Bankruptcy
WHAT IS
Bankruptcy
Whether you are a homeowner who is underwater on a second mortgage or you’re overloaded with credit card debt, bankruptcy may afford you a way to end those endless calls from creditors, take control of your finances again, and make a fresh start.
Bankruptcy
Which type of bankruptcy is right for me?
All bankruptcies automatically put foreclosure proceedings on hold (and stop all collection efforts against you. Bankruptcy can also protect specific possessions, including, in some cases, the equity in your home, jewelry, personal effects, or other assets. Often, significant amounts of debt can be discharged or forgiven. But not all bankruptcies are the same.
Chapters of Bankruptcy
Bankruptcy
what is Chapter 7 Bankruptcy
Have your debts gotten out of control? Are you overwhelmed by credit card payments and fees or buried under medical bills? Are you tired of being constantly hounded by debt collection calls? Filing for Chapter 7 bankruptcy protection may be your best chance to eliminate these debts, protect your family’s assets and start fresh.
Why should you file Chapter 7 Bankruptcy ?
If you’re unsure of your possible qualification to file for Chapter 7 Bankruptcy, there are a few indicators that it might be the right decision for you. Typically, good candidates for bankruptcy are those whose debts would take five or more years to pay off and which, when added up, come to an amount that exceeds half of their yearly income. If these conditions are applicable to your debt, and your financial situation is significant enough that you are left with little or no disposable income, you may benefit from Chapter 7 bankruptcy.
What are the benefits of applying for Chapter 7 Bankruptcy ?
While it is important that anyone who files for bankruptcy understand the gravity of their decision, for those who truly need it there are benefits to filing, including:
- Peace of Mind – The automatic stay ordered by the court when you file for bankruptcy will provide you with protection from debt collectors attempting to collect what you owe.
- Retention of Valuables – Chapter 7 bankruptcy usually allows those who file to retain some of your most important things, including motor vehicles (up to a certain value, necessary clothing, household appliances and pensions.
- Clear Intentions – While you will need to make your bankruptcy situation clear to potential future lenders, Chapter 7 is simple to explain and more understandable than years of missing payments and damaged credit.
Get promoted from out of control debt
The Los Angeles bankruptcy lawyers at Cemtica are highly skilled in helping clients get out from under unmanageable debt while holding on to what means the most to you. Our Chapter 7 Bankruptcy lawyers take the time to get to know you and your particular financial situation before recommending a specific path to take. Our commitment to putting client needs first is why our firm is listed on hg.org, 10 Best Debt, and TopLawPractices. Trust us to help you regain financial peace when struggling with heavy debt.
How does Chapter 7 Bankruptcy help me?
When you file for Chapter 7 bankruptcy protection, the bankruptcy court will issue what is called an automatic stay, which ends all attempts to contact you about any monies you owe. You’ll be protected from creditor calls, threats of a foreclosure sale and lawsuits. Your wages will no longer be able to be garnished.
Filing for chapter bankruptcy can enable you to get rid of:
- IRS debt
- Credit card debt
- Tax bills 3 years or older
- Wage garnishment and potential repossession
- Other unsecured debts and obligations
What assets will be exempt in bankruptcy?
Cemtica will be able to help you avoid some of the common mistakes that many people who are struggling with serious debt make – including an unwillingness to take the step of filing when it could truly be the right decision. Our Chapter 7 Bankruptcy Attorneys in Los Angeles have worked with many clients who fear the reputation of bankruptcy, as well as the fear that filing for bankruptcy will mean losing some of the things that mean the most to them – their home, car, or anything of value. In truth, many filings of Chapter 7 bankruptcy are actually considered “no asset” cases. This means that you will usually be allowed to keep the items that you need for daily living.
Non exempt property:
- Second Car or Truck
- Second Home, like a vacation home
- Family heirlooms
- Collections – Coins, Stamps, Valuable Items
Exempt property:
- Burial Plots
- Child and Spousal Support
- Damages awarded – personal injury, accidents, etc.
- Health Aids
- Household Goods
- Jewelry and Heirlooms
- Life Insurance Policies
- Retirement Accounts and 401(k) plans
Filing for Chapter 7 bankruptcy protection does not always mean you have to give up your home, car or other valuable possessions. There are many exemptions available for personal and real property, and after your debts are discharged, you may be able to keep your car and your home. If you qualify, Chapter 7 bankruptcy doesn’t require you to give up everything; in fact, filing for bankruptcy provides you with an opportunity to wipe out your existing debt and start again.
How to prepare and file for chapter 7 bankruptcy
1. Gathering necessary information and staying on track
The first thing you’ll need to do if you choose to file is to prepare what you’ll need. This includes your financial records – credit card and bank statements, documentation of loans, pay stubs from your job, and any other applicable records. At this time it’s also necessary to avoid behavior that could be considered fraudulent, like making luxury purchases or transferring the titles of your car or home. It’s also important that you continue to make payments to your creditors and avoid taking on any additional debt.
2. Credit counseling
Before you can file, it will also be a requirement that you attend a session of credit counseling with an approved creditor to inform you of your options and possible alternatives to bankruptcy if needed.
3. The means test
You’ll also need documentation proving that you pass what is called a “means test”, which will compare the median income of the state you live in to the income you make, proving that you do not have the means to pay off the majority of your debts.
4. Meeting with creditors
Once the bankruptcy is filed, you’ll need to meet with your creditors, who will be given notice of the meeting by the court. At this meeting, your trustee will ask you questions regarding your relevant financial information.
5. Seizure of assets
If it is deemed necessary, your trustee can then seize and sell your non-exempt property to pay your creditors, although there is room for negotiation in many cases.
6. Financial management course
You will then be required to complete a financial management course and file the form you receive upon completion.
7. Discharge
Your bankruptcy discharge will be mailed to you and the automatic stay will be lifted. This usually happens within three to six months following your initial filing.
What happens after filing for chapter 7 bankruptcy?
The hardest part of filing for bankruptcy is getting all of your papers in order before you are able to file. After you have filed for Chapter 7 bankruptcy, the process is relatively straightforward and painless. Shortly after filing, you will be assigned a judge and trustee as well as a date to appear in court. Once you appear in court and go through the courtroom procedure, you will be entitled to a discharge in 60 days unless there is an objection, which are exceedingly rare.
What is chapter 7 bankruptcy liquidation?
After a discharge has been granted, your trustee may liquidate your non-exempt assets in order to pay your debtors in-part. However, in most Chapter 7 bankruptcy cases involving individual debtors, no assets are ever liquidated.
How often can I file chapter 7 bankruptcy in California?
While there are no restrictions to how many cases of bankruptcy you are allowed to file, there are time limits that must be observed before you are eligible for another discharge. This will depend on the type of your previous filing, whether it was discharged or dismissed, with or without prejudice, and when it was filed. For Chapter 7, you must wait eight years from your prior filing date before you can file and be discharged for another Chapter 7 bankruptcy.
Alternatives to bankruptcy filing
If you choose not to file for bankruptcy or if you don’t qualify, there may alternatives. These include programs for debt management with credit counselors, or debt consolidation, which can simplify your payments, making them more manageable. In some cases, particularly if your credit is poor, you may be able to settle your debt with your creditors, which may reduce your total debt, but can result in further damaging your credit score.
How to file for chapter 7 bankruptcy?
Whether you are looking to file for affordable Chapter 7 bankruptcy or Chapter 13 bankruptcy, our bankruptcy lawyers in Los Angeles can help you to find the bankruptcy solution that makes the most sense for you.
Dedicated los angeles bankruptcy attorney
If you do not qualify for Chapter 7 bankruptcy, you may be able to file for Chapter 13 bankruptcy. Our Los Angeles bankruptcy attorneys can help you to find the bankruptcy solution that makes the most sense for you.
Bankruptcy
what is Chapter 11 Bankruptcy
For businesses and high net worth individuals, a Chapter 11 bankruptcy allows you to manage the process, protect assets and discharge debt. The process involves debt reorganization and the establishment of a repayment plan. Chapter 11 can also provide lien stripping services to help you reorganize and strip a significant portion of debt off of the properties of the estate.
Skilled Los Angeles bankruptcy attorneys you can trust
The Los Angeles bankruptcy lawyers at Cemtica are prepared to assist homeowners and their businesses. We’ll guide you through the complexities of Chapter 11 to lessen the burden of debt and protect all that you’ve worked to achieve.
Cemtica has earned an A+ rating from the Better Business Bureau and has been recognized by 10 Best Debt and TopLawPractices, among other organizations, for our fierce commitment to serving our clients as best we can. You can trust our firm to put your needs first.
Empowered by chapter 11
After your petition is filed, an automatic stay against foreclosure and collection efforts will be issued immediately. You then become a debtor in possession. As your own fiduciary, you are granted the rights and powers to administrate the bankruptcy.
We will help account for all property, examine each claim against you, and develop a practical payment plan. Whether it’s a corporation, partnership, sole proprietorship or family property that is threatened, expertise in legal matters is essential.
Your relationship with creditors will be skillfully managed. Some liquidation may be required. But when possible, we can retrieve recent payments and keep your business functioning in order to meet the terms of your reorganization.
Bankruptcy
what is Chapter 13 Bankruptcy
If you earn a good living but still find yourself in debt, Chapter 13 may be the option for you. Also known as the wage earner’s plan, Chapter 13 offers debt consolidation or reorganization for homeowners that earn a steady income but are facing a large debt burden.
Chapter 13 bankruptcy basics & advantages
Unlike Chapter 7 bankruptcy, in which debts are completely forgiven for those who are unable to repay them, Chapter 13 bankruptcy protection is only available to individuals who qualify based on regular earnings and an ability to repay debts on a regular payment plan. By reorganizing your debt into a practical repayment plan, all collection efforts against you will halt and all property will be secured as long as you continue to make the required payments.
There are many benefits to filing for Chapter 13 bankruptcy protection, including:
- All foreclosure procedures will stop immediately
- An automatic stay will be issued, immediately stopping all collection efforts against you
- Any co-signers will also be shielded, and collections efforts against them on any co-signed loans will cease
- Your possessions and property will be protected from a forced sale, whether they are considered exempt or non-exempt
- You will have additional time to develop a manageable payment schedule
- Once the bankruptcy process has been completed, significant debt may be discharged or eliminated
If you qualify, filing for Chapter 13 bankruptcy results in a consolidation of your debts and the development of a payment plan to pay off that debt over 3 to 5 years. The length of the repayment plan is based on your current monthly income. The plan is developed with input from your creditors, who may object to a proposed plan before it is approved. Once the plan is approved, both you and your creditors are required to abide by the plan.
Trust Cemtica to put your needs first
Any bankruptcy has consequences, and living on a fixed income can be challenging. But if you simply need time and you can make current mortgage payments along with your repayment plan, all of your property can remain in your family’s possession.
Our Los Angeles bankruptcy attorneys are prepared to work on your behalf to secure your financial future. Speak with our firm to learn more about your rights and how we can protect them.
Seasoned chapter 13 lawyer in los angeles to answer your questions
What is chapter 13 bankruptcy?
A Chapter 13 bankruptcy is also called a debt reorganization bankruptcy or a wage earner’s plan. It enables individuals or married couples with regular income to develop a plan to repay all or part of their debts. Under this Chapter, you, as the debtor, will propose a repayment plan to make installment payments to your creditors over three to five years.
A Trustee will be assigned to oversee the case, and any payments you make under the payment plan will be made to the assigned Trustee. The Trustee will then distribute the funds to your creditors according to the plan.
Under certain circumstances, you may not have to pay the full amount of certain debts such as medical bills, credit cards, past due utility bills, and judgments. The minimum your creditors are entitled to depends on a review of the type of claim the creditor has and the value of your property, as well as other factors, including the property exemptions allowed by law.
Who is eligible to file for chapter 13?
In order to file for a Chapter 13 you must:
- Complete the credit counseling class before filing
- Have sufficient regular income to meet monthly living expenses
- Have less than $1,081,400 in secured debt (debt that is tied to assets or property as collateral) and $360,475 in unsecured debt (debt not tied to any collateral).
- Not be a corporation, partnership, stockbroker, or commodity broker.
- Not have received a discharge in a Chapter 7, 11 or 12 in the past four years, or another Chapter 13 in the past two years.
How does the plan of reorganization work?
A “Means Test” is performed to determine whether you qualify for a Chapter 13 bankruptcy. This test compares your current household income to the average income in California, and then deducts your expenses from your income to determine whether you have sufficient disposable income to repay your debts under a repayment plan.
If you qualify, the plan must meet two other tests:
- Best interest of creditors test: The plan must give unsecured creditors at least as much on their claim as they would have received if you filed Chapter 7; and
- Best efforts test: All of your projected disposable income (the amount left after payment of allowed expenses) must be paid into the plan for the “applicable commitment period” which could be 3 to 5 years (or maybe more).
When do i start to make payments, and how often through the plan?
You will need to make your first payment on the plan within 30 days of the filing of the plan, and after that, payments much be made every month. Payments begin before the first meeting of creditors called a §341 meeting, and continue even while objections to confirmation of your plan are pending. Payments must be made in certified funds, such as money orders or cashier’s checks, or by voluntary wage deduction. If you stop making plan payments, the Trustee will ask that your case be dismissed.
When are my dischargeable debts discharged in chapter 13?
In a Chapter 13, the discharge is not entered until all of your plan payments are made and all of the terms of the Plan have been completed.
Can a chapter 13 eliminate a second mortgage or home equity line of credit?
If you have a home with a second mortgage or home equity line of credit (HELOC), and the fair market value of the home is less than first mortgage, you may be able to “strip” off or eliminate that second mortgage or HELOC. This is because that second loan is no longer secured by collateral (the home) because the value of the home is less than the first mortgage.
The first mortgage has a senior lien and priority over the second mortgage and HELOC that have only a junior lien. Chapter 13 may permit you to strip the HELOC and re-categorize it as unsecured debt. After the completion of the Chapter 13 repayment plan, the HELOC or second mortgage will be discharged along with your other unsecured debt.
Will I lose my home if I file chapter 13?
Not if your Chapter 13 Plan includes mortgage payments and any includes back payments. The lawyers at Cemtica can help you determine whether you’ll be able to organize your payments to include your house, but many people file Chapter 13 bankruptcy so that they can keep their homes. We can also work with you to devise a strategy including both Chapter 13 bankruptcy and loan modification to help you keep your home.
What happens if i lose my job or cannot make my payments during the plan?
There are times that you may be unable to pay the monthly Plan payments. If this is as a result of serious, short term changes in your income or some unusual, but necessary, expense, a moratorium can be filed with the Court and served on all the creditors, requesting that these payments be suspended for a period of time.
Can i get credit during a chapter 13 bankruptcy case?
Yes. But you will be required to obtain court approval to do so. The credit you wish to obtain will have to be for a just cause, affordable and reasonable given your current financial situation.
Can I ever get credit after receiving a chapter 13 bankruptcy discharge?
Yes. You may have to wait a few years before you are eligible to apply for certain types of loans, but filing Chapter 13 bankruptcy will not destroy your ability to obtain new credit for the rest of your life. Sometimes a Chapter 13 bankruptcy will help your credit worthiness by improving your debt-to-income ratio. Your debt-to-income ratio is improved by eliminating your debts that make you appear to be a higher risk in your current pre-bankruptcy financial state.
Let an experienced Cemtica Chapter 13 bankruptcy attorney in Orange County guide you through the complexities of Chapter 13 to lessen the burden of debt and protect all that you’ve worked to achieve. We’ll file your petition, a certificate of credit counseling, a 3-5 year payment plan to creditors, and all other related paperwork.
Bankruptcy
what is Chapter 20 Bankruptcy
What is chapter 20 bankruptcy?
In certain circumstances you can benefit by filing for Chapter 13 after a Chapter 7 filing. Commonly, known as ‘Chapter 20’ bankruptcy, you will be able to first discharge debt and then develop a repayment plan for the remainder.
Unofficially titled, Chapter 20 bankruptcy is a complex approach to debt relief. Qualifying homeowners who want to stay in their home may file for Chapter 13 Bankruptcy after the completion of their Chapter 7 bankruptcy. In some cases, the bankruptcies can run concurrently. An In-depth knowledge of bankruptcy law is essential for this strategy, and our Orange County bankruptcy attorneys know full well what it takes to get out from under substantial debt.
Step by step bankruptcy
It is necessary that you agree to regular mortgage payments under the terms of the Chapter 7 bankruptcy. Signing a reaffirmation agreement or redeeming the property would negate the benefits of Chapter 20. But after the discharge of unsecured debt, a Chapter 13 can then be filed in order to redeem the property with installments.
Our attorneys can guide you through the process as follows:
- Discharge debt through Chapter 7 filing
- Dispose of liens through Chapter 13 filing
- Discharge debts that could not be discharged under Chapter 7
- Use the automatic stay to develop a repayment plan
- Use terms of Chapter 13 to begin paying off remaining debt
- Bring claims against creditors who violated the terms of Chapter 7
Who chapter 20 bankruptcy helps
The requirements and terms of Chapter 20 are very specific. A lot of time and paperwork will also be necessary. But if you are under the weight of excessive unsecured debt, are behind in mortgage payments and are committed to keeping your home, this approach may be ideal for your family.
Patience is required to complete a Chapter 20. The costs of both bankruptcies may apply. The court will also need to be convinced that you are capable of meeting the new obligations and that you are working in good faith. But our experience can be an asset in rebuilding your security.