Month: October 2021

What Happens If I Declare Bankruptcy?

What Happens If I Declare Bankruptcy?

It’s unfortunate that many Americans are loaded down with more financial debt than they can afford. There can be many reasons for this, but typically it’s the result of some significant change in financial circumstances. For example, losing a job can leave someone unable to continue making payments at the same level. If you’ve reached that point, you may be asking “what happens if I declare bankruptcy?”

Depending on the type and size of the debt, there may be a variety of options available before you get to that point. For example, a consolidation loan may help if you need to pay off a few thousand dollars in credit card debt. However, bankruptcy may be the best option or even the only option if you have more significant debt.

Types of Bankruptcy

Bankruptcy is a legal remedy available to someone whose debts have become greater than they can reasonably manage. At its heart, it’s meant to help a debtor get a fresh start while also allowing creditors to recover some of the money they are owed. Though state law often comes into play, bankruptcy cases are handled exclusively in a federal bankruptcy court.

There are several different types of bankruptcy. Some are meant only for certain professions, such as farmers, and others only apply to businesses. Here we’ll discuss the two most common types of bankruptcy for individuals: Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Commonly called liquidation, Chapter 7 is the more straightforward type of bankruptcy, though it’s also more extreme in some ways. In Chapter 7 bankruptcy, a debtor’s assets are transferred to a trustee, who sells these assets to pay off creditors in an agreed-upon order.

It’s important to note that most disputes in a bankruptcy case do not involve the debtor at all but are rather between creditors as they argue over who gets paid first. At the end of the process, the bankruptcy judge discharges the debts (if they are dischargeable), and the debtor is no longer responsible for them.

Chapter 13 Bankruptcy

Called a wage earner’s plan, Chapter 13 bankruptcy is different from Chapter 7 in that it’s not about selling off the debtor’s assets. Instead, the debtor will propose a repayment plan.

The plan allows them to keep their assets and pay off all or part of their debt over three to five years. At the end of this repayment period, the debts covered by the plan are discharged.

What’s An Automatic Stay?

The most immediate benefit for someone who files for bankruptcy is that creditors’ collection activities are paused (an automatic stay). If a person is at risk of eviction, foreclosure, or having their utilities cut off, the automatic stay stops everything in its tracks. It can be a powerful incentive to file for bankruptcy.

What About Bankruptcy Exemptions?

When someone files for bankruptcy, the issue of exemptions becomes critically important. It’s also one of the more complicated aspects of bankruptcy law.

Under Chapter 7, exemptions mean the debtor is entitled to keep some of the proceeds of the sale of certain assets (such as their home). They may even be able to keep the assets from being sold altogether. Under California state law, generous exemptions mean that most bankruptcy cases are settled with no sale of assets.

Exemptions work differently in Chapter 13 cases but are still very important because they’ll help determine what portion of the debt must be repaid.

The Long-Term Consequences of Bankruptcy

Bankruptcy may be the best option for completely overwhelmed people who want to start over, but there are major consequences.

One consequence is the possible sale of personal assets to pay creditors. However, as mentioned above, most cases are resolved with little to no sale of assets.

The most significant consequence of declaring bankruptcy is the damage to a person’s credit rating. Chapter 13 bankruptcy remains on your credit report for seven years, and Chapter 7 bankruptcy remains there for ten years. During this time, you can expect to have a significantly reduced credit score. In addition, it’ll make it difficult to find financing for any major purchase. Also, you’ll likely pay a much higher interest rate if you are able to get financed. For this reason, bankruptcy should not be taken lightly.

Bankruptcy Attorneys in Southern California

Hiring an attorney when you’re overwhelmed by debt may seem counterintuitive. But having expert legal advice can make a major difference in how the process plays out. A lawyer can help you determine what type of bankruptcy is appropriate for your circumstances and how to protect your assets.

For a consultation with one of our experienced bankruptcy attorneys, contact us today.

Do You Need a Lawyer for Pain And Suffering Damages?

Woman lying in bed in pain with hand over her shoulder and neck.

Getting what you deserve in a lawsuit for pain and suffering isn’t always a straightforward process. An identical plaintiff might get significantly different results from different attorneys. A pro per plaintiff (someone who represents themselves) is almost sure to have a less satisfying and drastically different outcome.

Even though the goal is always the same, i.e., to make the plaintiff “whole” again after the defendant has caused them harm, there are many different ways to approach the issue. It’s incredibly complex when it comes to showing damages from pain and suffering.

When Are Pain and Suffering Damages Appropriate?

Economic damages are, for the most part, relatively easy to calculate. For example, if someone steals your car, the economic damage you’ve suffered is the value of the car, its contents, any income you lost as a result of not having the car, etc. Non-economic damages, such as pain and suffering, are appropriate for less tangible harm.

If someone lost their hand due to another person’s negligence, you could calculate their medical bills and their decreased ability to make a living. But of course, that doesn’t cover the full extent of their injuries. They would have suffered great physical pain, severe emotional distress, and perhaps long-term mental health effects (such as depression and anxiety). While no amount of money can erase these injuries, pain and suffering damages are meant to at least address them.

Should You Handle Pain and Suffering Damages on Your Own?

We strongly advise against representing yourself in any lawsuit where you might be entitled to pain and suffering damages. Such a case is likely to be complex, and you would be doing yourself a great disservice by trying to go it alone.

Imagine a situation where the defendant’s culpability is not in question. It’s just a question of how much money they will have to pay. You would have two options: settle the case or take it to court to prove damages.

Proving damages in court is no simple matter. You will have to call your witnesses, cross-examine the defense witnesses, possibly hire experts, and follow the complex rules of evidence. On top of that, the defendant is likely to fight hard because pain and suffering damages can be a lot of money. A pro per litigant is not going to be on equal footing.

This leaves you with the option to settle out of court. The defendant may be very willing to do this. But the amount they offer will be directly related to how much they wish to avoid a trial. If they know you don’t have an attorney, they will lowball you because you probably can’t beat them in court. Worse, because it’s difficult to know how much your case is worth, you may not even know that the offer is too low.

Experienced Plaintiff’s Attorneys in Southern California

If you’ve been injured and believe you may be entitled to pain and suffering damages, your first step should be to contact an attorney. Schedule a consultation with one of our litigation experts today.