When to File for Bankruptcy in Pasadena CA

Are you struggling with an unmanageable amount of large debts? Are you overwhelmed by the number of bill collectors harassing you and your family? Are you behind in your mortgage fees and now facing foreclosure or repossession of assets and properties? If yes, then declaring bankruptcy might be your light at the end of the tunnel. 

Bankruptcy may not be a comfortable topic for everyone because of its stigma. It is also one of the reasons why people avoid declaring bankruptcy even if their financial situation is already at the bottommost. Because it’s not a common topic, there is a lot of confusion and misconception about when a person should file for bankruptcy.

When should I file for bankruptcy in Pasadena? What are the documents I need to prepare and how is the bankruptcy process? Will bankruptcy erase all of my debts? With all those questions in mind, you need legal advice from a reliable bankruptcy lawyer in Pasadena, California. Let our lawyers walk you through the process while evaluating which approach suits you best. 

Contact our debt relief law firm now and let’s start repainting your life anew. 

Why do I need a Bankruptcy Attorney in California? 

Filing for bankruptcy is also equivalent to a fresh financial beginning and regaining control over your life once again. But while bankruptcy provides a way out of a debt crisis, it is not always the right option for everyone. It is important to determine if declaring bankruptcy is right for you. And if it’s a yes, you have to know when should you file for bankruptcy. 

To help you determine if filing for bankruptcy is the best solution for your financial problems, you need to consult a Pasadena bankruptcy lawyer who has extensive knowledge and experience in the area. At the Law Office of Daniela Romero, you can be assured that our attorneys will listen to your concerns and help you understand bankruptcy, its processes, and your other options. We take pride in listening to our client’s concerns and helping them set their priorities straight while we develop a strategy that is well suited for them.  

If you are in a dilemma with your finances and you are considering if you should file for bankruptcy, do not hold back yourself any longer. Give us a call now and let’s start discussing your way out!

What is Bankruptcy?

Bankruptcy is a legal process that provides financial relief to people to are no longer capable of paying their debts. It allows people to get out of debts by either creating a repayment plan or liquidating their properties and assets. Bankruptcy laws also give protection to companies and businesses who a having troubles financially. 

Debt relief and a fresh start await any individual who declares bankruptcy. There are different factors that need to be taken into account when filing for bankruptcy like your personal income and whether you have properties and assets you can sell in order to cover some of your debts. Also, serious consequences of bankruptcy declaration have to be evaluated too including long-term damage to your credit score. How can it affect your ability to borrow money in the future, the potential increase in your insurance payment, and even the challenges that await you when securing a job. 

What to Consider Before Filing for Bankruptcy?

You are in serious and unmanageable debt if you are now thinking of declaring bankruptcy. You have been falling behind with your bills and credit commitments, you have been in a constant cycle of borrowing money in order to pay your dues or just cover your immediate expenses, and you are burdened by the fact that your debt level is much higher than your income. Although bankruptcy is a great opportunity to rebuild your finances, you have to make sure to evaluate different factors before filing. 

Below are the things you need to consider before filing for bankruptcy. And because this is a complex process that will determine your fresh start in the future, it is recommended to seek legal advice from an experienced and knowledgeable bankruptcy attorney in Pasadena to help you with your options.   

• Compile your financial records. Make a list of the following information and compile all the documents needed
  • All your debts including the amount you owed
  • Make a list of all your properties and assets 
  • Collect all your property titles and deeds 
  • Organize all your tax returns for the past four years 
  • Proof of identification (drivers license, social security card, passport, etc)
  • Loans, divorce, child support documentation if applicable 
  • Brokerage statements and retirement accounts
• Qualify which among your debts are exempted under the bankruptcy law and which are nonexempt. Which among your asset will you lose and get to keep? 
• Decide what type of bankruptcy you intend to file 
• Will you be comfortable having your financial problems be public knowledge?
• How much will the entire bankruptcy process cost you? How long will the entire process take?
• What financial steps do you intend to do in the next years? Keep in mind that the bankruptcy process will affect your credit score and ability to obtain loans for possibly the next 7 to 10 years
• Get credit counseling. Before filing for bankruptcy, either Chapter 7 or 13, you must complete credit counseling from an accredited agency within 180 days before filing. Credit counseling aims to give you an idea of whether filing for bankruptcy suits your needs or if an informal payment plan would be better to get back on track with your finances. If you fail to obtain a certificate of completion before filing, the bankruptcy court will reject your application.  
• You have to confirm your eligibility. Not everyone can file for bankruptcy. Depending on the type you intend to file, there are requirements you have to comply with and tests you need to pass. 
• Will bankruptcy solve your problem? Consider that some debts are not covered by the bankruptcy law and cannot be discharged 
• What other debt relief approaches can you consider? Is there something less severe than declaring bankruptcy? 

What are the Types of Bankruptcy? 

There are two common types of bankruptcies for individuals, namely, Chapter 7 and Chapter 12. Each has its own advantages and disadvantages. You have to analyze your current situation and assess which suits you best. In order to make an extensive evaluation, get assistance from a credible bankruptcy lawyer in Pasadena. 

Chapter 7 Bankruptcy 

Chapter 7 bankruptcy is also known as the liquidation bankruptcy. It is a quick, simple, and most common type of bankruptcy that discharges your debt by selling all your nonexempt properties and distributes the proceeds to your creditors. It does not involve a plan of repayment. Once all the proceeds from selling your non-exempt  asset have been exhausted, your remaining debt will be discharged by the bankruptcy court.

Properties that are exempted from liquidation are those labeled as “necessities of modern life.” These properties include items necessary for living and working. Property exemptions generally include

• Pension
• Motor vehicles (to a certain value)
• Necessary clothes 
• Necessary household items and furniture
• Home appliances 
• Pieces of jewelry but to a certain value 
• Portion of equity under your name 
• Tools your need to pursue your occupation 
• Portion of earned but unpaid wages 
• Public benefits (welfare assistance, social security, unemployment compensation)
• Damages award for personal injury 

Nonexempt properties, on the other hand, includes but not limited to the following list. 

• Vacation home or second home 
• Second car or truck 
• Family heirlooms
• Collection of valuable items like coins, stamps, artworks, antiques, etc 
• Expensive musical instruments unless you’re a professional musician
• Cash, stocks, security bonds, mutual funds, bank accounts, and other investments 

Who Are Eligible for Chapter 7 Bankruptcy?

Even if you are in an irreconcilable financial problem and your debts are piling up left and right, Chapter 7 may not be for you. There are qualifications you need to meet before you become eligible for Chapter 7 bankruptcy. 

• You must have completed a debt counseling course within 180 days before filing bankruptcy with an approved credit counseling agency
• You have not filed for Chapter 7 within the last eight years 
• You have not filed for Chapter 13 bankruptcy in the last six years 
• You have a Chapter 7 or Chapter 13 bankruptcy petition that has been dismissed in the last 180 days. You need to wait for 181 days before submitting another bankruptcy case 
• You should pass the bankruptcy means test (if you failed the means test, you can still submit for Chapter 13)
• You should file for bankruptcy in good faith. If the court determines you are trying to defraud your creditors, your bankruptcy case may be dismissed 

Chapter 13 Bankruptcy 

Chapter 13 bankruptcy is also commonly called the “wage earner’s plan” bankruptcy. This type of bankruptcy provides individuals with a regular income with debt adjustment. It allows you to reorganize your financial status and develop a repayment to repay either all or part of your debts. You will propose an installment scheme of monthly payments to all your creditors over a period of three to five years. 

Your repayment plan should include how and how much you intend to pay each of your creditors. This type of bankruptcy is intended for those who are capable of making money but have fallen behind trying to keep on track with their monthly payments. 

You can keep all of your assets and properties in Chapter 13. It suspends any repossession or foreclosures and payments of your other debts that are considered a necessity for living and working. While this gives you relief, you shouldn’t forget that it only suspends, not eliminate. You still have to pay for these properties.

Any other properties that are considered nonexempt in the bankruptcy law but you wish to keep will not be covered by the bankruptcy asset protection law. You will need to pay for those assets through your repayment plan. 

Who Are Eligible for Chapter 13 Bankruptcy?

• You must have a steady income
• You have not filed for Chapter 13 bankruptcy in the past two years
• You have not filed for Chapter 7 in the past four years
• You have no unfiled taxes or any tax debt
• You don’t have unsecured debt of more than $465,275 and your secured debt should be less than $1,395,875
• You have no bankruptcy petition that has been dismissed in the past 180 days due to failure to appear before the bankruptcy court or comply with court orders or voluntarily dismissed 
• You have completed a debt counseling course with an approved credit counseling agency within 180 days before filing 

When Should You File for Bankruptcy in Pasadena? 

Filing for bankruptcy will never be an easy decision. It requires a thorough evaluation of your financial situation in general and an assessment of all your debts, properties, and assets. It is also a legal process that is complex and strict. There are qualifications that need to be met and a clear understanding of bankruptcy law and processes is necessary. Here is a list of questions that can help you determine when it is the right time to declare bankruptcy.  

• Do you pay your credit card debt in full or only make minimum payments?

• Do you get bill collector calls frequently?  

• Are you using your credit cards to pay for your necessities? 
• Did you consider or are you currently considering debt consolidation?
• If you sell your disposable properties and assets, can you pay down your debts?
• Are your bills higher than your income?
• Do you have bills that you can’t pay off? 
• Are you at risk of losing your house or your car? 
• How much is your debt? Do you know how much you actually owe? Can you still keep track?
• Do you have retirement savings you want to protect? 
• Do you have a severe medical condition?
• Any serious or life-changing events that happened in your life? 
• Will it take five years or more to pay off your debt even after doing extreme adjustments? 
• Has your debts impacted the quality of your life severely? Did your relationship suffer? Did it affect your work, ability to sleep, and your mental health in general?  
• Is your monthly income below the median level in Pasadena, California? 
• Is bankruptcy the right answer for your financial problems? Will it resolve your debts? Can you still think of other solutions? 

If you answered yes to most of the questions then now is the right time for you to declare bankruptcy. Consult with your bankruptcy lawyer in Pasadena immediately and start working on your bankruptcy petition. 

When Should You Delay or Avoid Filing for Bankruptcy?

Timing is very important in determining when you should file your bankruptcy case. What you did before filing your bankruptcy petition will be a big factor in assessing your case. If you did any of these things or you find yourself in these situations, you should consider holding it off or avoiding filing at all since it could derail your bankruptcy case. 

• You have started a mortgage modification
• You have recently purchased luxury items on credit or availed cash advance
• You have hidden assets or cash 
• You have paid some of your creditors before filing and it’s more than what the bankruptcy law allows
• You transferred properties under someone else’s name 
• You gave away properties or gifted them to someone  
• You have properties you don’t want to lose 
• You have sold some assets and properties for less than what it’s worth
• You have an anticipated debt coming soon (if you will not delay your filing, this debt will not be covered by your bankruptcy petition)
• If you are expecting a large amount of money in the near future that could pay off your debts. Or if your income has increased significantly and you just need to buy some time to get on track

Call our Bankruptcy Attorney in Pasadena Now!

If you have been swimming in mountains of debt for years now, bankruptcy might be your only solution. There’s always a misconception about when to file bankruptcy and it often causes more harm than good. The more you delay without any substantial reason, the more you drain your estate. The earlier you file for bankruptcy, the more assets you can protect, and the earlier you can experience a fresh start. 

To determine when you should file for bankruptcy, you need to know where you stand by assessing your net worth and liabilities. It is strongly recommended you seek legal help from an experienced bankruptcy lawyer who has a proven track record and experience in the field. An attorney in Pasadena who’s familiar with the filing processes and relevant bankruptcy laws can help you assess all your options, explain the benefits or risks, and guide you in the planning, preparation, and filing of all necessary documents until the release of your debt discharge.

Act now and don’t wait far too long! Law Office of Daniela Romero is here to help you stop debt from controlling your life!