A New Start with Bankruptcy Basics

What is Bankruptcy?

As opposed to stigma, bankruptcy can be a fresh start –Bankruptcy is a legal procedure that allows individuals and businesses to eliminate or restructure their debts. It's like hitting the financial "reset button." You get to wipe out your debts and start anew, free from the burden of creditors hounding you day and night. In California, there are mainly two types of bankruptcies: Chapter 7 and Chapter 13. Each offers its own set of advantages tailored to your unique financial situation.

Introduction: The Bright Side of Bankruptcy

If you're thinking about bankruptcy, you're not alone! It's never the end, but rather a new beginning. It’s your ticket to a fresh financial start. This guide will arm you with all you need to know about the bankruptcy basics.

Filing a bankruptcy nowadays is considered to be a good business decision since it allows you to show your creditworthiness and build a new financial future. However, we understand that it can still be a difficult and emotional decision to make.

To make it easier, call our lawyers for help. We will discuss the best options for breaking free from debt.

For more information, visit https://shield.law/an-experienced-bankruptcy-lawyer/

Two Main Types: Chapter 7 or Chapter 13

Chapter 7 and Chapter 13 are your two primary options for filing bankruptcy. Let's break down what each offers:

Chapter 7 is like hitting the "reset" button on your debts. You simply wipe out the debt and walk away, leaving them in history. Its just as easy as pushing a button. 

A Chapter 7 bankruptcy is the best choice for people with low income or unemployed, or having large families but not enough to cover all the costs. It also works for small businesses that find themselves unprofitable and suffering losses month after month.

Chapter 13 is your roadmap to repaying your debts over 36 or 60 months. It’s ideal mainly for those that have non-dischargeable debt, a higher consistent income, high value assets like a house and financial accounts, and other aspects that would make a Chapter 7 a wrong option. 

A Chapter 13 bankruptcy is designed for people who make too much money, have assets that would be sold and liquidated in a Chapter 7 bankruptcy, or have debts that they can’t wipe out with a Chapter 7 bankruptcy.

For example, if your lender is trying to foreclose on your home because of your late payments, the Chapter 13 can stop it and let you repay the amount you’re behind.

None of your unexempt property will be taken away or sold off, and no interest or penalties will be added to your monthly payments on the portion of debt being paid back. Think of this as a consolidation loan with zero percent interest, to pay back only what you can afford. 

Once the three or five year plan is done:

  • You won't owe any taxes to the IRS or the State,
  • Your car(s) will be completely paid off,
  • Your mortgage will be current with no threat of foreclosure, 
  • You will not owe anything to any of your unsecured creditors,
  • You will not owe any attorney’s fees. 

You'll be off to a fresh start and fresh financial future once its done. 

Who Can File? Eligibility Criteria

Individuals, married couples, and businesses can all file bankruptcies. 

The eligibility for Chapter 7 bankruptcy requires your monthly income to be at or lower than the average income for a family of the same size in the same county. The bankruptcy means test formula determines your income qualifications. BUT, the means test will not apply to businesses that file bankruptcy and it won't apply to people filing bankruptcy where the majority of their personal debts went toward running a business. 

The less disposable income you have, the better you’ll qualify for Chapter 7 bankruptcy. If that doesn't work, a person can always file a Chapter 13 at any level of income and assets without risking them. 

Upsides: The Benefits

  • Say goodbye to all of your debts.
  • Creditors, banks, lenders, lawyers, and collection agencies must stop harassing you the moment you file. 
  • No one can ever try collecting on a discharged debt again. 
  • Stop a foreclosure sale the second your bankruptcy is filed. 
  • Stop a garnishment the second your bankruptcy is filed. 
  • Stop a bank levy the second your bankruptcy is filed. 
  • Stop a lawsuit and judgment, whatever stage its in, the second your bankruptcy is filed. 
  • Keep your home, your car, your financial accounts, your retirement accounts, and other valuable assets. 
  • No one you owed money to prior to filing bankruptcy can ever report on your credit again. Your credit report will show all Zero balances. 

Start by talking to our bankruptcy attorneys.  From your initial FREE CONSULTATION to the discharge and elimination of all your debt, we’ll guide you through the entire process. 

In fact, keep in touch AFTER your bankruptcy is done for useful tips, tricks, and advice on rebuilding your credit, obtaining new credit, buying homes and cars, and enjoying your new financial future. 

Submitting the Documents: The Bankruptcy Petition

The bankruptcy petition, schedules, and statements are all filed in one packet as your bankruptcy filing with a case number. Your lawyer will help you draft and file the paperwork needed for your case. Your lawyer will also sign the bankruptcy paperwork with you, thus taking responsibility for your debts and getting them discharged. 

Life After Filing: A New Chapter After the Conclusion, And The Takeaway

Yes, there's life after the death of your debts—and a rather financially relaxed and optimistic life—after bankruptcy. You get a new slate to rebuild your financial life.

Bankruptcy isn't a bad word and isn't the end of your financial journey. Consider it a rest stop for you to refuel, reevaluate, and restart your financial journey fresh, clean and brand new.

What is Bankruptcy and How Does it Work?

Think of bankruptcy as your financial "reset button." It's a legal way to wipe out debt and get a fresh start. In California, you're in luck! Our state offers some of the most generous bankruptcy exemptions, allowing you to keep your money, investments, and even your retirement funds. Discover Your Fresh Start What Really Happens When You File Bankruptcy?

What Are the Different Types of Bankruptcy?

There are several types of bankruptcies, each intended for different types of debtors, from individuals, to businesses, to property owners, to millioniares and billionaires. The two most common types are a Chapter 7 bankruptcy and a Chapter 13 bankruptcy. Our Los Angeles and Riverside County bankruptcy attorney has options tailored to your unique situation. Our expert bankruptcy lawyers will guide you to the best path for your fresh start.

What is a Chapter 7 Bankruptcy?  CLICK HERE

What is a Chapter 13 Bankruptcy? CLICK HERE

Addiitonal information can be found here.

How Does Bankruptcy Affect Your Credit Score?

Yes, bankruptcy affects your credit, but it's the first step in your credit makeover! Our savvy bankruptcy attorneys have proven strategies to rebuild your credit faster than you'd think. Rebuild Your Credit

How Long Does Bankruptcy Stay on Your Credit Report?

Bankruptcy stays on your credit report for up to 10 years, but don't let that scare you! With the right moves, you can start improving your credit score long before it's removed, and as soon as you've already filed. Remember, a bankruptcy and zero debt looks much better and will give you a much higher credit score than a bunch of unpaid and unmananageable debt, collections, judgments, and other negative items on your credit report and no bankruptcy. Think about it... Learn More...

Can I File for Bankruptcy if I Have a Job?

Absolutely! Having a job doesn't disqualify you from reclaiming your financial freedom. Qualifying for bankruptcy depends on other aspects like your family size, the average income of that family size in the same county, your living expenses, the type of debt you have, and several other factors. We'll help you understand how your income may not even be a factor at all. Bankruptcy and Employment

Can I Keep My House if I File for Bankruptcy?

YES! You can keep your home and castle! California's generous homestead exemption protects a surprisingly high amount of home equity. You can file for bankruptcy and still keep your home sweet home. Learn More about Bankruptcy Exemptions in California HERE. Protect Your Home

How Much Does It Cost to File for Bankruptcy?

The cost in hiring a lawyer to file a bankruptcy varies. Not everyone has the same case and work involved. That's why Shield Law Group, APLC provides an absolutely free consultation to go over your specific situation. We can then give you a flat up front fee for you to decide on. There are no hourly fees or secret costs. But whatever the price, it'll be pennies on the amount of debt we will be wiping out for you.  Consider it a business decision and an investment in your financial future. Our consultations will give you a clear picture of the fees involved. At the very least, you'll get some questions answered even if you choose not to hire us. 

What Debts Can Be Discharged in Bankruptcy?

Nearly all unsecured debts will get wiped out in a Chapter 7 bankruptcy. Say goodbye to those pesky credit card bills, collection companies, personal loans, and medical expenses! Even if you are at fault for a car accident and don't have the insurance to cover it, bankruptcy will protect you (as long as no drugs or alcohol were involved). Even most taxes will get wiped out. Things that aren't dischargeable are child or spousal support obligations, court fines or fees, and student loans in most cases. Otherwise, unsecured debts can be wiped out, giving you the clean slate you've been dreaming of. Wipe Out Your Debts

In addition, secured debts like car loans, furniture loans, jewelry loans and other loans that are considered liens on propery also get wiped out. You'll no longer be personally responsible for those debts. All the lender can do is get the property or asset, but nothing else from of you directly. Even better, if you want to keep that car or furniture, or other asset, just keep making the payments. Contact us for more details on how this works. 

Can I File for Bankruptcy Without a Lawyer?

You could, but why risk making a mistake and putting yourself in a worse off situation than before the bankruptcy? Our seasoned bankruptcy attorneys will do the hard work the for you, ensuring you get the most out of your bankruptcy. All you need to do is imagine the feeling of having zero debt. Learn More Why You Need a Lawyer, and why its worth the money. 

How Does Bankruptcy Affect My Ability to Get Credit or a Loan in the Future?

Bankruptcy isn't a lifetime scar. It is a band-aid.  With smart financial planning, you'll be back in the good graces of lenders before you know it. In fact, you'll start getting credit card and loan offers in the mail almost as soon as you file. But remember to be responsible with them and only use them if you can pay them in full each month, only to get that available credit to boost your credit score. Within two years, you can even qualify for a home loan!

Even more interesting is that since the Covid-19 pandemic, so many people have filed bankruptcies that it no longer carrires the negative weight and effect that it used to. Creditors understand that people are still getting back on their feet and just need a break from all that debt that piled up. You won't be looked at as badly as one might think. Get Back on Track

What is the Wildcard Exemption?

The Wildcard is your financial superhero! It allows you to protect up tp $33,650 of equity in any asset or combination of assets or on top of other specific exemptions. It's like having a financial safety net! If your assets don't reacj that amount, the easier and less costly your case will become Learn More Discover the Wildcard