Bankruptcy is the process by which consumers and businesses can resolve debt and stop foreclosures, repossessions, and lawsuits. Filing bankruptcy may clear debt, stop creditor harassment, and provide additional time to repay bills. Bankruptcy is broken down into two main classifications: Personal Bankruptcy and Business Bankruptcy.
Personal Bankruptcy, also known as Consumer Bankruptcy, pertains to individuals. Individuals may choose to file bankruptcy to resolve a hopeless financial situation, or to delay debt-collection for a period of time to allow for financial reorganization. Personal Bankruptcy generally takes one of two forms: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.
Chapter 7 Bankruptcy is by far the most favorable because it allows you to get a "Fresh Start" and “discharge” all of your debt. That means you will not have to pay any of it back. While filing involves passing a means test to determine if you qualify, the goal of Chapter 7 is to help you:
- Prevent foreclosure on a home
- Discharge debt from personal loans and credit cards
- Avoid deficiency debts
- Relieve business debts
- Stop creditor harassment
- Prevent wage garnishment
- Resolve possible lawsuits
Unlike a Chapter 13 bankruptcy, filing for bankruptcy under Chapter 7 is a simple and faster way to resolve your financial difficulties by having a trustee take possession of your assets, protecting exempt assets and liquidating non-exempt ones. Our specialist attorneys can help you understand how to qualify, and help you properly file all of the required forms to resolve matters in as little as 90 to 120 days.
Chapter 13 Bankruptcy, often referred to as "Wage-Earners Bankruptcy," is a form of debt consolidation designed for repayment of some or all your debt to creditors using future income and a detailed plan. More expansive than Chapter 7 liquidation, restructuring debt under Chapter 13 involves a court-approved repayment plan allowing for consolidation of debt payments for a period of three to five years. Assets are not liquidated in this case. Debt can be reduced and a repayment plan will be established by the Bankruptcy Court in order to pay off the remaining debts. This form of bankruptcy requires a consistent source of income, and if you make all scheduled payments, creditors are only allowed to collect the amounts in the plan, and the remainder of your debt will be discharged. Chapter 13 Bankruptcy is often times NOT the best option. After an in depth analysis of your specific situation, our firm will make a determination and recommendation as to which route would be best for you.
If Chapter 13 is determined to be the best option, we will help you determine a reasonable repayment plan and help you understand how to budget your resources to successfully complete the plan. With our help clients can take advantage of Chapter 13 benefits:
- Protection from creditor collection
- Keep a home and personal property
- Repay debts with reduced payments
- Discharge debts not allowed under other bankruptcy methods
- Eliminate secured interest on junior liens of real property
- Make tax repayments easier by eliminating interest payments
Our law firm guides Southern California clients through the bankruptcy process, offering the attentive service of a small firm backed by large firm resources and results.
Call our Bankruptcy Lawyers at (949)454-1774, or contact us online to get started on the path to debt reduction. We can help you address your bankruptcy with efficient and experienced advice and support.
Corporations, Limited Liability Companies and Partnerships are legal entities separate from their shareholders or partners. They can file a Business Bankruptcy as Chapter 7 or Chapter 11, while sole proprietorships cannot. A sole proprietor must file bankruptcy individually, since the assets and the liabilities of the business are really just one form of assets of the proprietor. The individual owner may file a Chapter 7, Chapter 11, or Chapter 13 Bankruptcy.
Chapter 7 Bankruptcy involves the total liquidation of the business assets in order to repay debts. If you qualify for Chapter 7, a court-appointed trustee will collect all non-exempt assets, sell them and distribute the proceeds to creditors. Chapter 7 Bankruptcy, whether for the individual or a business, may be the best choice when:
- The business has no future.
- The business has no substantial assets.
- The debts are too great to be reorganized.
Chapter 11 Bankruptcy. Debtors who prefer to remain in business, have substantial assets, and wish to avoid liquidation may choose Chapter 11 Bankruptcy. While Chapter 7 Bankruptcy is a liquidation of debt, Chapter 11 Bankruptcy is a reorganization of the debt. Under Chapter 11, the business is restructured so that it may meet its obligations from future earnings. Under Chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. The downside of Chapter 11 bankruptcy is that it is expensive and time-consuming and can add stress to an already weakened business.
Chapter 13 Bankruptcy. If the business is a sole proprietorship, it may be eligible for relief under Chapter 13 of the Bankruptcy Code. Chapter 13 Bankruptcy enables individuals who have steady income to repay all or part of their debts over a specified time period. One of the main advantages of Chapter 13 is the opportunity to save one’s home from Foreclosure. By filing Chapter 13, individuals can stop Foreclosure proceedings and may cure delinquent mortgage payments over time. Any individual or Proprietorship is eligible for Chapter 13 relief as long as the individual meets the qualifications. A Partnership or Corporation may not use a Chapter 13 Bankruptcy.
As qualified bankruptcy lawyers we can determine if your financial situation warrants filing bankruptcy. Consulting with a bankruptcy attorney should be the first step for anyone considering bankruptcy to obtain relief from overwhelming debt.
Call our Bankruptcy Lawyers at (949) 454-1774 or We can help you with any type of personal or business bankruptcy.
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