Over 10,000 Bankruptcy Cases Filed
Chapter 7
One of the most powerful tools for eliminating your debt is called Chapter 7 bankruptcy. If you qualify for Chapter 7 bankruptcy, you should expect to be debt-free 3 – 4 months after your case is filed, while likely keeping all of your assets.
Read MoreChapter 13
Chapter 13 bankruptcy can be a great way for someone with mainly secured debt (mortgage and/or car loan) to get those debts reduced to the market value of the securing asset. In Chapter 13, you can strip off your 2nd mortgage if your house is worth less than you owe on the 1st mortgage. You can also get a car loan re-valued to the market value of the car in many instances.
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Do I qualify for bankruptcy?
There are many reasons for seeking relief under the Bankruptcy Code. Job loss, medical issues, wage garnishment, home foreclosure, and pending lawsuits are all reasons why an individual may look into bankruptcy. The first question people have for a Van Nuys bankruptcy attorney is if they even qualify for bankruptcy. There are two main types of personal bankruptcies: Chapter 7 and Chapter 13. A Chapter 7 bankruptcy is a liquidation. A trustee is appointed, and takes any nonexempt assets and sells them and distributes any proceeds to creditors, after which the remaining debts are discharged. In most cases, there are no nonexempt assets for the trustee to sell, and the case is discharged without creditors getting anything. A Chapter 13 bankruptcy is a repayment plan over three or five years in which the individual pays back a percentage of their debts, after which the remaining balances are discharged. Each chapter has its own standards as to who may file, and it is important to contact bankruptcy attorneys Van Nuys to discuss your options.
A Chapter 7 may be filed in this state by any person or entity that is domiciled (lives in, or does business in) California. There is no debt limit, so a person does not have to worry if they owe too much to qualify. However, to qualify for a Chapter 7 bankruptcy, an individual with primarily consumer debt needs to pass what is often referred to as the Means Test. This test compares your monthly income against that of the average monthly income of a family of your size in California. If your monthly income is below the state average, then you qualify for a Chapter 7. If not, then the Means Test will determine if you can pay back some of your debts over five years. If you can, there arises a presumption of abuse, and a Chapter 7 bankruptcy may not be for you. However, even if you do not qualify for a Chapter 7 bankruptcy, you may still be eligible for a Chapter 13.
Chapter 13 is for individuals (not businesses) who have a steady income yet are unable to meet their monthly obligations. There is a debt limit of $360,475 of unsecured debts, and $1,081,400 of secured debt. Often Chapter 13 debtors cannot pass the Means Test because of their income, but due to high interest rates and mounting debt, they are unable to pay their bills every month. A Chapter 13 structures a manageable repayment plan over three or five years, based on your income and expenses. A Van Nuys bankruptcy attorney can take stock of your expenses and income, and will then determine your disposable income that can go into the plan. He will then construct a plan in which a certain percentage of your debts are paid off over time, with the rest being discharged when the plan is completed. It is important to consult a bankruptcy attorney Van Nuys to discuss the structuring of a Chapter 13 plan.
Whether you are thinking of filing a Chapter 7 or 13 bankruptcy, there are a number of eligibility requirements to keep in mind. Seasoned bankruptcy attorneys Van Nuys, such as those at Wadhwani & Shanfeld, APLC, can quickly tell you which chapter you qualify for and which best fits your needs and goals. Call Wadhwani & Shanfeld, A Professional Law Corporation, today for a free consultation.