When you’re in a dire financial problem, you are allowed to file for bankruptcy according to federal law. You may feel unsure at first, but remember that the process is legal and will save you lots of trouble. Bankruptcy is a legal process where you declare that you can no longer pay off your creditors' debts.
Although the process might seem simple, the details can be complex and require legal knowledge to navigate. At Los Angeles Bankruptcy Attorney, we will be there with you every step of the way. Our firm serves the Van Nuys city of the San Fernando Valley with the utmost professionalism.
We will help you understand each step that is required and help you file for bankruptcy. We will also advise you, based on your case, the type of bankruptcy that you can file. Our Van Nuys Bankruptcy attorney will show you how to handle exemptions and help you save your property.
Types of Bankruptcy
The Federal Bankruptcy Code has four different types of bankruptcy that a person can file in California. They include chapter 7, chapter 11, chapter 12, and chapter 13.
Chapter 11 bankruptcy is considered a reorganization proceeding and is generally filed by corporations though in some cases, an individual can file it too. The organization(the debtor) is allowed to keep their property(assets) and continue operating the company as they come up with a plan(reorganization) to clear off all the debts.
Chapter 12 bankruptcy is a reorganization plan for family farmers to clear all pending loans by coming up with a repayment plan.
Chapter 11 and chapter 12 are not common. Most individuals file for chapter 7 and chapter 13 bankruptcy, which we would help you do at Van Nuys Bankruptcy. Here is what is entailed at each of them.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy or liquidation bankruptcy is filed when you have limited income and you don't have a way of paying back all the money owed. This type of bankruptcy is the most common bankruptcy as it helps you clear all your debts, thereby giving you a fresh start.
When filing for bankruptcy, the court in which you have filed the bankruptcy will appoint a trustee for you. The trustee will sell all your non-exempt properties. You will then be paid any exempted amount, then he/she will use the net proceeds to pay your creditors.
What is usually cleared by the chapter 7 bankruptcy is credit card debts, few assets, and unsecured bills. However, non-dischargeable debts like child support, student loans, alimony, fraudulent debts, among others, cannot be cleared by chapter 7 bankruptcy.
If you wish to hold onto your debts, such as furniture or car, you must first sign a “Reaffirmation Agreement” to reaffirm all the debts. However, once you have signed the agreement, you cannot file for bankruptcy for at least eight years. Your creditors will still demand the money owed, and you must continue paying them like before. If you had not paid for a couple of months at the time of reaffirming the debt, you would have to clear the debt first before signing the agreement.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy helps those who have a regular income to come up with a repayment plan for all or part of their debts and still keep their property. According to this bankruptcy, you (the debtor) will come up with a repayment period of between three to five years. The repayment period will depend on your monthly income.
You can file a chapter 13 to help protect your house from foreclosure, to prevent accruing interest, to keep valuable non-exempt property, pay up all the missed car and mortgage payments, among others. A Van Nuys Bankruptcy lawyer will help you make things easier by helping you file for chapter 13 and keep your property.
For you to qualify for a chapter 13 bankruptcy, you must:
Have a Steady Income
When filing for Chapter 13 bankruptcy, you must provide evidence showing that you have a steady income source. This income should cater to your monthly needs and be a part of your repayment plan.
Not Exceed Debt Limits
You must also show that the debts you have don’t exceed a certain amount. Usually, there are two types of debts, secured and unsecured. Secured debt gives your creditor permission to take your property if you fail to pay the debt. On the other hand, unsecured debt includes medical cover and your credit card and does not give your creditors the right to take your properties from you.
Be an Individual, not an Organization
You must not be a business organization when applying for chapter 13 bankruptcy as it is only available to individuals. However, if there are any business-related debts that you are personally responsible for, you can benefit from filing for Chapter 13 bankruptcy.
An automatic stay is a form of protection for debtors against creditors who want their payment back. The stay is activated after you file for bankruptcy in a court of law. The automatic stay also stops any civil suits against you. Also, chapter 13 automatic stay will protect any co-debtors that you may have. The creditor cannot collect any debts from a person considered your debtors unless the court authorizes it.
Here are all other benefits you will receive from an automatic stay:
Prevent Disconnection of Your Utilities
After the automatic stay is activated, the utility company will stop any plans to disconnect your utilities for at least 20 days.
Stop Any Evictions
If the landlord is trying to evict you from your home, the automatic stay can stall the eviction process. However, the automatic stay will not work if your landlord had already filed a wrongful possession against you in court. Also, the automatic stay will only buy you a few weeks or days in the home.
Stop the Collection of Public Benefits Overpayments
The automatic stay will stop any government agencies from collecting any public benefits overpayment you might have been receiving at the time of filing for bankruptcy. The overpayments are collected from your benefits checks or direct billing. But if you cease to be eligible to receive the benefits, the automatic stay will not help you stop collecting the benefits.
Stop Any Foreclosure Proceedings
If the financial institutions begin foreclosure proceedings when filing for bankruptcy, the automatic stay will stop them. But this move will only be temporary. The institutions will find a way of continuing with the foreclosure proceedings after the automatic stay has been lifted.
Stop Wage Garnishment
Wage garnishment is a type of court order where your earnings are withheld by your employer and used to pay any existing debts. When you have a wage garnishment, mostly multiple of them, you should consider filing for bankruptcy. The automatic stay will prevent employers from garnishing your wages until the stay has been lifted.
Process of Filing for Bankruptcy
Filing for bankruptcy is your best way of debt relief. The process is a bit complicated, which is why you need to consider hiring a Van Nuys Bankruptcy attorney. Having an attorney by your side will smoothen the process and save you the trouble. However, if you can't afford an attorney, you can file bankruptcy through the following steps.
Collect the Bankruptcy Documents
It's important to start by gathering the necessary documents, which will be submitted in court to help with your petition. These documents include:
- Income verification documents.
- Information from all the creditors you owe money, including all the money you owe them.
- Documents showing assets information.
- Two years of filed tax returns, but if you intend to file chapter 13 bankruptcy, you will have to provide four years of filed tax returns.
Attend a Credit Counselling Class
You must attend a credit counseling class for six months before filing for bankruptcy. This class is mandatory for the bankruptcy you intend to file according to the federal laws. You will find several approved classes in Van Nuys. Generally, the classes are an hour and thirty minutes long and pretty easy to understand. The classes are also offered online or through the phone, making the whole process easier for you. The schools charge a small fee for the course, but you can find others sponsored by nonprofit organizations.
Fill Out the Bankruptcy Forms
You will find the bankruptcy forms at Van Nuys court. However, you must only file them if you’ve lived there for at least 180 days. The questions are easy to answer.
If you have a Van Nuys bankruptcy attorney, they will help file the forms for you. The attorney will ask all the relevant questions that are in the petition before filing them out. However, you will be required to sign the documents before they are submitted to the courts. Keep in mind that you should submit these forms truthfully; otherwise, you will be prosecuted for perjury.
When filing the forms, remember to attach the necessary certificates before submitting them to the courts.
Pay the Filing Fee
You must pay the filing fee when submitting your bankruptcy documents to the courts. If you cannot pay the stipulated amount, which is $338 at once, you can pay in installments. However, you must apply with the bankruptcy court first. If the property you own is less than 150%, you should apply for a fee waiver according to the federal poverty guidelines.
The courts accept cashier's check, cash, and US Postal Service money orders. However, the courts are not taking cash at the moment due to the ongoing COVID 19 pandemic.
Take the Documents to the Court
Once you have all the forms with you, take them to the court where you intend to file the bankruptcy. You can drop the forms in person, or you can mail them to the court. At this point, the process to file for chapter 7 bankruptcy can begin.
Share the Documents with Your Trustee
The courts will assign you to a trustee once you have filed the forms with them. You should then share the documents with the trustee, who will help you handle your chapter 7 bankruptcy. If you are filing a different type of bankruptcy, your trustee will sell your non-exempt property, then use the money to pay all your creditors. The non-exempt property does not exist in chapter 7 bankruptcy.
Take a Bankruptcy Course
According to the bankruptcy code, you should take the bankruptcy course after you have filed for bankruptcy. You need to take the course at an approved school for you to receive a certificate of completion. The court requires this certificate, and it will help you obtain the discharge, which is essential if you filed for chapter 7 bankruptcy.
Attend the 341 Meeting
The 341 meetings (meeting for creditors) are held in court, and it's the only time your presence will be required in court. However, unlike the usual court proceeding, which involves a judge and other court officials, you will only be meeting with your trustee to discuss your case. The trustee will only ask you standard questions relevant to the case. These include:
- Any existing inaccuracies.
- Whether you answered every question truthfully.
- Whether you read and understood all the documents before signing them.
You must carry your identification documents, which include a photo ID and social security number.
Find a Bankruptcy Attorney Near Me
Never underestimate the power of a bankruptcy attorney when considering filing for bankruptcy. An attorney is necessary when you don’t know where to begin. At the Los Angeles Bankruptcy Attorney, we serve clients looking to file for bankruptcy in Los Angeles. We offer affordable services since we understand the need to file for bankruptcy.
We help file different types of bankruptcy, including chapter 7 and chapter 13. We will help you go through each step and advise you on your best legal options concerning bankruptcy. So don't hesitate to call our Van Nuys Bankruptcy office at 424-285-5525 if you need help.