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The BAN Blog

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Steps to Filing a Bankruptcy

Bankruptcy is a legal status of a person or entity designed to assist debtors receive relief from debts they cannot pay that is owed to creditors. In turn, creditors may be paid through whatever property or assets that are not essential to debtor’s every day living .


You are a debtor if both statements are true: 

  • You are a person or entity that owes a debt to another party.
  • You cannot repay the money in the time allotted for that payment.


Even though bankruptcy can eliminate some debt, it does not eliminate all types of debt. Filing for bankruptcy can be a stressful and overwhelming ordeal. You can find a lot of information about filing a bankruptcy online. However, an experienced Orange County bankruptcy lawyer can help you navigate the specific circumstances of your case by identifying which debts can be wiped out, what debts will remain, and whether pursuing a bankruptcy is right for you.


HOW CAN BANKRUPTCY HELP YOU?


Bankruptcy is understandably met with trepidation. Bankruptcy can actually assist you by allowing you to:

  • Keep your property.
  • Wipe out credit card debt and other unsecured debts.
  • Eliminate or prevent wage garnishment.
  • Stop creditor harassment (phone calls, letters, emails).
  • DIscharge IRS and State Tax Liens.
  • Restructure debt or business.


The two most common types of bankruptcy are Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy liquidates your general unsecured debts like credit cards and medical bills and helps wipe them out. You must have little or no disposable income in order to qualify for a Chapter 7 bankruptcy. After filing for a Chapter 7 bankruptcy, a trustee will be assigned to your case. They will review your bankruptcy papers and supporting documents, as well as sell your nonexempt property to pay back your creditors. Chapter 7 is usually for low income debtors who have little to no assets and want to get rid of their unsecured debts.


If you are disqualified from filing a Chapter 7 bankruptcy because you make too much money, your only option may be to file for a Chapter 13 bankruptcy. Chapter 13 focuses on reorganizing debt for those debtors with regular income. This allows debtors to pay back a portion of their debts through a repayment plan. A Chapter 13 bankruptcy allows you to keep all of your property, including nonexempt assets, in exchange for repaying all or a portion of your debts through a personalized repayment plan contingent on your income, expenses, and types of debt. 


GATHERING PAPERWORK


The first step in filing for bankruptcy starts with gathering the appropriate paperwork. Itemizing your current income sources; major financial transactions for the last two years, like home or vehicle purchases; monthly living expenses; secured and unsecured debts; and property (all assets and possessions, not only real estate). Tax returns for the past two years, deeds to real estate you own, your car titles, and documents for loans should also be included.


Either by yourself or with the help of your local Orange County bankruptcy attorney, you should determine which properties are exempt from seizure based on California exemptions. A two page petition and several other forms at your California district bankruptcy court must be file. These forms are collectively known as schedules and refer to your current financial status and recent financial transactions. Filling out your schedules as accurately as possible can aid your case, whereas withholding information can hurt the outcome of your petition.


When filing a Chapter 13 bankruptcy, a proposed repayment plan must be submitted with your forms. Factors taken into consideration when deciding a Chapter 13 bankruptcy include how much money is left over after reasonable monthly expenses are paid. Judgments on cases differ because of individual circumstances, but unsecured debts can be paid off as little as 10 cents per dollar.


Your repayment plan must pass each of the following three tests, in addition to the general requirements listed above:


1) It must be delivered in good faith.


2) Unsecured creditors must be paid at least as much as if a Chapter 7 bankruptcy had been filed. Generally, this is the value of all the non-exempt property you own (please refer to California bankruptcy exemptions).


3) All disposable income must be paid into the plan for 3-5 years.


After filing a Chapter 13 bankruptcy, you will be required to attend a hearing before a bankruptcy court judge, who will either confirm or deny the repayment plan. If your plan is confirmed and you abide by this agreement, the balance, if any, on the dischargeable debts you owe will be eliminated at the end of your term.


CONTACT AN ORANGE COUNTY BANKRUPTCY LAWYER


We at Ben Ari & Nyugen Attorneys and Counselors believe that you should not have to choose between paying your bills and supporting your family. By representing both individuals and business, we are your premier Orange County bankruptcy attorneys dedicated in helping you free yourself from debt. Our experienced bankruptcy attorneys are dedicated in helping you find the right debt relief solution. With us, you won't face a bankruptcy alone. Connect with Ben Ari & Nyugen Attorneys and Counselors with a free consultation to discuss your bankruptcy concerns today.