Bankruptcy Basics

Law Office of Kristy A. Hernandez offers legal representation for both Chapter 7 and Chapter 13 bankruptcy.

Bankruptcy can:

* Stop a pending foreclosure
* Wipe out all credit card debt, medical bills, HOA dues, and some taxes.
* Decrease monthly car payments
* In a Chapter 13 case we can often help wipe out second mortgages and can help clients get caught up their existing mortgages.

You will likely not have to give up your house or car when you file for bankruptcy. Our office offers free consultations and affordable monthly payment plans.

Difference Between Chapter 7 and Chapter 13 Bankruptcy

CHAPTER 7

Filing Chapter 7 may be an option which will relieve you of your debt and help you get the fresh start you need. There are several important advantages of filing Chapter 7 bankruptcy. In fact, Chapter 7 is the most common form of bankruptcy in the United States. An individual or a business may file under Chapter 7 of the U.S. Bankruptcy Code. This process involves the liquidation of assets and the distribution of proceeds from this liquidation to creditors. Following are some of the advantages of Chapter 7:

* Stops creditor harassment.
* Stops all debt collection efforts.
* Postpones foreclosure proceedings, giving you time to figure out an alternative to foreclosure.
* Successfully completed, discharges all eligible debt.
* No maximum limit to the amount of debt that can be discharged.
* No minimum amount of debt that can be discharged.
* Chapter 7 proceedings take approximately 3 to 6 months to complete, meaning your debt can be discharged in a relatively short amount of time.
* No monthly payments to the court.

While there are many important advantages to filing Chapter 7, there are also some disadvantages that are helpful to fully understand:

* Chapter 7 will not help you get caught up on past due mortgage or car payments.
* Your non-exempt property and assets may be at risk of being surrendered to the bankruptcy court and liquidated to pay off creditors. (Our office will let you know if any items will need to be surrendered in advance of filing your case.)
* Not all debt is eligible to be discharged (including spousal support, child support, and certain student loans and taxes.)
* Chapter 7 bankruptcy can only be filed once every 8 years.
* A Chapter 7 bankruptcy can negatively affect your credit rating and make it difficult to get loans in the immediate future.

CHAPTER 13

A Chapter 13 bankruptcy is a catch- up plan with the bankruptcy court to help you get caught up on all past due payments for secured debts, and will get rid of all unsecured debts. Payment plans with the court last between 3 to 5 years, and the amount of payment is based on your monthly disposable income. Clients interested in Chapter 13 cases must be able to prove that they can meet all of their basic monthly expenses, plus an additional payment to the court.

Some of the most rewarding benefits to Chapter 13 bankruptcy include:<

* Chapter 13 cases let you get caught up on past due payments for mortgages and car loans over time.
* A Chapter 13 case can wipe out some 2nd mortgages
* Filing for Chapter 13 will put an end to creditor harassment
* Filing for Chapter 13 will put an end to wage garnishments
* Filing for Chapter 13 will put an end to repossessions
* Filing for Chapter 13 can halt foreclosure
* Filing for Chapter 13 can halt pending debt collection lawsuits
* After Chapter 13 bankruptcy you will finally be debt free!

The two most common misconceptions about Chapter 13 bankruptcy are that it will permanently damage your credit rating and that you will lose your home, vehicle, and other valuable assets during the bankruptcy process. This could not be further from the truth. While your credit will undoubtedly take a hit, many people are surprised how quickly they are able to start rebuilding their credit, even with a bankruptcy on their credit history.

If you are worried about losing your assets, you shouldn’t be. Unlike Chapter 7 bankruptcy, your assets will not be liquidated when you file for Chapter 13. Instead of liquidating your assets to repay your creditors, your debts are consolidated into a lump sum that you are responsible for paying off over the course of three to five years.

What Should I Bring to My First Appointment?

The purpose of your first appointment is for your bankruptcy attorney to collect information about you and your financial situation. Here are the five most important things to prepare for your initial office consultation:

1. Recent Pay Stubs: or Receipts showing money you received during the previous six [6] Months.
2. Tax Returns: Your last two federal and state income tax returns, including all W2 and 1099 forms.
3. Bills: Every single outstanding bill that showing everyone you owe, even your house and cars. There are ways to keep these items in a Bankruptcy case.
4. Miscellaneous Documents: Documents such as Child Support, Alimony/Maintenance Court Orders, Unemployment Information, Deeds, Vehicle Titles, Proof of Home and Vehicle Insurance.
5. Credit Report: By law, you are allowed one free credit report per year. To get yours, go to www.annualcreditreport.com. If you already had one this year, bring a copy of it.
6. Questionnaire: Print our client questionnaire and fill it out the best you can.

How Do I Afford to Pay for a Bankruptcy Lawyer?

We hear this one a lot, and it is an understandable question to pose if your wages are being garnished or your accounts are frozen. The quick answer is, you can’t, that is if you’re truly broke.

BUT…

At the Law Office of Kristy Hernandez, we offer payment plans for all clients. Bankruptcy is for people seeking to bring some sanity and solvency to their financial affairs, not for those just struggling to survive. So, food, shelter, that sort of thing, must always come first. If things are tough, but not truly dire (which is usually the case), and would seem to improve without the weight of debt, phone calls, lawsuits, etc., then this is how people tend to pay the legal fees of a typical Bankruptcy case.

Most people stop making certain debt payments (like credit cards) in the meantime to help raise the money. This is a popular strategy and works just fine in most circumstances. However, there are times when a wage garnishment order is about to enter or some other shoe is about to drop, and this just won’t work. Those circumstances are difficult, but even in those cases solutions can sometimes be found if the money is not available from a family member, friend, or retirement fund. Moreover, it tends to be rare that people wait until the last minute like that to explore their options. So, in the normal case, being on a payment plan works quite well. You are able to have a lawyer to go to with questions and help with the pre-filing time (usually phone calls from debt collectors) and have the guidance to set up a case correctly.

Frequently Asked Questions – US Chapter 7 Bankruptcy Filings in the State of California

What is bankruptcy?

Bankruptcy is the legal process that provides relief to businesses and individuals in serious debt or severe financial trouble. In bankruptcy cases, individuals, businesses, or organizations legally declare inability to repay their debt to creditors. When a Chapter 7 bankruptcy is filed, the individual, business, or organization may request and be granted a complete dismissal of all debts . Filing for bankruptcy while in debt, protects you from your creditors.

Do I need an attorney to file for bankruptcy?

It is not legally required to hire an attorney when filing for bankruptcy. However, US bankruptcy law is extremely complicated and the assistance of a skilled California Bankruptcy Attorney you can drastically enhance your chance of achieving your legal goals and objectives. The courts do not provide individuals with any legal guidance or assistance with mandatory forms.

Does my spouse also have to file for bankruptcy?

No. Debts usually remain in the name of one person. The credit of the spouse not filing for bankruptcy will not be affected.

If I file for Chapter 7 Bankruptcy, will all by debts and bills be eliminated?

Generally, yes. All unsecured debt (i.e. medical bills, credit card debts, and income taxes over three years old) will be permanently eliminated in Chapter 7 bankruptcy. However certain debts cannot be discharged including alimony, child support, student loans, criminal penalties and fines, and income taxes less than 3 years old.

What is a joint petition?

A joint petition is a single petition that is filed by both the debtor and his/her spouse. Only married individuals are eligible to file a joint petition. In cases of corporate or business partnerships, each individual must file a separate case.

Can I be fired from my job if I file for bankruptcy?

No. You can Not be fired. It is illegal under the U.S. Bankruptcy Law to specifically discriminate against a person based upon their need to file for protection under bankruptcy laws.

Will my credit be ruined for 10 years after bankruptcy?

Bankruptcy is the first step in re-establishing credit that is already damaged, or about to be ruined. Chapter 7 bankruptcy discharges any outstanding debts. Within 18 to thirty months after filing for bankruptcy, a debtor is usually able to re-establish good credit.

To consult with an experienced California Chapter 7 Bankruptcy Lawyer, contact us at: 1-510-456-7400.