The pandemic left a trail of fallout that gives economists nightmares. Even though the number of personal and business bankruptcies filed in the country dropped last year despite COVID-19, many people still struggle with the current economic climate.
If you are unable to pay your bills, you may be able to file for bankruptcy to stop all creditors from trying to collect their debts. We’ve put together answers to some frequently asked questions on bankruptcy law in LA.
Is Filing For Bankruptcy Good For Me?
Bankruptcy filings can have long-term effects on your finances, but depending on your financial situation, filing may be the best option. Filing for bankruptcy is a very complicated process, and the consequences of filing when you shouldn’t can be significant.
Some advantages you could gain from filing from bankruptcy include:
- Creditors are automatically prohibited from contacting you. While it does not cancel your debt, the court does suspend any debt collection proceedings until your bankruptcy case is finished or the stay is lifted.
- Your debt may be discharged. If you are unable to repay these debts, you may be able to discharge them. Credit card debt, medical bills, utility bills, and personal loans fall into this category.
- Your property may remain yours after bankruptcy if you qualify for bankruptcy exemptions. Some exemptions protect properties up to a certain dollar amount; other exemptions protect the entire value of an asset. Certain types of assets, such as a motor vehicle or wedding ring, are exempt from taxes, while others can be applied to any property you own.
- Your credit score may improve. In the event your dischargeable debts are cancelled, you can move forward with a clean slate and begin rebuilding your credit.
What Type Of Bankruptcy Should I File?
There are two common bankruptcy you can file for your personal loans:
Chapter 7 Bankruptcy
When you file for Chapter 7 bankruptcy, you file a petition with the bankruptcy court. Upon filing, you may eventually need to sell certain non-exempt property to satisfy creditors. Some of your property will often be considered exempt. Often, people filing for Chapter 7 bankruptcy in Los Angeles sell their real estate.
Chapter 13 Bankruptcy
You file a plan with the bankruptcy court, indicating you intend to pay off your debt over the next three to five years.
In order to qualify for bankruptcy, you must satisfy the “means test,” which requires that your monthly income be less than the median income in California.
What Happens During The Bankruptcy Process?
You must file for bankruptcy with a court and pay a filing fee, which can be paid in installments or waived. A trustee may then be appointed to work with you and your creditors. The trustee usually holds a creditor meeting to address creditor claims and your financial status. You may need to appear in court if you contest a creditor’s claim or if other issues arise.
Bankruptcy can prevent foreclosure and give you time to make up missed payments. You may not be able to eliminate all mortgages and liens owed on your home by filing for bankruptcy; however, you should speak with an experienced bankruptcy attorney about removing a second or third lien. The ability to keep your property depends on the value of your equity, the amount of debt owed, and other factors specific to your situation.
There are two choices for California debtors: the state law exemptions listed in the Code of Civil Procedure section 704 or the bankruptcy-only exemptions listed under federal law and in the Code of Civil Procedure section 703. You can claim many different exemptions, including the homestead exemption for real or personal property that you occupy. You can claim all applicable exemptions during the bankruptcy process with the help of a bankruptcy attorney.
Talk To Us Today To Learn More
The Law Office of R. Grace Rodriguez consists of professional and compassionate lawyers specializing in bankruptcy law in Los Angeles. We have helped thousands of people get out of debt and end the financial misery that comes with it.
It can be very difficult to decide what to do when you are in financial difficulty. Consulting an attorney about these matters can be stressful and intimidating … not to mention expensive. Too often, people leave a lawyer’s office more confused than when they entered.
We at the Law Office of R. Grace Rodriguez strive to prevent this from happening to you. Our goal is to make sure you receive the advice you need in a relaxed, informal atmosphere, and that you do not pay us unless you understand all your options and decide to hire us.
We are happy to answer all your questions about bankruptcy law. Call us today at (818) 734-7223.