“Filing for bankruptcy is a little more complicated than many people think,” says Bert Briones, an Irvine bankruptcy attorney . In general, filing for bankruptcy is done when a person or business has debts that exceed their assets. Personal bankruptcy is a bit different than corporate bankruptcy. People are able to file for either chapter 7 or chapter 13 bankruptcy, both of which offer different protections, and impact the filer’s credit history in different ways.
Chapter 7 bankruptcy is the type of bankruptcy most people end up filing for. With chapter 7, many of a person’s assets are liquidated in order to repay their financial obligations. This will eliminate some types of debt, but things like mortgages and car payments will remain. It’s good for getting rid of things like credit card debt, or other bills that don’t require an initial deposit of collateral (referred to as unsecured debt).
In many states, filing for chapter 7 bankruptcy can only be done by individuals that pass a “means test,” which compares their income to a statewide average to determine whether they have enough debt to warrant filing for chapter 7 bankruptcy. This type of bankruptcy remains on a person’s credit history for ten years, and there is a six to eight year waiting period before they will be able to file for bankruptcy again.
Chapter 13 bankruptcy differs from chapter 7 in that it does not eliminate debt. Instead, debts are consolidated, and a repayment agreement is reached between the debtor and their creditors. This repayment agreement usually spans three to five years, and impacts the debtor’s credit history as long as the repayment agreement is in effect. Chapter 13 bankruptcy is good for individuals with a high income, and it does not require debtors to liquidate their assets.
Filing for bankruptcy is more complicated than it sounds, and the decision of how to go about doing so isn’t an easy one. A good bankruptcy lawyer can help advise you on whether or not bankruptcy is a legitimate option for your financial situation, and assist you in determining whether chapter 7 or chapter 13 is more appropriate.
If you have questions regarding Chapter 7, Chapter 11, or Chapter 13 bankruptcy, lien stripping, wage garnishment, cram down, foreclosure, asset protection, or related issues, please call Red Hill Law Group PC, to schedule a no-charge face-to-face or phone consultation with an experienced Orange County bankruptcy lawyer.
We can be reached at 877-343-3289, or please use our contact form and you will be contacted within the next business day.
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