Bankruptcy Overview

Bankruptcy is a federal process, which allows consumers to have their qualifying debts forgiven. The law recognizes that bad things sometimes happen to good people, and consumers sometimes simply do not have the ability to comply with creditor's repayment demands. There are several types of bankruptcies and it is important to know which type is the best in your circumstances. You no longer need to fear the endless phone calls from creditors. When considering a bankruptcy due to overwhelming debt and inability to pay creditors, it is vital that you contact a bankruptcy attorney and find out what can be done for you.



California Bankruptcy

California bankruptcy laws are based on forgiveness rather than punishment. Bankruptcy is not intended to regulate certain behavior as other laws do, it simply recognizes that there are some circumstances beyond the consumer’s control which can only be addressed through the cancellation of debt.



Chapter 7 Bankruptcy

Chapter 7 is the most common type of bankruptcy. This type of bankruptcy proceeding allows a consumer to discharge debts completely through a relatively short process. There are certain debts that cannot be discharged with a Chapter 7. These include child support, alimony, student loans and some income taxes.

As soon as you file bankruptcy, you can begin to put some of your fears to rest. Once a bankruptcy petition is filed, the automatic stay comes into effect. That means that creditors can no longer undertake any actions, including wage garnishments, foreclosures, repossessions, phone calls and the like, against the debtor to collect the debts they are owed. The stay lasts until the bankruptcy case is closed. During the bankruptcy proceedings, foreclosure proceedings on your property will be put on hold, usually until completion of the bankruptcy proceedings. This can give you time you need to handle the foreclosure and explore other options to keep your home. It is very often that Chapter 7 turns out to be a no-asset case, which means there is no property to distribute and all property is exempt, that is, the debtor can keep it.



Chapter 13 Bankruptcy

Chapter 13 is the bankruptcy proceeding that is a restructuring of your debts. It is a federal debt consolidation plan, which allows you to rearrange your financial affairs and repay just a portion of your debts. In most cases, the idea is to allow you time to get back on your feet. To qualify for Chapter 13 bankruptcy, the debtor is required to have a stable source of income to make payments under the plan. Chapter 13 allows the debtor to retain all his property as long as the adjustment plan payments are made. This is not an option for corporations or partnerships. This option can work well to stop the foreclosure proceedings on your home and work out a debt restructuring. What typically happens is that back debts are paid out over several years. You must also have had counseling from an approved debt relief group within the past 180 days to qualify to file for Chapter 13.



Filing for Bankruptcy

For many people, filing bankruptcy is due to circumstances truly outside of the debtor's control, such as catastrophic illnesses and injuries, lengthy unemployment, or loss of a lawsuit. Whether your financial troubles stem from credit card debt, student loan debt, medical debt or any other cause, filing bankruptcy may be your best solution to getting your life back on track. Once a bankruptcy case is successfully completed, the consumer receives discharge information from the Bankruptcy Court. A Discharge is a legal release from debts. Creditors no longer have a right to contact you or pursue debts listed in the bankruptcy documents.

Bankruptcy filing is extremely complex and if it is done incorrectly, you may not be approved. You can file for bankruptcy on your own. However, it is wise to contact an attorney to ease your fears and assist you with your bankruptcy filing preparation. Doing this will ensure that your filing is correct, and ensure that you are filing the correct type of bankruptcy.



Life After Bankruptcy

After bankruptcy, your life is often completely different. Life without creditor harassment, fear, and the anxiety that debt causes, begins after a bankruptcy is discharged. While a bankruptcy is reported on your credit for several years following the filing of your case, it doesn’t mean you can never obtain more credit. Your debt-to-income ratio is improved and lenders may even consider you less of a credit risk after filing bankruptcy since the majority of your debts were eliminated in your bankruptcy. Contrary to a popular myth, a bankruptcy on your credit report is not the end of the road. You are free of almost all of your debt and you can use the money you make to provide for your family instead of making those minimum payments that made no impact on reducing what you owed.

To set up your consultation, contact Robinson Sookdeo Law.

Riverside Office

Robinson Sookdeo Law

4129 Main Street, Ste. 200-B
Riverside, CA 92501


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