What Is Bankruptcy?
Bankruptcy is a legal proceeding in which a person who cannot pay his or her creditors can get a fresh financial start. The right to file bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal
Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you—at least for a limited period of time.
How Will A Bankruptcy Attorney Determine If Declaring Bankruptcy Is Right For Me?
As a bankruptcy attorney in Downey, CA, and the greater Los Angeles County area, I have clients from many walks of life. When determining whether bankruptcy is the right decision for a client, one of the first questions I ask is: What is your income compared to your expenses?
If the client is making enough money and are able to keep current on their bills, a judge will question why a declaration of bankruptcy is necessary. The second important question I ask is: How much of your assets do you own?
For most people, their biggest asset is their home. If a client has a sizable amount of equity in the home, it does not make them ineligible to file for bankruptcy. However, whether they can keep their home will depend on whether they can use an exemption to protect it. Exemptions are laws that protect your property when filing for bankruptcy. Property that is exempt can’t be sold for the benefit of your unsecured creditors.
What Is Chapter 13 Bankruptcy Vs. Chapter 7 Bankruptcy?
Chapter 13 is a repayment plan, where you will repay all or a portion of your debt over a 3 to 5-year period. It allows you to keep your home and possibly your automobile while repaying your creditors.
If a client doesn’t have enough income to cover the payments in this bankruptcy plan and doesn’t have access to contributors who can provide financial assistance, then filing for Chapter 13 bankruptcy isn’t an option.
A Chapter 7 bankruptcy is a way for a person to liquidate their estate when they have a lot of unsecured debt (e.g., credit card debt, medical bills, etc.). Clients who file for Chapter 7 bankruptcy generally do not make enough money to cover their expenses each month. In essence, Chapter 7 bankruptcy is a tool that can be used to discharge unsecured debt without losing exemptible assets. That means credit card bills and medical bills will be erased.
Both chapter 13 bankruptcy and chapter 7 bankruptcy have benefits and drawbacks. It’s important that you speak to an experienced bankruptcy attorney in Downey, CA before making any decisions regarding bankruptcy.
What Should I Do (Or Not Do) Prior To Filing For Bankruptcy?
Before filing for bankruptcy in Los Angeles County, it’s important to list all debts that will be included in the bankruptcy. In addition, all creditors must be notified of the bankruptcy in order for debts to be discharged.
If you’re married, then talk to your spouse about the bankruptcy, even if your spouse isn’t filing with you. This is because the spouse’s information might be requested and some of the assets they own might be affected by the bankruptcy.
By all means, do not transfer assets to family members or try to hide assets in any way before filing for bankruptcy. This will be considered fraudulent behavior by the court and invalidate your bankruptcy declaration proceedings.
The bottom line is that you should be honest at all times before and during the bankruptcy process. Your bankruptcy attorney can only help you if you are completely honest about everything. Remember, your attorney is not there to judge you but to help defend your rights and help you get back on your feet again.
What Types Of Debt Cannot Be Discharged In A Bankruptcy?
There are some types of debt that cannot be discharged even if you successfully declare bankruptcy. Here’s a list of debts that will not be discharged in Los Angeles County:
- Most federal and state taxes
- Child support and alimony payments
- Student loans
- Court fines and criminal restitution
- Debts associated with DUI-related accidents
For more information on Filing For Bankruptcy, a free consultation with a Downey, CA bankruptcy attorney is your next best step. Get the information and legal answers you need by calling (818) 900-5794 today.
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