Filing for bankruptcy protection can be a complicated process, and just one small mistake can cost you thousands of dollars. However, learning and exploring all your options and obtaining legal counsel can drastically reduce the chances of any errors being committed.
Below are a few helpful facts regarding bankruptcy laws in California to help you determine your viable options.
California Bankruptcy Facts
Bankruptcy began as a process used solely by creditors to obtain payments from debtors, but has grown to become a useful and popular tool for both individuals and commercial business owners who have amassed more debt than they are able to pay off. The process involves applying for a specific chapter and either having your assets liquidated or repaying what you owe to creditors over an allotted period of time.
Because it can be difficult to determine exactly which option is best for your specific financial needs, hiring an experienced bankruptcy lawyer in California is always a wise choice. No one wants to end up with more debt than they started with, which is exactly what attorneys aim to prevent.
What Bankruptcy Chapters can be Filed in California?
There are several bankruptcy chapters that can be filed in California, each resulting in a different outcome, but the two most commonly sought are Chapter 7 and Chapter 13. Chapter 7, by far the most popular petition, is known as liquidation bankruptcy because assets are liquidated in exchange for the discharge of unsecured debt. Both consumers and businesses favor this petition because it wipes out debt and gives petitioners the chance to start over with a clean financial slate.
Although the idea of forsaking assets can be scary, there are a number of items that are exempt from creditor seizure in California, including the debtor’s home, car and certain personal effects such as clothing and heirlooms. If you retain an experienced California bankruptcy attorney, you can rest assured creditors will not repossess your most treasured valuables. Your attorney will fight diligently to protect your rights and make sure that the number of assets exempt from liquidation are maximized.
If Chapter 7 sounds like the best option for you, expect to take a means test to determine if you are eligible to file. The means test compares your income with the average for a family of your size in California and if your income falls below that number, then you qualify for Chapter 7. If you do not meet this requirement, however, your California bankruptcy lawyer can still help you file this chapter and will examine other aspects of your income and assets to arrive at the best decision for your case.
If you don’t qualify for Chapter 7, you can always choose to apply for Chapter 13 bankruptcy in California, the second most commonly filed petition. Also known as reorganization bankruptcy, this petition differs from Chapter 7 in several ways. For one, you do not have to worry about having your assets liquidated because you will be placed on a repayment plan to pay back creditors what you owe. However, the downfall is that you will not be able to wipe out all your debts in full.
Each of these chapters carries their own unique pros and cons, which is why hiring a leading bankruptcy lawyer in California is critical to ensuring the best possible outcome for your case. Speaking with an attorney in your are today if you have considered filing for bankruptcy protection to review all your options thoroughly and emerge from proceedings as quickly as possible.