If you are struggling with crushing financial debt, do not let life pass you by. Debt can affect more than your checkbook. It can take a toll on your health, leave you depressed, and even affect your marriage. In fact, financial problems are often some of the biggest factors in divorce. At Miranda, Magden & Miranda, LLP, we understand the value of a clean slate. If you qualify, you may be able to start over and erase much of your debt. Give us a call to find out your options.
Clean Slate vs. Scheduled Repayment
There are several kinds of bankruptcy. For businesses, restructuring often makes sense. For higher income people and those with significant assets to protect, such as a home, a scheduled repayment plan (Chapter 13) may make sense. If you are looking to erase debt and start over, a Chapter 7 bankruptcy is the way to go. In Chapter 7 bankruptcy, you will likely need to give up many of your secured assets, although you will have certain exemptions that you are allowed to keep.
What Can I Keep?
As a general rule, a federal bankruptcy court in California will let you keep basic material necessities for doing your job, staying in school, or taking care of your family. So, your primary vehicle, your home, and job-required tools may be subject to exemption, if you know how to ask.
What is Reaffirmation of Debt?
Since you are going bankrupt, you are essentially telling creditors that you cannot pay and will not pay. Therefore, it is going to damage your credit badly at first. If you wish to keep an asset, such as a car, the creditor may want the debt to be reaffirmed. This is a contract that says if you are unable to pay, you cannot discharge that particular debt in the future through bankruptcy. This gives the creditor more certainty. Other creditors (many in California) will not require you to sign a reaffirmation agreement and instead allow you to “pay and retain” on your vehicle after a bankruptcy. Come consult with an experienced Bankruptcy attorney to make sure you choose the right option for you.
What Happens to Child Support Liens and Alimony?
Under federal law, domestic support obligations cannot be discharged in a bankruptcy. Now, there are specific exceptions to this rule. Property distribution orders can, at times, be included in your bankruptcy, but payments for child support and maintenance (alimony) are almost never allowed. These obligations may be reduced through family court, but the bankruptcy court will not discharge them.
At Miranda, Magden & Miranda, LLP, we help debtors seek the fresh start they deserve. Call us today to see if we can help you file for Chapter 7 bankruptcy.