Are you in dire financial problems? Do you feel your creditors closing in on you without any way of repaying your debts? Then you are in a situation that can be solved through filing for bankruptcy. Federal law states that filing for bankruptcy protects you, a debtor, from creditors' actions due to unpaid dues.
Though filing for bankruptcy may seem like an easy task, it can be complex depending on the type of bankruptcy you wish to file. Hence, the Los Angeles Bankruptcy Attorney firm is here to help. The firm deals exclusively with bankruptcy law, so you are assured of great skills. We serve clients looking to file for bankruptcy in Woodland Hills.
Types of Bankruptcy
Filing for bankruptcy protects yourself as (a debtor) against creditors' actions when you are in debt you cannot pay. When considering bankruptcy in California, consider different types of bankruptcy depending on your circumstance. The different types Chapter 7, 11, 12, and finally chapter 13 bankruptcy. However, the most common types of bankruptcy filed in California are chapter 7 and chapter 13. Each of the two is a great tool to protect yourself. But whether you are eligible for either will depend on some factors such as your financial situation. A bankruptcy will grant you discharge through the courts. A discharge is an order issued by the courts to ban your creditors from collecting their dues.
Chapter 7 Bankruptcy(Liquidation Bankruptcy)
Chapter 7 bankruptcy is a legal tool to help you clear all the debt you owe your creditors. You can only use it once in eight years. So before filing for bankruptcy, you need to think about it. Chapter 7 is also called liquidation bankruptcy, which occurs when the court sells all your assets and then uses the cash to clear the debts you owe your creditors.
This type of bankruptcy is mostly used on debtors who have few assets. You should take a means test to show that you are eligible for chapter 7 bankruptcy. The means test is a means of ruling out people who have a higher income from filing. It is essential to consult a Woodland Hills bankruptcy attorney if you are unsure about your eligibility.
If you fall under these categories, then you will pass the means test and can qualify to file for liquidation bankruptcy:
- The property you own is not expensive.
- You have a credit score of below 600.
- The dischargeable debt that you own is worth either $10,000 or more.
- You have no way of paying your creditors for at least five years.
- You have a high chance of being sued by your creditors.
- The amount of money you have is not enough to pay your creditors as it will leave you completely broke and not fend for yourself.
When you file for bankruptcy, ensure you fill out forms showing all your assets, what you owe your creditors, how much your own, and your spending amount. If formally employed, you must submit all the tax returns from six months ago and your pay stubs. The court will then assign a trustee who will go through all your documents and every form you’ve filled to ascertain whether they are genuine. He/she will ask you several questions relating to the forms.
Once everything is in order, it will be up to the court to review it and decide on the next step. After a few months, you will receive a notice of your official bankruptcy discharge.
Chapter 7 can discharge several debts, but not all of them. The dischargeable debts include credit card debts, car loans, utility bills, medical bills, personal loans, and debit or credit card agencies' judgments. The debts that cannot be discharged include child support, alimony, student loans, and government debts.
Chapter 13 Bankruptcy (Wage Earners Plan)
Chapter 13, bankruptcy is meant to help individuals with a regular income who would like to pay their debts but cannot clear them. It helps debtors pay the debt but still keep their property. The debtor will create a repayment plan of up to five years, depending on their monthly income. The repayment period will be under the court's supervision, and it will begin 30 days later after you have filed for chapter 13 bankruptcy.
The court will appoint a trustee to oversee your case, and he/she will be responsible for distributing the payment to your creditors. The repayment plan will be calculated from disposable income, priority debts, and the creditor's best interest. When you pay your creditor per the repayment plan, the debts which were not cleared are discharged.
Bankruptcy Filing Process
Filing for bankruptcy is not a hard task when you have a Woodland Hills bankruptcy attorney. The attorney will take you through these steps and ensure you are protected. The steps of filing for bankruptcy are:
Collect the Required Documents
The first step to filing bankruptcy is collecting the documents required by the courts. The documents include all the formal documents, tax returns, paycheck stubs, among others, that the court will need to help smoothen the bankruptcy process. The court will also need the list of all your creditors.
Credit Counselling Class
A course in credit counseling is important during the bankruptcy process, irrespective of whichever bankruptcy you are filing. The classes are listed among California approved schools. The course is offered both in-person and online so that you can take them depending on your preferences. It is also fairly priced, but if you don't have the money to spend on them, you can take classes offered by a non-profit organization.
Fill the Forms for Bankruptcy
You must fill all the required forms required by the court. All these forms are the same and easy to fill out. However, if you are filling a list of your exempt properties, you will need the help of a Woodland Hills bankruptcy attorney. The attorney will want to know the answers to certain questions then help you fill the forms. But, you must sign the forms yourself as the court requires your signature. You must review the questions and answers carefully before signing them.
You should have the required fee with you to help you file all the documents in court. The fee required in California is $338. If you can't raise the money due to other engagements, you can apply to pay it in installments. If you fall below the poverty guidelines as provided by the federal laws, which is 150%, you need to apply for a fee waiver. But if you have the full amount with you, carry it to court when making your application. The money should be in cash. If you have a cashier's check and money order, the court will accept it.
Up to this point, you are eligible to file for chapter 7 bankruptcy. All the above steps are necessary for chapter 7 bankruptcy. But, if you intend to file a different type of bankruptcy, you should proceed to the next step.
Print All the Forms
You must print all the forms if you filled them on a computer before taking them to court. Remember to keep a copy as a reference.
Take the Forms to Court
Once everything is in order, you need to take the forms to court in your district, in this case, California's central district. Ensure you mail the forms or drop them yourself at the court. You must carry a declaration showing the income for 60 months before the filing of the bankruptcy. This is a requirement in the central district of California.
Assigning of the Trustee
Once the court has received all your documents, they will assign a trustee to oversee your case. A trustee is an independent official from the department of justice(DOJ). The trustee is responsible for the following roles:
- Conduct a meeting of creditors as many bankruptcy cases don’t involve a judge.
- Review and ascertain all the information in the documents filed by the debtor.
- Be responsible for the bankruptcy estate.
- Sell the debtor's property except for the nonexempt property.
- Recover all the property given away by the debtor.
- Recover debt.
Take a Course 2 Bankruptcy
You must take a course two bankruptcy from one of the California-approved schools. This course is necessary if you want a bankruptcy discharge. After completing the course, you will be given a certificate which will show that you have completed the course. The certificate will help in writing the discharge.
Attend 341 Meeting(Meeting of Trustees)
You must attend the meetings once you have completed the course. The meetings are also called the meeting of trustees, and it occurs between you and the trustee in court. They will ask you a few questions which are necessary for the filing of bankruptcy. You are required to carry forms of identification such as ID and a social security card.
Bankruptcy exceptions are types of laws that protect your property during the bankruptcy process. Any property that is exempted cannot be sold for the sake of paying the creditors. When you file for bankruptcy, you must claim an exemption to protect your property. Failure to this, the trustee is required by the courts to sell your property.
Bankruptcy exceptions are crucial because they help guarantee that you don't have to start from zero after your property is sold to clear the debt. Some of the property protected by bankruptcy exemptions include:
- Life insurance
- Household property
- Motor vehicles
- Unemployment benefits
- Child support
- Social security benefits
- Awards from personal injury or another victim award.
An automatic stay is a form of protection given to the debtors against creditors trying to collect their dues. The automatic stay is immediately activated when you file for any bankruptcy.
According to 11 U.S. Code § 362, an automatic stay becomes active in these instances:
- After a judgment has been enforced before filing for bankruptcy.
- Possessing an estate or the debtor’s property.
- When collecting or recovering dues from the debtor.
- Commencing any proceeding against the debtor.
If you are having difficulties grasping the automatic stay concept, your Woodland Hills bankruptcy attorney will guide you through it. Keep in mind that an automatic stay is designed for your good.
When an automatic stay is activated, you will be awarded various benefits, not just protection from debtors. Some of the benefits include:
If your landlord had plans to evict you from your home, then the automatic stay will stop them from evicting you. But in the case where the landlord had filed for wrongful possession against you, then the automatic stay will not work.
An automatic stay will stop any foreclosure proceeding filed by the financial institutions. Keep in mind that the financial institutions will proceed with the proceedings immediately after the stay has been lifted.
Stop Garnishing of Wages
The automatic stay will stop any garnishing of your wages currently in place or about to be put in place. Wage garnishment means your employer can withhold your income then using it to clear your debt.
Find a Bankruptcy Attorney Near Me
Being in a financial problem can be a hard time for you and your dependents. Besides the embarrassment, you have to deal with constant calls from your creditors when your debt payment is due, which is why filing for bankruptcy is the go-to solution. Filing for bankruptcy will protect you from the creditors' actions until you can clear debts.
If you are in a hard financial situation, you could be sorted through filing for bankruptcy, reach out to a Woodland Hills bankruptcy attorney for help. At Los Angeles Bankruptcy Attorney, we serve clients looking to file for bankruptcy in Woodland Hills. So don’t hesitate to reach out to us at 424-285-5525.