Find a Bankruptcy Attorneys Who Can Help
It is possible for anyone to get into serious financial problems that may prompt them to file for bankruptcy. For instance, you may be financially prudent but you lose your job during a financial recession. How would you be able to continue servicing your home and car payments? Well, one of the best options at your disposal during times of financial difficulty is filing for bankruptcy. California-bankruptcy attorneys can guide you through the process and offer competent legal counsel to ensure you get legal protection against creditors as well as a solution for the debt problem at hand. If your debt issues resolves around a family problem, you may need to call a Riverside family lawyer. A qualified Rancho Cucamonga divorce lawyer will be able to offer sound advice.
How Bankruptcy Works
The first step in the bankruptcy process is filing of bankruptcy petition to initiate the process. This can be done by creditors to ask the court to liquidate the assets of the debtor to pay all debts, or voluntarily by the debtor to get legal protection and debt resolution. Once the necessary paperwork have been filed at the bankruptcy court, the debtor gets automatic stay. This means that creditors will be prohibited from taking any further action to recover their debts. The automatic stay also prohibits creditors from communicating with the debtor, unless under supervision of the court. While all these may sound great, there are also some responsibilities or limitations that come with the automatic stay. For instance, the debtor will not be allowed to procure more debt or dispose of any asset that’s part of their estate. Once the court process begins, the debtor can start working their way out of bankruptcy. That said, it is important for debtors to always hire a bankruptcy attorneys to help them get through bankruptcy unscathed.
Types of Bankruptcy Options
i) Chapter 7
This is the most common type of bankruptcy because anyone can qualify. For instance, it can be used by both businesses and individual debtors to get out of debt. It basically involves liquidation of assets. In this process, the bankruptcy court appoints a trustee who identifies all the assets owned by the debtor and auctions off all the non-exempt assets. The proceeds of the sale are then distributed among the creditors based on their fraction of the total debt as well as order of priority of their debt. After the sale, the unpaid amount is written off and the debtor is discharged of all their debt, paving the way for a chance to start life afresh.
ii) Chapter 11
This is a bankruptcy option designed for businesses and institutional debtors. Unlike Chapter 7, this chapter entails debt reorganization. It involves debt consolidation and rescheduling of payments. Debtors are normally required by the court to come up with a reasonable plan to pay off their debts. The plan must take into consideration their current income and monthly bills. The idea is to submit a fixed amount of money to the trustee every month for payment of their business debts. The amount is determined by the debtor’s income, not debt obligations. The plan must be presented to creditors in a joint meeting, organized by the trustee and attended by all the parties concerned. Creditors can ask questions to test the sustainability of the plan before taking a vote. Please note that creditors do not necessarily have to approve the plan for it to become legal, but a thumbs up will be appreciated by the sitting judge when making a ruling. The debtor will be required to make the monthly payments without default for the duration of the bankruptcy process. Failure to do so will result in liquidation under Chapter 7 bankruptcy. To qualify for this option, the debtor must be a business with decent revenues.
iii) Chapter 13
This chapter is similar to Chapter 11 bankruptcy, but it’s meant for individuals. To qualify, the debtor must be an individual with a decent income and few valuable assets. It basically entails submission of a negotiated monthly installment to settle a person’s credit account. What makes this option more appealing than liquidation is the idea that creditors will be able to recover more money through regular payments over a given period of time than they would when the debtor’s assets are liquidated. For this reason, debtors must have a decent income and few assets. During the process, the debtor will be required to come up with a repayment plan and present it to creditors for approval, but the court will have the last say. Defaulting on your own repayment plan will lead to liquidation of assets.
Getting Legal Advise and Representation
When faced with a serious debt problem, you should hire a competent bankruptcy lawyer to lay out all the legal options at your disposal. Experienced bankruptcy lawyers always know the best bankruptcy option for different types of debtors and can help you get legal protection from your creditors. In case of a Chapter 11 or 13, the lawyer will help you to come up with a repayment plan that will not only fit into your budget, but also meet you creditor’s expectations. In case of a Chapter 7, the lawyer will ensure that non of the exempt assets in your possession is touched by the trustee. In fact, they can negotiate with the trustee to ensure you retain your car and other assets. One of the main reasons why you should hire a competent bankruptcy lawyer is because you will need legal representation. After all, you may not always be available to attend bankruptcy proceedings. Furthermore, the lawyer can help you do the paperwork to ensure the forms are filled and filed properly.
When filing for bankruptcy, taxpayers should always choose experienced bankruptcy attorneys who are licensed to operate in the area and have a lot of experience with bankruptcy cases. The ideal attorney should also have a great reputation, so you may want to do a little bit of background research before making a decision.