In the United States, Chapter 7 bankruptcy is a potent legal weapon that lets you completely wipe off various debts, including credit card debt, medical debt, car loans, and payday loans. It's more common than you think, so you shouldn't be afraid to file for bankruptcy if necessary.
That said, there are limitations. For example, not all debts can be forgiven in a Chapter 7 bankruptcy. Therefore, you want to make sure you're making the best decision possible by learning about what declaring bankruptcy means and how it can affect you or your business.
Here's a quick guide to Chapter 7 bankruptcy, as often handled by our prescreened California bankruptcy lawyers:
A Quick Guide To Chapter 7 Bankruptcy In Los Angeles, California
How Do You File For Bankruptcy In Los Angeles, California?
You must complete forms detailing your income, expenses, possessions, and debts before submitting them to the bankruptcy court in a Chapter 7 bankruptcy. If employed, you must also submit your most recent pay stubs and tax records.
Your papers and documentation will be reviewed by a bankruptcy trustee. They will also hold your 341 Meeting of Creditors, during which they will enquire about your financial condition in general.
You'll receive a notice in the mail from the court informing you that the court has granted you a bankruptcy discharge a few months later. Most persons who are truthful, completely fill out their bankruptcy documents, and follow the necessary procedures get their bankruptcy petition approved by the court and have all of their qualified debts discharged.
If you're unsure about filing or the process, consult a Los Angeles bankruptcy lawyer and an accountant. Remember, experts know their way around filing bankruptcies, how it can affect you, and the best route for you and your business.
What Debts Are Forgiven When Filing Bankruptcy In California?
The term "dischargeable debts" refers to these debts. The automatic stay kicks in as soon as bankruptcy is filed. This prevents anyone from temporarily trying to collect any debts you owe them.
The following typical debts are dischargeable in Chapter 7 bankruptcy:
- Credit card debt
- Medical expenses
- Car loans
- Payday loans and personal loans
- Judgments obtained from credit card companies and debt collectors
- Utility costs
California bankruptcy lawyers will advise you to not be afraid to file for bankruptcy. Additionally, waiting too long before filing could lead to more problems for you later on, so it's better to consider it as soon as you need to.
What Debt Is Non-Dischargeable?
Non-dischargeable debts cannot be forgiven even when filing for bankruptcy. The following debt categories cannot be discharged under Chapter 7 bankruptcy:
- Alimony and child support
- Current tax debts and other debts to the government, such as fines
- Typically, student loans cannot be forgiven
That said, even with the exceptions, those filing for bankruptcy can still benefit from it. Again, filing allows you to get more wiggle room and recover from being in financial straits.
Will I Lose Property After Filing For Bankruptcy In California?
Secured debts are debts tied to a particular asset, such as a mortgage to a home and a vehicle loan to a specific car. You still need to keep making payments on the debt if you wish to keep the assets that serve as security.
Additionally, you must confirm that your debt payments are up to date before filing. Finally, the debt can be discharged through Chapter 7 bankruptcy if you're ready to give up the property.
However, most California residents who file for Chapter 7 bankruptcy don't lose their property. Some exemptions will allow you to keep some of them, so make sure you consult your Los Angeles bankruptcy lawyer to get the best results.
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