiring a lot of paperwork, which you should not omit on your petition. Before embarking on this legal procedure, you must prepare the documents below in advance:
- Valid documentation to prove your past six months income
- Valid identification documentation, for instance, your social security card, driving license, or birth certificate.
- A receipt of the past two months tax filings
- Any type of evidence that can prove your current financial situation or circumstance, for example, medical bills following a catastrophic injury or illness
- Valid documentation that can prove your ownership of particular assets or properties, for example, title deeds
Meet Your Credit Counselling Legal Requirement
Under California bankruptcy law, every petitioner who wants to declare bankruptcy must enroll in a credit counseling session to figure out if there are other alternatives for solving his/her financial situation. Credit counseling in the filing of bankruptcy is a mandatory requirement, and it can lead to dismissal of your petition if you fail to meet this requirement.
File Your Petition
Fortunately, if you have an attorney by your side, you don't have to go to court when filing a bankruptcy petition. Your bankruptcy attorney will review all your paperwork requirements to ensure there is no erroneous or missing information. To file liquidation or Chapter 7 bankruptcy, you will require a fee of $306, but to file for reorganization or Chapter 13 bankruptcy, you will pay a fee of $281.
Once you file bankruptcy, the court will notify your creditors to inform them of your bankruptcy declaration, which will bar them from taking any form of debt collection step against you, including filing lawsuits.
Remember, California’s bankruptcy declaration is a brilliant idea of finding relief from overwhelming debts, but it will not wipe all of your debts. You cannot eliminate the following type of debts through bankruptcy:
- Student loans
- Child support
- Particular types of tax debts
- Restitution or compensation that you owe from criminal conviction
Attend 341 Meeting
The 341 meeting, also typically known as creditors’ meeting, requires you to avail yourself in court in the California bankruptcy process. The purpose of this meeting is to prove whether particular bankruptcy declaration documents are legit, for example, a social security card and other identity documentation.
The court-appointed trustee will ask you questions about your bankruptcy petition documents to ensure no erroneous information or misleading information on the petition. Most of these questions require a "yes" or "no," which makes the meeting very short, lasting less than five minutes.
If you have a Sunland-Tujunga bankruptcy attorney legal representation, he/she can walk you through the steps of this meeting to ensure you are ready for the trustee's questions. Your bankruptcy petition's success depends on whether you have an attorney specializing in this type of law to guide you through these confusing steps.
Find a Sunland-Tujunga Bankruptcy Attorney Near Me
To have an experienced specialist assess your financial circumstances and provide you with knowledgeable options for your financial recovery, we invite you to contact Los Angeles Bankruptcy Attorney at 424-285-5525. If you are in Sunland-Tujunga struggling with financial problems during these challenging economic times, our attorneys can help you find debt relief through bankruptcy for a new fresh start.