Call Now For A FREE Consultation (916) 459-2364

Understanding the Bankruptcy Process

Understanding the Bankruptcy Process

As you may know, bankruptcy is a court proceeding in which a judge and court trustee examine the assets and liabilities of individuals and businesses who cannot pay their bills. Then the court will decide to discharge the debts and you will no longer be legally required to pay your debts.

If your finances have gone wrong and you find yourself surrounded by debt, you can ask for a second chance, that's where bankruptcy comes in place. Individuals or business owners can file bankruptcy; both can petition U.S. Bankruptcy Courts to release you from debt and start your financial life with a clean slate.

Chapters in Bankruptcy

There are two main types of bankruptcy available to individuals. In Chapter 7, the consumer can have all or part of his debts discharged after the liquidation of his non-exempt assets to pay part of the debt, often without losing any assets. In Chapter 13, the consumer can repay part or all debt with a 3-5 year payment plan. Most people choose to file Chapter 13, to keep all of their assets.

The basic process to file for bankruptcy would be to confirm that you really can't pay your debts, then choose a bankruptcy attorney to help you choose the best option that fits your case. Since personal bankruptcy laws are complicated, good advice is to seek professional help from an attorney before filing for bankruptcy. This is the best way to make sure your paperwork is filed completely and accurately.

Debt Relief

Both options of bankruptcy (Chapter 7 and Chapter 13) may help you with foreclosures, repossessions, garnishments, utility shut-offs, and debt collection. Both types provide exemptions that allow people to keep certain assets, but the exemption amounts vary. Personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. These will remain active even with the bankruptcy process.

A trusted Roseville bankruptcy attorney may prove helpful in solving your debt problems.

Frequently Asked Questions about Chapter 7 and Chapter 13 Bankruptcy

Frequently Asked Questions about Chapter 7 and Chapter 13 Bankruptcy

If you have severe debt and the only viable option looming in front of you is to file for bankruptcy, you may want some questions answered. To start with, you must understand the two most common types of personal bankruptcy that people and organizations file – Chapter 7 and Chapter 13.

Chapter 7 involves the 'liquidation' of some of your assets and then sold to pay off your debt. Chapter 13 involves 'reorganization,' in which you keep all of your properties and assets and pay towards the debts within a fixed time period. Before contacting a lawyer, you should know the basics of how these two types of personal bankruptcies work so that you can clearly communicate your situation. Here are some frequently asked questions for you to get some insight into both types.

Who can file for Chapter 7 and Chapter 13 Personal Bankruptcy?

Both individuals and business entities can file for Chapter 7, whereas only individuals (including sole proprietors) can file for Chapter 13.

Are there any eligibility restrictions?

The disposable income must be low enough for your case to clear the Chapter 7 Means Test. In chapter 13, you cannot have more than $419,275 of unsecured debt or $1,257,850 of secured debt (as of April 2019).

How long does it take to get a discharge?

In Chapter 7, it usually takes just three to four months. In chapter 13, you get a timeframe of three to five years to pay off all your debts. You will get a discharge only when you complete all the defined plan payments.

Will I lose all my properties?

You may lose some of your properties in the case of Chapter 7, but you can keep your exempted properties like clothes, tools related to your profession, retirement account, and so on. However, in Chapter 13, you get the opportunity to keep all of your properties (if the court allows), but you will have to pay the unsecured creditors an amount equal to your non-exempt assets.

What are the benefits?

Filing for Chapter 7 bankruptcy helps debtors get a quick settlement by discharging the qualifying debts in a span of three to four months and subsequently get a fresh start. On the other hand, Filing for Chapter 13 bankruptcy will help you keep your properties and give you more than a couple of years to pay off the mortgages and other debts through your earnings.

What are the drawbacks?

The biggest drawback of Chapter 7 is that the trustee can sell your non-exempt properties and not give you enough time to avoid foreclosure or repossession. When it comes to Chapter 13, the drawback is that you have to continue paying monthly payments to the trustees over three to five years, and even one missed payment can have serious repercussions.

How long will this be mentioned on my credit reports?

Chapter 7 remains on your credit reports for ten years, whereas Chapter 13 remains for seven years.

Now that you know the basics of both types of personal bankruptcy, you should be able to make the right move that will improve your financial status. Your next step is to contact a Sacramento bankruptcy attorney to find out how you can get financial relief.

How to File Personal Bankruptcy

How to File Personal Bankruptcy

The U.S. Constitution permits citizens to file for bankruptcy when they are no longer capable of repaying their debts. In such cases, you can file for personal bankruptcy by petitioning under the Bankruptcy Code, which is a Federal law. The Bankruptcy Code allows the petitioner to declare insolvency or to apply for restructuring their debts.

You can file a petition for personal bankruptcy either individually or along with your spouse. However, there are two ways of doing this in the U.S. You can either file for bankruptcy under Chapter 7, also known as liquidation bankruptcy, or under Chapter 13, which covers the reorganization of loans.

Chapter 7 vs. Chapter 13

If you are all set to file for bankruptcy and are confused about which chapter to file under, then you must know your options and when to exercise them. As mentioned earlier, Chapter 7 refers to liquidation, while Chapter 13 lays out a repayment plan that spreads the debt over three to five years.

Filing for personal bankruptcy makes it easier to get debts such as personal loans, credit card bills, and medical bills wiped out by filing for bankruptcy under Chapter 7. However, if you wish to avoid liquidation of assets, consider filing for bankruptcy under Chapter 13. If you satisfy the necessary conditions, then you may even be allowed to pay a reduced amount.

To clear your qualifying debt and start anew, contact a Roseville bankruptcy attorney to find out what options you may have.

Bankruptcy Advantages

Bankruptcy Advantages

Bankruptcy is one of the quickest and most affordable options to get out of debt. This is because bankruptcy stops debt collectors and even protects your assets. The most apparent benefit of filing for bankruptcy is to eliminate debts or dramatically minimize them. This legal process is known as "discharge". In other words, the individual is not obligated to pay certain debts once a bankruptcy case has been completed. This commonly occurs approximately three months after filing for Chapter 7 bankruptcy.

Remaining Debt

Certain debts cannot be entirely eliminated, like fines resulting from criminal activities, alimony, child support, most student loans, and some taxes. Almost all of the remaining types of debt can be settled, including credit card debt, medical account debt, payday loans, and other unsecured debts.

Automatic Stay

A legal benefit that the vast majority are unaware of is the "automatic stay." A provision that the bankruptcy code offers as protection between creditors and debtors. This means that according to the federal law, collectors will be restricted from contacting you for collection purposes, and any action that exists against you will be stopped. This also includes lawsuits, liens, and even evictions.


There is a misconception that the moment a person files for bankruptcy, all of their possessions are taken away. The bankruptcy code includes exceptions. These are used to exempt a large number of assets from being liquidated, such as homes, land, vehicles, household items, furniture, clothing, and in some cases, even cash. In addition, retirement funds can also be protected.

Filing for bankruptcy means having the opportunity to start fresh, but it does not mean that you have to start with nothing. If you are in a difficult financial situation, filing for bankruptcy can be the light at the end of the tunnel. Consulting with a Citrus Heights bankruptcy attorney can help you learn about all the available options.

Bankruptcy Myths

Bankruptcy Myths

Are you struggling with overwhelming debt, but are you concerned about the consequences of bankruptcy? Does the bankruptcy process intimidate you? Are you worried you will never secure loans again after filing for bankruptcy? These are legitimate concerns; but, did you also know that the majority of your worries are probably based on myths about bankruptcy.

Myth 1: You will never get credit again!

Even though the bankruptcy will remain on your credit for up to ten years from the date of filing, you can start rebuilding your credit. After your bankruptcy is closed and discharged, with an adequate plan, you can purchase new homes, vehicles, and even qualify for credit cards much earlier than expected.

Myth 2: Lenders will ignore you after bankruptcy!

Most lenders understand personal problems with the challenging economic environment which the global crisis unfortunately experienced, and that affects consumers in general.
Interest rates may be higher, but you can still get credit after the bankruptcy filing.

Myth 3: You are an irresponsible person if you file for bankruptcy!

It is very typical to have difficult financial situations. Whether you lose your job and you can't pay your debts, or become ill or injured and incur critical medical bills. These economic hardships may cause you to become desperate about your situation. This doesn't make you a bad person for choosing bankruptcy relief.

Myth 4: Filing bankruptcy could trigger an IRS audit!

Nowadays, filing bankruptcy is much easier than in the past, thanks to electronic filing.
The law demands numerous forms to be filled and submitted to the court. A trustee may be assigned to your case for additional financial documentation, but audits are infrequent.

Myth 5: Personal bankruptcy will ruin your family!

Filing for bankruptcy may be seen as a fresh financial start, so it may actually offer a solution to some of your pressing problems.

Myth 6: You can only file for bankruptcy one time!

You are still allowed to file for bankruptcy more than once; it depends on when you filed and the type of bankruptcy.

Myth 7: Bankruptcy will solve all your financial problems!

If you can take advantage of bankruptcy, it can be the start of a new way of thinking about money. It may remove your obligation to pay your debts, but it can't redress your spending habits or lifestyle.

Myth 8: Filing bankruptcy means you are a failure!

Various case studies over the past ten years have demonstrated that many bankruptcy cases are the result of uncontrolled issues, including medical debts, job loss, or divorce. That doesn't mean they are a failure because they file bankruptcy. On the contrary, it indicates the need to make things right, and that they are doing something about it.

Contact an Elk Grove bankruptcy attorney today to get the facts from the myths that will help you determine if bankruptcy is a suitable solution for you.

Bankruptcy Basics

Bankruptcy Basics

Are you juggling your monthly bills, or losing sleep worrying about your debt? Are you considering a debt consolidation loan or a risky title loan to get a fresh start? Not all debt relief options are equal, and one option could be the difference in saving your property or walking away worse than you started.

Oftentimes, people view bankruptcy as a negative option. In fact, bankruptcy can actually be your best solution for debt relief. Bankruptcy can give you a chance for a clean slate or fresh financial start.

The Automatic Stay

One of the biggest perks of bankruptcy is that it will put an immediate halt to all debt collections. Bankruptcy will provide you the opportunity to pay your debts over time or eliminate them entirely. Due to the automatic stay going into effect when you file bankruptcy, all creditor's actions against you to collect a debt will stop.

∙ Harassing phone calls
∙ Eviction or foreclosing on your home
∙ Bank levies or payroll deductions
∙ Vehicle repossession
∙ Utility shut-offs

Once you have decided to file bankruptcy the next step will be to contact a bankruptcy attorney and submit a petition to a bankruptcy court in your area. A petition will list all your assets, such as:

∙ Houses
∙ Cars
∙ Furniture
∙ Electronics Products
∙ Bank Balance and other valuable assets

At the time of your filing, you will also be required to provide a recent tax return and a certificate of completion of a credit counseling class with your petition. From there, the court will calculate the amount of income, expenses, and the debt you have to determine what, if anything, you will pay towards your debt.

If you are going through a financial hardship and unable to pay your debts, bankruptcy is a good option. Contact a Sacramento bankruptcy attorney to answer more of your questions and to find out how you can get financial relief.