Bankruptcy protection in the United States is a constitutional right. First enacted in 1898, bankruptcy law is designed to protect a debtor by giving him or her a fresh start, free from creditor’s claims and the obligation to pay most pre-existing debts.
Bankruptcy is an excellent tool when debt becomes unmanageable. The courts have said: “Bankruptcy gives to the honest but unfortunate debtor… a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.”
The U.S. Bankruptcy Code regulates bankruptcy law and the common name of the different bankruptcy types come from the chapter of the Bankruptcy Code in which they are found.
Chapter 7 is the simplest and fastest way to discharge consumer and unincorporated business debt. Most Chapter 7 cases take about 4 months from start to finish. A Chapter 7 Bankruptcy starts with the filing of the Bankruptcy Petition and supporting documents.
An Automatic Stay goes into effect immediately upon filing and creditors are notified by the court and instructed not to contact the debtor for any collection purpose. Wage garnishments, court judgments and any requirement to make payment on dischargeable debts stop immediately. A Bankruptcy Trustee is appointed to review the case and determine if any assets exist to repay creditors. Most Chapter 7 debtors are allowed to keep most, if not all of their assets and property. Generally only one court appearance is required. Chapter 7 filings do require the debtor to meet certain income and asset criteria to qualify. Debtors who do not qualify for Chapter 7 may file for relief under Chapter 13.
When you contact our office an experienced San Diego bankruptcy lawyer will analyze your particular financial situation and determine if you qualify for Chapter 7 relief.
Chapter 13 allows a debtor who does not qualify for Chapter 7 relief to reorganize debt and repay creditors based upon the debtor’s ability to pay. A repayment plan is developed and when approved by the court, creditors are required to accept payments through the repayment plan even when the plan payments are less than the original loan payment. A repayment period of three or five years is established after which any remaining unsecured debt may be discharged.
Chapter 13 is for people and personal unincorporated businesses that have significant assets, earnings, or a large amount of equity in their home or business and are therefore not eligible for discharge under Chapter 7.
More advanced debt management tools are available to a debtor under Chapter 13 such as preventing foreclosure on a home, removing second mortgages that are unsecured because of a change in home value or equity, and protection of co-signers or co-debtors. Additionally, student loans, back taxes, and court ordered spousal and child support that are not dischargeable under Chapter 7 can be managed through Chapter 13.
To determine which type of bankruptcy is best, or if other options exist outside of bankruptcy, we will carefully analyze your particular financial situation and explain your options to you.
Many people avoid bankruptcy because of a perception of social disgrace and damage to credit associated with bankruptcy. Remember bankruptcy is your constitutional right and is handled confidentially. Most people are surprised at their ability to re-establish credit ratings quickly and obtain new credit immediately after filing bankruptcy. This is because after filing for bankruptcy, creditors understand you now have less debt and therefore more disposable income and since you cannot file for bankruptcy again for many years your credit scores improve.
If you simple cannot pay your bills, have suffered job loss, experienced health problems resulting in large medical expenses, have unexpected expenses, are seeking or been through a divorce, or suffered a small business failure, then bankruptcy may be right for you.
Please contact us today to speak with an experienced San Diego bankruptcy attorney at no charge who will explain the process and help determine what course of action is best for you and the steps you need to take to obtain immediate financial relief.
WE ARE A DEBT RELIEF AGENCY UNDER TITLE 11 OF THE US CODE.
We provide legal assistance and help people file for bankruptcy relief under the Bankruptcy Code.