The word “bankruptcy” carries considerable fear for most people. It is a common misconception that bankruptcy signifies the end of financial prosperity, but that isn’t necessarily the case. Instead, filing for bankruptcy can offer you a second chance at financial freedom.
Bankruptcy can provide extraordinary relief. With the help of a qualified bankruptcy lawyer, you can start with a clean slate, and work to rebuild your financial situation while repaying your creditors at a rate you can afford.
At The Sands Law Group APLC, our Los Angeles bankruptcy lawyers are committed to helping our clients get out from under the weight of crushing debt. Our skilled bankruptcy attorneys have saved significant time, money, and stress for countless clients while preventing debt lawsuits, home foreclosure, property repossession, and wage garnishment.
We offer exceptional legal services at affordable rates, in French, Hebrew, Arabic, Spanish, and English. Contact The Sands Law Group APLC today to determine if filing for bankruptcy in Los Angeles or Oahu is right for you.
Know Your Debt Relief Options in Southern California
For individual debtors, there are two main forms of bankruptcy: Chapter 7 and Chapter 13. Each individual’s finances and circumstances are different and will factor into the decision about which chapter is best aligned with their unique needs and qualifications.
Chapter 7 Bankruptcy
If you are eligible for chapter 7 bankruptcy, this is usually the preferred option. If the majority of your debts are dischargeable, as is the case with credit card and personal loan debt, and you have few assets, chapter 7 bankruptcy can offer you a fresh start, with the following advantages:
- Upon filing, you gain immediate protection from collection efforts and wage garnishment.
- You are no longer responsible for paying back any unsecured debt, such as bank loans or medical bills. Instead, the court will assume your debt, and assign a trustee to sell your non-exempt and unsecured assets to repay your creditors.
- You keep your secured and exempt assets (and their debt). To secure an asset, you must sign a Reaffirmation Agreement, which in essence renews your promise to pay back that debt.
- With some exceptions, any wages or property you acquire after filing for bankruptcy are yours to keep.
- Chapter 7 bankruptcy cases are relatively short and painless, typically resolving within three to six months.
Not everyone is eligible for chapter 7 bankruptcy, however. Some debts, such as alimony, student loans, child support, and certain tax obligations–are non-dischargeable, which means they cannot be wiped out. Additionally, if your income is too high, you cannot file for chapter 7 bankruptcy.
To qualify for chapter 7, you will need to pass the Bankruptcy Means Test: a tool the court uses to evaluate your income, assets, debts, and life circumstances.
But just because you can file under chapter 7 doesn’t mean it’s the best choice for your unique situation. For starters, you have very little control over what property you get to keep in a chapter 7 bankruptcy. All non-exempt property must be liquidated and used to pay off creditors, and any stay on a home foreclosure is temporary. Creditors may be able to hold any loan co-signers responsible unless they, too, file for bankruptcy. Furthermore, you can only receive a debt discharge under chapter 7 every eight years.
Our Los Angeles bankruptcy lawyers understand the gritty details of bankruptcy filings in Los Angeles and can guide you through the process.
Chapter 13 Bankruptcy
For those who want to keep any non-exempt property after bankruptcy, or whose income is too high to file chapter 7 bankruptcy, chapter 13 may be a better option. Chapter 13 bankruptcy also gives the debtor greater time and flexibility for paying back their debt, provided that they meet the terms of their chapter 13 repayment plan. Although a person’s debt is not canceled in a chapter 13, it is reorganized into a three-to-five-year repayment plan, and it can be significantly reduced. It’s also worth noting that anyone can file chapter 13 at any time. There is no waiting period like there is with a chapter 7.
As with chapter 7 bankruptcy, chapter 13 does have its disadvantages. Filing for chapter 13 bankruptcy is a more complex process, as the debtor and court need to decide upon the terms of a repayment plan, which assets to keep and which to sell, and how much each creditor will receive from the repayment plan. With this complexity comes higher legal fees, longer court proceedings, and a longer time spent in bankruptcy: most chapter 13 cases last between three and five years. During that time, the debtor has little cash liquidity, with much of it spoken for in their repayment plan.
Filing for Bankruptcy in LA
The process for filing for bankruptcy in Los Angeles, California is as follows:
1- Complete your 2005 Bankruptcy Act credit counseling. All individuals considering filing for bankruptcy must undergo credit counseling within six months before filing.
2- Determine which chapter you should file under. The courts will determine your eligibility for each chapter by applying the Bankruptcy Means Test.
3- Collect the necessary documentation, including:
- an itemized list of your present source(s) of income;
- all secured and unsecured debts;
- any real or personal property;
- tax returns from the past two years;
- loan documentation;
- automobile titles;
- real estate deeds;
- monthly living expenses; and
- any large financial transactions from the past two years.
4- Assess your exempt property. It is highly recommended to seek a lawyer’s assistance when determining which pieces of property are exempt under your state’s list of exemptions.
5- File for bankruptcy. Your lawyer will file a two-page petition and other documentation with your California district bankruptcy court. Filing under chapter 7 incurs a small fee, which can be paid in installments. The fee for filing under chapter 13, however, must be paid immediately.
6- Attend a financial management course soon after filing for bankruptcy. This is required under the 2005 Bankruptcy Act.
7- If filing for Chapter 13 bankruptcy, propose a repayment plan. Your lawyer will assist you in creating an affordable plan based on your income, debts, and monthly expenses, and ensure that the proposed plan complies with the law. A bankruptcy judge will either confirm or deny your plan.
Once you file for bankruptcy, the court will grant you an automatic stay, which will halt home foreclosure and should prevent creditors from contacting you. A bankruptcy trustee will be assigned to your case, selling any non-exempt and unsecured property that you do not intend to make further payments on. Bankruptcy lawyers can help to ensure the filing process is as seamless as possible.
Our Experienced Los Angeles Bankruptcy Attorneys Can Help
When considering bankruptcy, it is in your best interest to consult with experienced legal counsel. A skilled LA bankruptcy lawyer will:
- advise you on which type of bankruptcy is right for you;
- explain what bankruptcy means, what it entails, and how it will impact your future;
- manage the complicated filing procedure without mistakes; and
- communicate with creditors on your behalf, sparing you further stress and harassment.
Hiring a lawyer when you’re already swimming in debt may seem counterintuitive, but it’s often the most cost-effective decision you can make. Most Los Angeles bankruptcy lawyers will accept a portion of the settlement as payment or agree to a payment installment plan. Most importantly, you are liable to make mistakes when filing by yourself, leaving you vulnerable to creditors acting in bad faith and ultimately costing you more money.
Frequently Asked Questions
How Much Debt Do You Have To Have to File for Bankruptcy?
There is no minimum debt required to file bankruptcy. Even so, it’s not a decision one should enter into lightly. Filing for bankruptcy will negatively affect your credit score, which may impact your ability to take out loans for years into the future. Also, in the case of chapter 7 filings, you can only discharge your debts every eight years. Therefore, if you opt to eliminate a small amount of debt through chapter 7 when you could reasonably repay it yourself, you remove this option for potential larger debts incurred in the future.
Before filing, you should consider the amount and type of debt you have, and how much you can afford to pay back. A qualified Los Angeles bankruptcy attorney is best able to advise you on this decision, taking into account the particulars of your unique case. Your lawyer may be able to negotiate an understanding with your creditors, therefore avoiding court altogether.
Can I File for Bankruptcy Without an Attorney?
It is certainly possible to file for bankruptcy without legal assistance (otherwise known as “filing pro se”). However, as discussed above, doing so is risky business. A California bankruptcy court will expect you to understand the bankruptcy code and procedure, and court employees cannot provide legal advice. A simple mistake can significantly impact your financial future.
Some pro se litigants opt to instead use a non-attorney petition preparer, believing this to be a good compromise between filing alone and hiring an expensive attorney. But, as the name suggests, non-attorney petition preparers are not a substitute for legal counsel. They can only prepare documents for you, not tell you which documents to prepare, advise you on which chapter to file, provide legal advice, communicate with creditors on your behalf, or accompany you to court.
Can I Keep My Home After Filing Bankruptcy?
It is possible to keep your home after you have filed bankruptcy, but it depends largely on the chapter you file and on the exemptions available. You must take steps to protect your home equity with a bankruptcy exemption under either chapter.
It is rare for states to allow you to protect all of your home equity under a bankruptcy exemption. Most states instead have a limit called a “homestead exemption.” This exemption depends on several different factors, such as your tax filing status, your age, your disability status, and if you own any other real property. For example, California’s homestead exemption limits families with no other real property to $150,000.
The Bankruptcy Code is complex, and your unique circumstances will greatly affect how the law applies to your situation.
Contact The Sands Law Group APLC Today
The decision to file for bankruptcy is very personal and has long-term impacts on your life and financial health. You need a competent and compassionate attorney to guide you through this complicated process. The experienced Los Angeles bankruptcy lawyers at The Sands Law Group APLC will provide you with personalized and thorough counsel, saving you money over time and setting you up for the best possible financial future. Call or contact The Sands Law Group APLC today for a confidential consultation about your bankruptcy case.