Losing the ability to clear your debts can be quite stressful, especially if you lack adequate financial support. Among the different options that you may consider when dealing with your creditors, filing for bankruptcy is ideal. Usually, if the court allows for your petition to file for bankruptcy, you will have enough time to make arrangements to repay creditors. Additionally, the court appoints a board of trustees to help in the debt repayment process for your advantage.
However, you will need to work with an experienced bankruptcy attorney for the best chances of discharging debts successfully. With a Toluca Lake bankruptcy attorney's help, you do not have to stress about going through the different procedures required in filing for bankruptcy. Additionally, your attorney will provide all the necessary details you need to note as the debt repayment process continues. At the Los Angeles Bankruptcy Attorney, we work hard to provide reliable and quality legal services for anyone seeking legal guidance in bankruptcy matters.
Common Types of Bankruptcy to File
Normally, the option to file for bankruptcy is provided for by a court of law as the last option for anyone unable to pay off debts. When the court receives your filed petition, the judge authorizes several procedures to follow, leading to the official declaration of bankruptcy.
Upon successfully filing for bankruptcy, you will then repay your debts based on the specific type of bankruptcy you chose. The two main types of bankruptcy you can opt for are chapter 7 and chapter 13. Each option provides different advantages based on the extent of your financial constraints. When you work with a bankruptcy attorney, he/she will advise you on the best choice when discharging your debts.
Chapter 13 Bankruptcy
One of the available options is filing for chapter 13 that allows you to reorganize your debts for proper repayment. Therefore, you will have to work closely with your bankruptcy attorney to create a reliable debt repayment structure as directed by the bankruptcy court.
When the presiding judge receives your petition, you will need to present your intended repayment structure for approval. As a result, you should factor in all your creditors and the total debts owed to them.
Further, your debt repayment structure should show a long-term ability to repay your creditors, as chapter 13 lasts for three to five years. Hence, the judge will ask an appointed board of trustees to verify your repayment schedule that may involve monthly payments or any other time frame.
Based on the repayment structures in chapter 13, you will need to determine whether you meet all the requirements set. This allows you to proceed with the reorganization strategy without major setbacks. For example, you should have a reliable source of income that will support your debt repayment structure for the entire bankruptcy period.
Additionally, you may need to provide documents that show your revenue bracket, as chapter 13 is limited to people earning $394,725 per year. Hence, your attorney can assist in preparing and presenting the required documents to prove your eligibility for chapter 13.
The main advantage of filing for chapter 13 is that you will have the chance to retain specific assets like your house. This is often a concern for most debtors, as creditors are prone to possessing your property as a repercussion for failing to repay your debts.
Additionally, you should note that chapter 13 bankruptcy does not mandate you to discharge all your debts. If the repayment structure cannot support all debts owed, the presiding judge may wipe off unsecured debts. In doing so, you have a better chance of clearing the secured debt.
Nonetheless, you should note that failing to uphold your structured debt repayments as required may prompt the court to revoke your chapter 13 bankruptcy. Consequently, you will be vulnerable to losing your property, as you may have to opt for chapter 7 bankruptcy instead.
To avoid facing mishaps from inconsistent debt repayment under chapter 13, we recommend maintaining a close relationship with your bankruptcy attorney. Doing this will keep you updated on the obligations you must fulfill, and seek guidance on possible fraudulent claims made by your creditors.
Chapter 7 Bankruptcy
Filing for chapter 7 bankruptcy is a common option for most people who need immediate debt relief. Under this option, your assets will undergo liquidation. The process involves selling off the surrendered assets to generate enough money to repay your debts.
In the interest of upholding integrity, the court appoints trustees to take over your assets and conduct action sales to generate the money. Moreover, the trustees will oversee debt repayment to your creditors until all debts are discharged.
Once you file for chapter 7, you will receive immediate protection from your creditors, as the court will authorize an automatic stay. The court order restricts your creditors from contacting you and demanding debt repayments until the board of trustees engages with them.
Thanks to the automatic stay, you will not have any interactions with your creditors for a few weeks, giving you time to prepare yourself for the liquidation process. With the help of a Toluca Lake bankruptcy attorney, you can identify the best assets to surrender to the trustees for liquidation.
Receiving legal assistance will be beneficial, as you will avoid subsequent complications. For example, your attorney will advise you against submitting leased property without notice to your lessees, to avoid violating agreements.
Typically, filing for Chapter 7 bankruptcy is the best option in doing away with your unsecured debts. Most of these debts include unpaid medical fees and balances from your credit card expenditures. They differ from secured debts that require you to offer collateral in case of debt non-repayment. For example, taking out a mortgage is a secured debt, as you will have your home as the collateral property to be repossessed in case of defaulted payments.
Since the focus is on repayment of secured debts, the judge can wipe out the extra unsecured debts. As a result, you will have a lower financial burden, and your liquidated assets may be sufficient to discharge all secured debt.
While filing for chapter 7 is advantageous, you need to ensure that you meet the requirements set to benefit from it. The main requirement to fulfill is falling within the stipulated financial bracket for chapter 7 applicants. Accurate results of your exact earnings can be determined by doing a means test.
Your Toluca Lake bankruptcy attorney can conduct a means test for you to establish whether you meet the financial bracket designated to chapter 7 beneficiaries. The procedure involves assessing your household background and comparing your income to the average California household.
Typically, you will be eligible to file for chapter 7 if your annual income falls within the median range for most California households. As a single person living alone, the acceptable median income should be below $54,787 per year. On the other hand, people living in households where more than one person is earning should have an annual income of $73,162 or less per year to qualify.
Despite the financial bracket limit, you may still qualify for chapter 7. This will be possible if you can ascertain that your earnings will be insufficient to warrant complete debt repayment without liquidation.
For example, if you or a household member requires constant medical services leading to financial constraints, you may qualify for chapter 7. The special circumstances will protect you from having to seek alternative options to clear your debts, especially if they are beyond reach.
One of the main benefits of filing for chapter 7 is that your debts are discharged in a short period, between three to four months. Moreover, you will receive a fresh start in your financial life after the period, enabling you to make better financial decisions.
Despite this, you should remember that your liquidated assets are inaccessible to you, as they will be sold to third parties to repay your debts. Hence, you may need to purchase a new property after chapter 7 bankruptcy, which is not always easy.
Advantages of Filing for Bankruptcy
Without enough information on the advantages of filing for bankruptcy, you may be tempted to settle for unfair agreements with your creditors. Thus, you should seek additional information on the benefits of filing for bankruptcy from a bankruptcy attorney.
From the details you receive, will have more confidence in the process and will stand a better chance of discharging all your debts. The main advantages of filing for bankruptcy are:
You Receive Protection from Creditors
Typically, creditors may grow impatient from the debts you owe to them. Most creditors will therefore engage in verbal harassment that includes threats to possess your home, sue you or ruin your reputation for non-payment of the owed money.
Moreover, we understand the unnecessary stress you could face from continuous calls from your creditors even when you have limited options to make repayments. When you file for bankruptcy, you avoid the continuous harassment by creditors thanks to the imposed automatic stay.
Further, the court will only authorize communication between the creditors and your trustees, or a Toluca Lake bankruptcy attorney if need be. Thus, you have a chance to make sound financial decisions without constant probes from the creditors, until you discharge the listed debts.
You Can Protect your Property from Repossession
As mentioned, most debtors are fearful of losing their homes and other assets to creditors. However, you can avoid the anxiety of having to foreclose your home by filing for chapter 13. Thanks to the relief issued in court, you and your family can enjoy the security of retaining your home even as you continue to repay your creditors.
Most Unsecured Debts are Wiped Out
Thirdly, the court will consider several factors when your file for bankruptcy. Normally, any person who decides to file will be facing serious financial challenges, meaning that he/she is incapable of covering most debts.
Based on the rational considerations, the court prioritizes over debt repayment for secured debts over unsecured debts. If the judge authorizes most of your unsecured debts to be discarded, you automatically benefit by receiving a more manageable financial obligation to your creditors.
You Can Question the Validity of your Creditors' Claims
Moreover, filing for bankruptcy gives you access to a qualified Toluca Lake bankruptcy attorney who can identify fraudulent claims made by your creditors. Some creditors take advantage of your incurred debts to include inaccurate costs, especially if you have not paid them in a long time.
However, your lawyer helps by thoroughly assessing the claims presented by each creditor and comparing them to your financial reports. In case of any inconsistency, your bankruptcy attorney can then forward the concern to the court or to any appointed officer who handles bankruptcy matters on the court's behalf. Eventually, you will have called out fraudulent creditors who intended to receive more money than you owed to them.
Debts Not Discharged by Filing for Bankruptcy
Some debts will not be wiped out or discharged when filing for bankruptcy, primarily if you obtained them unlawfully. For example, if you used false pretenses to obtain a loan, you will have to pay for it without the court's protection or assistance.
Moreover, you will remain responsible for personal obligations imposed by the court, especially after divorce proceedings. Therefore, bankruptcy does not protect you from paying outstanding balances in child support and alimony, nor court-imposed fines.
Contact a Toluca Lake Bankruptcy Attorney Near Me
When your financial responsibilities become too much to handle, you may face a difficult time in determining how to repay the debts. However, filing for bankruptcy is a suitable solution that promotes your protection against creditors. In the meantime, you will have adequate time to surrender your assets to trustees or reorganize your payment plans to discharge debts. Working with a bankruptcy attorney also makes your work easier, as he/she will handle all the technicalities of filing your petition, and gathering relevant documents.
When you reach out to Los Angeles Bankruptcy Attorney, you will benefit from the excellent legal services you receive from us. Our attorneys have years of experience in the field, making us among the best team to partner with in Los Angeles. Reach out to us today at 424-285-5525 for more information on how to file for bankruptcy.