If a debtor decides to file for bankruptcy in the state of California, he or she must go to credit counseling within six months and complete a financial management course. Financial analysis of past income and expenses will determine what chapter of bankruptcy the debtor qualifies for. Chapter 7 bankruptcy requires liquidation of a debtors assets, with few exceptions. This is a relatively quick form of bankruptcy and discharges certain debts. A Los Angeles bankruptcy lawyer can help organize the paperwork and present it to the district bankruptcy court.
Chapter 13 bankruptcy calls for a repayment plan in which the debtor and their Los Angeles bankruptcy lawyer devise a plan to pay creditors over time (3-5 years) in a series of payments. Before a debtor can file for Chapter 13, the court must decide if the individual is eligible to meet payment requirements. The court’s denial can occur if the debtor has too much debt, secured debt over $1 million, unsecured debt over $350,000, or if they don’t make enough money to proceed with the repayment plan. If approved, the debtor must undergo credit counseling, present a plan of repayment, have it approved by a bankruptcy judge and begin paying back their debt, starting with priority debts (alimony, child support and employee wages). A trustee is appointed to oversee the case. After one month, there will be a meeting of creditors where negotiations may take place. If there are no objections and the debtor proceeds to make their payments on time, the court can discharge certain dischargeable debts at the end of the payment plan.
Bankruptcy will help relieve a debtor from financial struggle, but it is not the only option available. Alternatives to bankruptcy include working directly with creditors to build a repayment plan rather than filing a Chapter 13 to the court. Consolidating debt is another alternative in which the debtor can take a loan from an institution, usually a bank, pay off several different creditors and amass their debt to one source. Other alternatives to bankruptcy include reworking a debtor’s budget, or taking no action, whereby being declared judgment proof. Before going forward with any of these alternatives on one’s own, it is advised to contact a Los Angeles bankruptcy lawyer and discuss these options with them.
Bankruptcy law is a complicated process that is as unique as those who file for it. A debtor is in a position where they need help handling their finances and should not deal with creditors alone. If you need legal advice on your financial situation, contact a knowledgeable Los Angeles bankruptcy lawyer today and look forward to taking back control of your finances.
This article was written by Cris Stapels, on behalf of DCDM Law Group, helping those struggling to come out of debt trap. To know about the responsibilities of a personal bankruptcy lawyer, you may visit Wisegeek.com.