It is almost impossible to find someone who dreamt of declaring bankruptcy for debt relief. However, if you are struggling financially, considering bankruptcy could be the best (or even only) option for you. Individuals who have successfully filed a petition for bankruptcy can wipe out their debt, which means that they did not have to pay back what they owed to certain lenders. Through the different bankruptcy chapters, countless people who were once bankrupt eventually had a fresh start in life.
If you are planning to file for bankruptcy or require preliminary bankruptcy information on how to file, give us a call. A well-trained Pasadena bankruptcy attorney can answer your questions and clarifications.
A lot of people have apprehensions about filing for bankruptcy. This article aims to shed light on reasons why filing bankruptcy, particularly under Chapter 7, is worth the tedious legal process it involves. It will look into:
- An Overview on Bankruptcy Cases
- Discharged Debt and Your Credit Score
- Opting for a Chapter 7 Bankruptcy Proceeding
An Overview on Bankruptcy Cases
There are different types of bankruptcy, each with certain advantages and disadvantages. A Chapter 13 petition for bankruptcy, for example, will allow you to restructure or reorganize your finances. Proceeding with restructuring will allow you to bring current payments for secured debts. A Chapter 7 bankruptcy case, on the other hand, will likely have your unsecured debts (such as personal loans, medical bills, credit card bills, and other loans with no collateral involved) forgiven or discharged. A seasoned bankruptcy attorney in Pasadena can explain in detail what it means to wipe out a debt.
Filing a bankruptcy petition also comes with the automatic stay, which protects you from collection calls from creditors and harassment from debt collectors. This form of bankruptcy protection also enables you to stop an eviction, utility disconnections, wage garnishment, and even getting sued. Additionally, if you do decide to file for bankruptcy, you can stop foreclosure or repossession of your home, car, or other personal property. For these reasons alone, most filers would agree that a bankruptcy petition is worth it.
Discharged Debt and Your Credit Score
Consumer bankruptcy helps an individual resolve debt under federal court protection. There are several bankruptcy types suited for different circumstances, but what most filers aspire for is to have certain debts wiped out. Filing for bankruptcy erases most of your unsecured debt. While recent tax debt, criminal fines and penalties, student loans, alimony, and child support are generally not dischargeable under bankruptcy laws, a Chapter 7 bankruptcy declaration allows you to raise money for the debts that you must still repay.
What repels most people from bankruptcy proceedings is the fact that they stay on your credit report for up to ten years. Indeed, filing for bankruptcy will affect your credit reports and your ability to get credit cards with low-interest rates for several years. However, rebuilding credit is not as difficult as it sounds. With discipline and good spending habits, you can improve your credit scores just months after you declare bankruptcy. Additionally, the pros of filing far outweigh the cons when it comes to solving your financial problems.
Opting for a Chapter 7 Bankruptcy Proceeding
A Chapter 7 is best for bankrupt individuals with a few assets and whose problem debts include credit card debts, medical bills, payday loans, or other debts that a Chapter 7 may wipe out through a discharge. It is also applicable for filers whose problem debts exceed two-fifths of his or her annual income and therefore have no capacity to pay off debts even with extreme measures.
On the other hand, if you have a lot of assets, if you are generally dealing with secured debt, or if it would be possible for you to pay back some of what you owe to your creditors, a Chapter 13 bankruptcy petition may be a better option. A hands-on Pasadena bankruptcy lawyer can look into your specific circumstances and help you decide on the debt relief option or filing chapter that is most suited for you.
If you are facing financial problems and would want to qualify for this type of bankruptcy, you must go through the following steps:
- Undergo credit counseling from a nonprofit credit counseling.
- Pass the bankruptcy means test (which covers your assets, monthly income, and living expenses) and work on bankruptcy forms and paperwork
- File your petition and wait for the bankruptcy trustee to facilitate the meeting of creditors, sell your nonexempt assets, and pay creditors in a manner according to the bankruptcy code
- Take a financial education course and wait for the discharge, following the usual bankruptcy process.
If you are planning to file for bankruptcy under Chapter 7, give our bankruptcy law firm a call. Pasadena Bankruptcy Law specializes in the different types of bankruptcy filings, and what filers can do to maximize their gain. Reliable Pasadena bankruptcy lawyers like Daniela Romero will gladly assist you with any legal matters concerning bankruptcies.