BANKRUPTCY
Are You Considering Bankruptcy?
Accumulating credit card debt is easy. With high interest rates and laws that allow credit card companies wide discretion on changing credit card terms with little notice to the consumer, a person can be quickly engulfed by credit card debt. Also, illness and personal injuries are rarely anticipated and can easily rack up enormous medical bills.
Bankruptcy can help you get rid of many or all of your debts and stop creditors and collection agencies contacting you at your home, your work and everywhere else. The most common debts that can be eliminated in bankruptcy are credit cards and medical bills. Additional types of debt may also be discharged in bankruptcy but there are exceptions.
What to Think about When Contemplating Bankruptcy
While bankruptcy may seem like a win-win situation, there are some things you should consider before choosing this option:- A bankruptcy will stay on your credit report for up to 10 years. But if you haven't paid your bills for some time, your credit may already be in trouble. In any case, a bankruptcy on your credit report may make it difficult to obtain a loan or other financing, may increase the interest you have to pay on a loan, or may impact your general ability to obtain future credit.
- You won't be able to get rid of debt that is secured by real or personal property without losing the underlying property. Generally, while in a bankruptcy action, you have the choice of either keeping the property (along with remaining responsible for the debt on the property) or giving the property back to the creditor in exchange for the discharge of the associated debt.
- There are certain debts that can't be discharged, such as child support, spousal support, some student loans, court restitution orders, criminal fines, certain obligations to governmental agencies and debts that arise after your bankruptcy has been filed.
Chapter 7 vs. Chapter 13 Bankruptcy
There are two basic forms of bankruptcy actions that individuals typically use: Chapter 7 and Chapter 13.
Chapter 7 - The majority of bankruptcy actions in California involve an attempt for a complete discharge of debt, which is governed by Chapter 7 of the Bankruptcy Code. In order to qualify for a Chapter 7 Bankruptcy, you must pass a "means test" which includes an analysis of your financial situation (including income, expenses, assets and debts). In exchange for this discharge, the bankruptcy trustee can take any property you own that is not exempt from collection under the laws of California, sell it, and distribute the proceeds to your creditors.
Chapter 13 - In a Chapter 13 Bankruptcy, you file a repayment plan with the bankruptcy court to pay back a percentage of your debts over time. The amount you'll have to repay depends on how much you earn, the amount and types of debt you owe, and how much property you own.
We can help you decide your debt relief options including whether or not you should file bankruptcy. Our office is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. If you wish to discuss your options, please feel free to contact the Law Offices of Ian S. Topf.