If you are under the burden of overwhelming debt, a Citrus Heights bankruptcy attorney can help you get a fresh start and rebuild your finances. However, it is important to understand the pros and cons of bankruptcy before you file. Learn more about the bankruptcy process below.
The Basics of California Bankruptcy
Many people are unnecessarily ashamed of bankruptcy. Bankruptcy is simply a federal program that allows you to overcome overwhelming debt and rebuild your financial future. In 2016, over 74,000 people filed for personal bankruptcy in California.
When you file for bankruptcy, you must make detailed disclosures about your debts, assets, income, and other relevant information. It’s important to identify all your creditors. If you do not provide complete information, your debts may not be fully discharged. And, while you must list all of your assets and income, not all bankruptcies involve selling your home, vehicles, and other important assets. In California, certain assets are exempt (or protected) from bankruptcy.
Once you file bankruptcy, an automatic stay goes into effect — and your creditors must stop all of their collection efforts. It is a valuable tool that gives you time to organize and resolve your debts without harassing phone calls, letters, and collection lawsuits. In fact, the automatic stay may even apply to non-dischargeable debts, such as student loans.
During bankruptcy, the court will evaluate your assets, debts, and income in great detail. In all personal bankruptcies, the court will appoint a trustee that will oversee your bankruptcy. While the trustee’s duties vary depending on your type of bankruptcy filing, he or she plays an important role in resolving your debt. Your lawyer can help you comply with the trustee’s demands and may be able to negotiate with the trustee on your behalf.
Bankruptcy claims are always filed in federal court. In Citrus Heights, you must file your claim with the Sacramento Division of the U.S. Bankruptcy Court. If you need help understanding your rights and responsibilities under federal bankruptcy law, contact a Citrus Heights bankruptcy lawyer for more information.
Types of Bankruptcy
The federal government offers a variety of bankruptcy options. If you are filing personal bankruptcy, you will file under either Chapter 7 or Chapter 13. (Different options are available for businesses and family farms.)
Chapter 7 Bankruptcy
Chapter 7 is the most common form of personal bankruptcy in Citrus Heights. In a Chapter 7 (or liquidation) bankruptcy, most of your debts are discharged, including credit card debt and medical bills. However, in exchange for this discharge, a bankruptcy trustee will collect and liquidate all of your non-exempt assets. Most Chapter 7 claims are processed quickly — sometimes within a matter of months.
However, not everyone is eligible for Chapter 7 bankruptcy. In order to qualify, you must meet the Chapter 7 means test. This test analyzes your ability to repay your debts. If your income and assets exceed the means test, your choice is limited to Chapter 13 bankruptcy. To learn more about the means test and your eligibility under Chapter 7, contact a Citrus Heights bankruptcy attorney.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy does not involve the liquidation of your assets. Instead, you enter into a repayment plan with your creditors. You can make payments over time (for up to five years). And, when you complete your Chapter 13 payment plan, your creditors must discharge any remaining debt. While Chapter 13 bankruptcy allows you to keep your home, vehicles, and other property, it also has its disadvantages. A Citrus Heights bankruptcy attorney can help you determine which form of bankruptcy is in your best interest.
Other Forms of Bankruptcy
If you own a business or family farm, you are eligible for Chapter 11 or Chapter 12 bankruptcy. While these types of bankruptcy can be incredibly beneficial, the filings are complex. Before you begin a Chapter 11 or Chapter 12 bankruptcy, consult with a Citrus Heights bankruptcy attorney.
Alternatives to Bankruptcy
Sometimes, you may not qualify for bankruptcy. Other times, it simply is not in your best interest. In these situations, you may still benefit from credit counseling, loan modification, and other debt solutions. We can help you understand your fill array of options and tailor a plan to meet your personal needs.
Consult With a Citrus Heights Bankruptcy Attorney
Don’t spend another sleepless night worrying about debt — our Citrus Heights bankruptcy attorney can help. The Law Office of Diane Anderson provides its clients with comprehensive bankruptcy and debt-related services. We will work with you to find an effective solution to your debt problems — and initial consultations are confidential and free.