There are many reasons why people find themselves in financial debt, and if you find yourself in a situation with no way to pay back your creditors, there are still options available to you. Filing for bankruptcy can give you a fresh start financially, and our bankruptcy attorneys are prepared to help. At Miranda, Magden & Miranda our bankruptcy lawyers pride themselves on providing legal representation in a bankruptcy filing that gets you through the process as quickly as possible with your dignity and reputation still intact.
Which Bankruptcy Filing is Right for You?
Individuals are able to file for bankruptcy under either Chapter 7 or Chapter 13 of the Bankruptcy Code, and it is important to understand the differences in order to figure out which is best for your situation. Chapter 7 bankruptcy is also known as a liquidation bankruptcy, and the purpose of this type of bankruptcy filing is to get rid of all unsecured debts. Under this type of bankruptcy, all of the debtor’s nonexempt assets are collected and sold off, or liquidated, to pay creditors back for the debts. However, California is one of the most generous states in terms of the amount and type of exemptions that protect your assets from liquidation in bankruptcy, and most Miranda, Magden & Miranda clients are able to protect their assets throughout the Chapter 7 process, thereby having enough to successfully start their lives over after bankruptcy.
Chapter 13 bankruptcy attempts to reorganize debts in a way that allows the debtor to pay them off over a period of time. Depending on a complicated formula, the percentage that you pay back to your unsecured creditors can vary from 0 percent to 100 percent. In order to file for Chapter 13 bankruptcy, you must be able to prove that you are earning an income to continue to pay off the debts. Chapter 13 bankruptcy allows the possibility of saving your home and vehicle even if you are in arrears, unlike Chapter 7. Chapter 13 bankruptcy separates all debts into three types of claims – priority, secured, and unsecured and then begins paying back debts one tier at a time according to the Chapter 13 Plan approved by the court. At the end of the payment plan time period, any remaining debts are discharged.
How to File for Bankruptcy
Under both Chapter 7 and 13 bankruptcy, the debtor is required to submit a long list of documentation that identifies all assets and debts to the bankruptcy court. Under Chapter 13, a repayment plan must also be filed, but under Chapter 7, this is not necessary. A trustee is appointed to the case, who manages all payments back to creditors. A creditors meeting is held after filing with the debtor, trustee, and creditors to discuss the repayment of debts, approve the plan, and allow the opportunity for creditors to ask any questions.
It is important to note that for both Chapter 7 and 13 bankruptcy, the debtor must go through two credit counseling courses and cannot have filed for bankruptcy within certain time frames prior to the current filing. The debtor also can not have had bankruptcy petition dismissed for willful failure to appear within 180 days prior to the current filing. Chapter 13 bankruptcy also has a ceiling for debt that the petitioner cannot be above, or else the debtor is required to file for Chapter 7 or other relief instead.
Our Office Can Help
If you are considering filing for bankruptcy in Monterey County or the surrounding areas, our bankruptcy attorneys may be able to provide guidance and counsel. Call the office or contact us today at Miranda, Magden & Miranda to discuss your potential bankruptcy filing.