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Bankruptcy is a federal legal process that provides financial relief to individuals with debts they cannot pay. While bankruptcy is governed by federal law, California law determines which assets you can protect, or exempt, from being sold to pay creditors. Immediately upon filing for bankruptcy, an automatic stay goes into effect to stop most collection actions, including creditor calls, wage garnishments, foreclosures, and repossessions.
A Whittier bankruptcy lawyer at the Law Offices of Steven Ibarra could evaluate your financial circumstances, help you choose the correct chapter, and provide unwavering legal representation throughout this complex process. Our attorney could support you by helping with filing the necessary paperwork and negotiating with creditors to protect your assets. Contact our firm today to schedule an initial consultation and get started.
The types of bankruptcy available are defined by federal law and are uniform across the country.
A Chapter 7 liquidation bankruptcy is a common form of bankruptcy for individuals, allowing a court-appointed trustee to gather and sell the debtor’s non-exempt assets. The proceeds are then used to pay creditors. Most unsecured debts, such as credit card bills and medical expenses, are then discharged, providing the debtor with a fresh start.
Debtors in a Chapter 7 case must pass a “means test,” comparing their income to the median income in California to determine if they can afford to repay their debts. This process is relatively quick, typically taking about four to six months. The debtor may have to give up some non-exempt property, though many essential and other assets, including basic household goods, clothing, and a certain amount of home equity, are protected by exemptions under state law.
A Chapter 13 bankruptcy can be a viable option for individuals with a regular income who want to keep their property, such as their house or car, and can afford to make payments. In such cases, the debtor proposes a court-approved plan to repay all or part of their debts over a three- to five-year period.
Filers must have a stable income, and their debt must not exceed certain limits set by the Bankruptcy Code. A key advantage of a Chapter 13 bankruptcy is the ability to stop foreclosure proceedings or vehicle repossession by catching up on past-due secured payments through the assigned plan. During an initial consultation, your Whittier lawyer could help determine which bankruptcy chapter aligns best with your financial situation.
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Learn moreA successful bankruptcy case can legally eliminate most unsecured debts, such as credit cards, medical bills, and personal loans, through a court-ordered discharge. This means you will no longer be legally obligated to pay these debts, which can provide significant financial relief.
However, certain debts, like most student loans, alimony, child support, and many taxes, are typically not dischargeable, and you will continue to owe them. Your Whittier attorney could help you understand your legal and financial obligations both during and after bankruptcy.
It is important to note that a bankruptcy filing can cause a significant drop in your credit score, with a Chapter 7 remaining on your credit report for up to 10 years and a Chapter 13 for up to seven years. While the long-term negative impact is undeniable, rebuilding credit is possible by consistently paying bills on time and using tools like secured credit cards.
Not only does the damage to your credit score lessen over time, but it is often possible to get credit, though potentially at a higher interest rate, even relatively soon after discharge.
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For a live video consultation from your smartphone, tablet or computer, contact the Law Offices of Steven Ibarra today.
Ultimately, the goal of a Whittier bankruptcy lawyer is to help you achieve a fresh financial start or create a manageable repayment plan. Our team at the Law Offices of Steven Ibarra could help with unique issues, such as certain tax debts, and provide guidance on life after bankruptcy. Contact our firm today to request your case review.
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