Bankruptcy is a legal court proceeding in which a judge and a court trustee will examine the assets and liabilities of individuals or businesses who are struggling or cannot pay their bills. The court takes numerous items into consideration and will decide whether to discharge the debts so the person or business will no longer be legally required to pay them back. Bankruptcy laws are put in place to give people who are financially struggling a chance to start over – it’s essentially a legal lifeline for those that are drowning in debt. No matter what bad decision, legal issue or bad luck resulted in needing to file for bankruptcy, lawmakers understand that consumers and businesses alike need and deserve the opportunity to start over and rebuild – and nearly all who file for bankruptcy are successful!
It’s important to keep in mind that filing for bankruptcy does grant you the chance to get rid of your debt, but it also affects your credit and the ability to secure future financial help or a loan. Filing for bankruptcy can help you prevent or delay foreclosure on a property you own, put off a repossession of a car and put a stop to legal actions from debt collectors, but in the end, you don’t get to walk away completely unscathed. A bankruptcy can remain on your credit report for up to ten years, which can make it difficult to qualify for a car loan, a mortgage or any other type of financial assistance.
There are different options to look into when it comes to filing for bankruptcy and the most common ones for private individuals are Chapter 7 and Chapter 13 bankruptcy. How do you know if you should file for Chapter 7 and Chapter 13 in Contra Costa County? There is no perfect time to declare bankruptcy, but a good rule of thumb to keep in mind is if it’s going to take you more than five years to repay all the debt that you owe then you should probably look into filing for bankruptcy. If you have a combination of medical bills, credit card debt, mortgage debt and student loans that equal to more than you earn then filing for bankruptcy might be the best answer. While there are other debt management options that you can look into the majority of available alternate solutions require you to pay off your debt within a certain time period and none of them guarantee that your debt will be settled.
It can take up to six months to file for chapter 7 and chapter 13 in Contra Costa County, but as soon as you submit the paperwork then all debt collection calls will stop, things like eviction or wage garnishments must also be put on hold, and you will immediately feel a release in tension knowing that you’ve taken the first steps towards being debt free.
Chapter 7 bankruptcy is known as “liquidation” bankruptcy because it eliminates the majority of your debt. This is the simplest and most common type of bankruptcy and can be completed fairly quickly. In order to qualify for Chapter 7 bankruptcy, you must submit financial records including income, expenses, secured and unsecured debt and qualify under the income limits in the state of California. Part of the proceedings of declaring bankruptcy will also require you to complete a financial management course so you can learn how to manage your finances better once you receive your fresh start.
Chapter 13 bankruptcy is less about eliminating your debt and more about reorganizing it based on your income and financial situation so you can come to an agreement with your debtors on a repayment schedule that works for you. It also allows you to keep all your property instead of liquidating it under Chapter 7. With Chapter 13 you will be required to make monthly payments for three to five years to a trustee who will then distribute the money to the creditors. To be eligible to file for Chapter 13 then you must demonstrate that you have the means to pay down your debts and you must be able to show proof that you are current on your state and federal tax returns.
In order to file for bankruptcy, whether it’s Chapter 7 or Chapter 13 in Contra Costa County, you will need to work with an experienced and qualified attorney who can put together an evaluation and assist you throughout the process. Contact our team at Gale, Angelo, Johnson & Pruett P.C., to learn more about what you need to qualify for Chapter 7 and Chapter 13 in Contra Costa County and to explore your options for financial freedom. You can get in touch by filling out the contact form below with more information about your situation, or you can call us directly at (916) 290-7778.