Sometimes, when there are no alternative means for overcoming financial problems, bankruptcy may be the only answer. Filing bankruptcy does not mean that you will lose your house, car or other property. In fact, in most cases, you will be allowed to keep both personal and real property.
A bankruptcy case does, however, stop ALL CREDITOR HARASSMENT, including telephone calls, wage garnishments, and all ordinary lawsuits. It will also temporarily, stop the foreclosure or repossession of secured debt purchases (e.g., home mortgage or vehicle loan); meaning they will not be able to take your home, automobile or other personal property. It will also temporarily, prevent the eviction of a person from an apartment.
In virtually all instances, bankruptcy results in the discharge of unsecured debts, such as credit card charges, unsecured lines of credit, and medical and doctor bills. This means that these debts will never have to be paid.
A person filing bankruptcy will still be required to pay child and spousal support. Certain taxes and student loans may not be dischargeable. But even in these instances, actions taken in bankruptcy can often allow for a more favorable payment schedule of these debts.
Bankruptcy may allow you to avoid paying a debt but it does not mean that if you wish to "reaffirm" a debt you cannot do so.
While fraudulently incurred debts are not dischargeable, it is up to the creditor to raise this issue with the Bankruptcy Court, and since the law is intended to give debtors a "fresh start" it is not easy for creditors to collect under these circumstances.
There are four different types of bankruptcies -- Chapter 7, Chapter 11, Chapter 12 and Chapter 13. It is essential to retain a skilled bankruptcy attorney to determine which chapter is most appropriate and beneficial for you.
Chapter 7 - often called a "straight" bankruptcy, is usually the best remedy for people who have mainly unsecured debts, and who are current on their house and car payments.
Chapter 11 - is usually reserved for businesses, or for individual debtors who wish to pay off their creditors, over time, but do not otherwise qualify for Chapter 13.
Chapter 12 - typically, a Chapter 12 bankruptcy allows a family farmer or family fishermen to restructure debts over a three to five year period. Chapter 12 has many benefits including the ability to cramdown debt to the value of the collateral and settling unsecured debt at a reduced percentage.
Chapter 13 - a Chapter 13 bankruptcy is sometimes called a wage earner's plan because it enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time.
Please call our office at (818) 224-4270 with any questions you may have, or for a free consultation.