IF financial start. Bankruptcy is a powerful remedy because it stops most collection actions, including lawsuits, wage garnishments, bank levies and foreclosure. It also wipes out many types of debts.
Most people who file bankruptcy have credit card debts, personal loans, medical bills, back mortgage payments, medical bills, to name a few. While most debts can be discharged (wiped out), there are a few exceptions. For example, if you have student loans, child support, alimony and most tax debts, filing bankruptcy can only postpone collection while the case is pending (Chapter 7) and you will still need to pay them back.
There are 2 types of bankruptcy available for individuals who are struggling financially- Chapter 7 and Chapter 13. Which chapter you file depends on your income, assets and your objective in filing. There is no “one size fits all” solution and an experienced bankruptcy attorney needs to carefully evaluate the case in order to recommend the best option.
Once you file bankruptcy, a court order called the “automatic stay” goes into effect. The stay stops almost all collection actions against you but there are a few exceptions. For example, if you were ordered to pay spousal or child support, bankruptcy will not stop your obligation to continue paying. If you are facing an auto repossession, filing will only delay the repossession unless you can bring the account current. So in that situation, filing bankruptcy sometimes buys you the time that you need to catch up on missed payments.
Chapter 7 is often filed to wipe out most unsecured debt. “Unsecured” means that you did not pledge any security or collateral for the loan. Credit cards are generally unsecured and therefore can be wiped out. So are personal loans, payday loans, medical bills and other contracts. Most debts for jewelry, furniture and electronic items are secured and cannot just be wiped out. For these types of debt, you can either return the merchandise with no further liability or work out a payment plan based on the present value of the property secured by the debt.
There are situations where only Chapter 13 can help you achieve your goal in filing. For example, if you are facing foreclosure and need to keep your home, Chapter 7 cannot help you catch up on payments but Chapter 13 can. Chapter 13 can also be beneficial if most of your debts are the type of debts that cannot be wiped out in bankruptcy and you just need time to pay. By consolidating these debts in Chapter 13, all you have is one payment every month. Chapter 13 plans can last anywhere from 3-5 years. While in Chapter 13, all your assets are protected and you can have peace of mind knowing that creditors cannot take legal action against you.
Chapter 7 and 13 offer unique solutions and as I stated above, must be tailored to your individual needs so that you can maximize the benefits afforded by law. If you are considering bankruptcy to get out of debt, I would like to help you figure out what is best. For a free office consultation, please call my office Toll-Free 1-866-477-7772. I have offices in Glendale, Cerritos, and Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped more than 5,000 clients in getting out of debt. For a free evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772. They have offices in Glendale, Cerritos and Valencia.
