Tag: bankruptcy attorney

Few situations are more stressful than having more debt than you can manage. At those times, declaring bankruptcy might be your best option, but it’s a complicated process. Before you go down that road, you should understand what bankruptcy is and whether or not you need a bankruptcy attorney.

Hiring a bankruptcy attorney might seem 100% counterintuitive—you might say, “I don’t have any money. How am I supposed to pay a lawyer?” While that feeling is understandable, there are a few reasons it’s still a good idea to at least talk to an attorney before making a decision.

Choosing the Right Bankruptcy and Knowing Your Rights

There’s not just one kind of bankruptcy; there are different options that might be better or worse, depending on your situation. The two most common types of bankruptcy for consumers are Chapter 7 and Chapter 13. 

Under Chapter 7, also called liquidation, all dischargeable debts will be wiped out at the end of the process, but your assets can be seized and sold off to pay your creditors. 

Chapter 13 bankruptcy is quite different. Called a wage-earners plan, Chapter 13 bankruptcy lets the debtor negotiate a repayment plan. After making the required payments for three to five years, the debts are then discharged, usually without liquidating any assets.

Though bankruptcy is handled exclusively by federal bankruptcy courts, state laws should be considered. Crucially, California bankruptcy laws have generous exemptions that protect many of a

the debtor’s assets from liquidation. If you don’t understand how these exemptions work, you may end up unnecessarily agreeing to sell off assets.

 Proper Filing and Documentation 

Declaring bankruptcy is a fairly complex and document-intensive process. It is easy to file your paperwork incorrectly or forget to include certain documents. Such mistakes can draw things out longer than necessary but also have more serious consequences. There are also filing deadlines that, if missed, can potentially prejudice your case.

It’s possible to navigate the legal and bureaucratic aspects of bankruptcy on your own, but it won’t be a very pleasant experience. An experienced lawyer can greatly cut down the stress of it.

No More Dealing with Creditors

The one thing most people want more than anything when they’ve reached the point of considering bankruptcy is to be done with the endless harassment from creditors. Once a person files for bankruptcy, an automatic stay goes into effect. This means that, in theory, creditors must cease trying to collect any debt from you.

In reality, some debt collectors will not stop harassing you, especially if they don’t think they’ll get much via bankruptcy. They may continue contacting you, trying to get as much money as possible. If you have an attorney, insist that any further communications go through them. If the creditors persist, your lawyer should be able to stop it.

Talk to a California Bankruptcy Expert

You don’t have to go through bankruptcy alone. Our attorneys know the process inside and out and can eliminate much of the stress in what is already a very difficult time. We also know how to work out a fee arrangement that works for you and helps you put you back on your feet. Contact us today to schedule a consultation.

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.

The novel coronavirus has shut down businesses of all sizes, many of which have also filed for bankruptcy. Even large companies such as Hertz, Neiman Marcus, J. Crew were no exceptions. One of the latest casualties is pizza chain California Pizza Kitchen, which filed for Chapter 11 bankruptcy. According to this New York Times article,

“More than 6,800 companies filed for Chapter 11 bankruptcy protection last year, and this year will almost certainly have more. The flood of petitions from the worst economic downturn since the Great Depression could swamp the system, making it harder to save the companies that can be rescued, bankruptcy experts said.

Most good-size companies that go into bankruptcy try to restructure themselves, working out payment agreements for their debts so they can stay open. But if a plan can’t be worked out — or isn’t successful — they can be liquidated instead. Equipment and property are sold off to pay debts, and the company disappears.”

Interestingly, while the pandemic hit California hard, Chapter 11 filings are in flux. Bloomberg Law notes that

“confirmed coronavirus cases and Chapter 11 numbers rise and fall in their own rhythms. In fact, Chapter 11 cases steadily dropped in California from March (43) to April (30) to May (27) as confirmed cases increased from 8,221 to 41,897 to 61,821. The two only increased contemporaneously in June 2020.”

While big companies make the news when it comes to bankruptcy, the impact these filings have on the workers are not as reported. You may be an employee whose company is immediately facing bankruptcy. Perhaps you or someone you know is about to file for individual bankruptcy after debt consolidation is no longer a viable option.

If 2020 has taught us something, it’s that events like a pandemic can trigger such great economic uncertainty that puts even the most prepared at risk. Often, even major expenses such as health care bills, job loss and other financial loss can result in bankruptcy. But regardless of the reason, there are ways to recover from financial stress. Our bankruptcy attorneys can help find a solution that fits your needs so you can start over with your finances.

Types of Bankruptcy

Get the legal assistance you need and get your financial fresh start. Find out which type of bankruptcy you qualify for and how our bankruptcy lawyers can assist.

Chapter 7

This type is also called the straight or liquidation bankruptcy. A court will appoint a trustee who will then own your assets to sell and distribute the funds to your creditors. Under current bankruptcy laws, you must pass a means test before filing Chapter 7 bankruptcy. If your current monthly income is below the Southern California adjusted median income, then you automatically qualify. Our lawyers have helped many people file Chapter 7 Bankruptcy after other attorneys told them that they did not qualify. 

Chapter 13

Chapter 13 Bankruptcy may help you get out of debt by completing a repayment plan over a 3- to 5-year period. Chapter 13 is often the best option for those who cannot pass the Chapter 7 means test or those seeking to protect assets that would be placed at risk by Chapter 7. We explain your options for loan modifications versus bankruptcy and the prospects of reaffirming secured debts. 

Chapter 11

This type is a reorganization bankruptcy and is available to individuals and businesses. In contrast to Chapter 7, the debtor remains in control of business operations under chapter 11 and doesn’t sell off all of its assets. The process involved with Chapter 11 personal or business bankruptcy is far more complicated than either Chapter 7 or Chapter 13 personal bankruptcy. In fact, you or your business will have to be involved in the process for several years in most cases. We can help you through all of these steps and explain each option available to you.

Chapter 15

The main goal of Chapter 15 is to provide cooperation between a foreign debtor, foreign courts and the U.S. Bankruptcy courts. A foreign debtor who had assets in a number of countries would file Chapter 15. Our attorneys have experience assisting foreign debtors with their complicated debt problems. 

Our Bankruptcy Attorneys Can Help

Our boutique law firm offers comprehensive legal services and years of proven experience to help you recover from debt. We also recognize that each case is unique. This is why we deliver creative solutions and fee structures tailored to each client’s needs. Financial relief is possible and we’ll help you navigate the legal process from start to finish. Contact us for a consultation today.