Struggling with debt and financial problems is not easy. Bankruptcy law is a complicated matter that will require legal help from a reliable bankruptcy attorney. Bankruptcy filing helps a debtor pay all or wipe out certain debts. The two common types of bankruptcy are Chapter 7 (liquidation bankruptcy) and Chapter 13 (reorganization bankruptcy). You may choose from these bankruptcy forms depending on the types of debt you owe, whether they are mostly unsecured or secured debt.
Filing bankruptcy will be a great help if you want to repay your debts, prevent creditor harassment, stop foreclosure, and avoid wage garnishment. Once the bankruptcy court has approved your bankruptcy petition, an automatic stay shall be effective immediately.
These are bankruptcy basics that you should know before bankruptcy filing:
Family or relatives
The assigned trustee in bankruptcy cases has the right to sue relatives who received a substantial payment from the filer within the year before the bankruptcy petition. That is, even if it was meant to pay back something that is owed legally. What you can do is to have such debt forgiven or discharged, and instead provide a post-petition repayment or pay-off to the relative concerned.
Equity in your home
Getting credit against the equity in your property to repay unsecured debts, such as credit card bills and medical bills, could be a big mistake. In a bankruptcy case, unsecured debts will likely be discharged or wiped-out while secured debts, like home equity, will not. If you are considering bankruptcy to get a discharge for your credit card debt, if things go well, you can end up with a greater amount of net cash for your mortgage payment. This will essentially allow you to stop foreclosure and other related legal issues.
The state law in California provides for two different exemption systems. The first one is the CCP §704, which is advantageous if you have substantial home equity. The other one is the CCP §703, which comes with a relatively small exemption but enables any unused residual to be “wildcarded.”
Bankruptcies and Divorce Proceedings
It is usually best to file bankruptcy before filing for divorce, but note that each case is unique. You would need a spousal waiver from the non-filing partner if you are still married but would want to use the above exemption. In bankruptcy cases, Bear in mind that in almost all bankruptcy cases, it is difficult to wipe out unpaid alimony and child support. Furthermore, you may only file a joint bankruptcy petition if you are still married. Joint petitions generally cost much less when compared to separate bankruptcy filings.
Accounts for Retirement
It is also a bad idea to take assets or funds from a retirement account. In general, retirement accounts are protected or covered in bankruptcy. Remember that you put up such an account to secure your financial future. Get legal assistance from a reliable bankruptcy lawyer to make sure you enjoy what you saved for your golden years.
Creditors or Debt Collectors
Create a full list of everyone you owe money from, including those who usually do not submit a monthly invoice. Bear in mind that the automatic stay is enforced once the bankruptcy petition is filed in court. It means that all creditors must suspend all collection in the absence of a satisfactory request to do so.
A petition in bankruptcy is signed legally, under the possible penalty of perjury. It shall be subject to careful investigation and is considered as part of public record. You must strictly follow all relevant bankruptcy rules and not take actions that may seem to be dishonest.
Student loan debt, child support, and the certain tax debt that are insured are forms of non-dischargeable debt. Being aware of what you may or may not strike off your list of debts in a bankruptcy proceeding would make it easier to determine whether or not it is best to declare bankruptcy.
Timing is crucial. If you are facing debt problems, you might be making too much now to pass the bankruptcy means test, but that won’t be the case a few months from now. You may have a tax debt that can’t be discharged right now, but could be discharged tomorrow.
It is important to consult with an experienced bankruptcy attorney to help you on how to file, understand the bankruptcy proceedings, and prepare the requirements necessary when filing for bankruptcy. Contact us at the Law Offices of Marc Grossman for a free consultation: 855-5664-911