Filing bankruptcy in Los Angeles? Many other Los Angeles residents find themselves unable to pay their debts. Bankruptcy laws help people to get out of debt and start over again. People filing for bankruptcy seek protection from their creditors for the debts they acquired. Also, individuals filing for bankruptcy expect to give up a large part of their assets and property.
At Stone & Sallus LLP, you can speak to an experienced Chapter 7 bankruptcy lawyer in Los Angeles. We’re here to help you with important life decisions about your debts and the ability to pay them.
What is Chapter 7 Bankruptcy?
Chapter 7 provides a straight (liquidation) bankruptcy. It’s the most common bankruptcy in California. It is best used when your debts overwhelm your ability to pay them off or, when too many creditors expect you to pay them simultaneously.
The federal bankruptcy laws appoint a trustee to oversee the proceedings with authority to examine all your financial records to verify a petition for bankruptcy. This includes your bank statements, pay stubs, and other sources of income. The trustee may sell the debtor’s property to pay the creditors.
The law allows you to file for bankruptcy every eight years since your last Chapter 7 bankruptcy. The process may take from four to six months.
A Chapter 7 bankruptcy lets you eliminate court judgments, credit card debts, medical bills, and other “unsecured debts”. Allowing you to move forward in your life.
Yet, “secured debts” like car loans and mortgage loans do not get discharged in bankruptcy unless you surrender the collateral. Those creditors maintain the right to foreclose or repossess the property if you fail to make payments. But, they only have the right to possess the secured property without suing you or seeking more money if they can’t sell the property to pay your debt.
Causes for Chapter 7 Bankruptcy
Many reasons exist for a person’s inability to pay debts. Such as, long term illness, loss of job or clients, and an expensive marital divorce.
Poor investments and business failure also stop income to pay debts. When the debts become too great to pay off with your current income, an option to file for bankruptcy exists.
How to Protect Your Assets
The bankruptcy law protects some of your assets called “exempt assets”. Considered “necessities” for life. Exempt property includes:
- Necessary clothing;
- Motor vehicles up to a certain value;
- Household appliances;
- Necessary household furnishings and goods;
- Jewelry up to a certain value;
- Part of the equity in the debtor’s home;
- Tools of the debtor’s profession or trade up to a certain value;
- Public benefits (social security, welfare assistance, and unemployment compensation) already held in bank accounts;
- The part of earned wages not yet paid; and
- Personal injury damages awards.
These exempt assets exist to help debtors get out of the crushing debt and get back on their feet. Because it’s counterproductive to strip debtors of everything.
How to File for Bankruptcy in Los Angeles
See if You Qualify – You must take the “Means Test” which calculates your qualification to file a Chapter 7 Petition. It evaluates your monthly income, types, and amount of debt, and other facts about your financial status. If your average monthly income for the past six months is less than the median income for the same size Los Angeles household you qualify.
Fill out the Petition and Schedules – These forms are available from the Bankruptcy Court or your Chapter 7 bankruptcy lawyer in Los Angeles.
File the Petition– with the California Central District Bankruptcy Court in Los Angeles.
Documents you need include:
Verify Your Income – You need to gather necessary documents to verify your income.
The Creditors – Gather information on all your creditors including how much you owe and their names and addresses.
Assess Your Assets – Obtain documents about your assets. Like bank accounts, 401K and IRA, other retirement plans, real properties, life insurance policies, expensive jewelry, stocks and bonds, and vehicle value (NADA or Kelly Blue Book).
Tax Returns – For the past two years provided to the trustee.
Take a Credit Counseling Class – Complete it within six months of filing your petition. File the Certificate of Completion with the court.
Attend a 341 Hearing – You must attend this hearing after filing your bankruptcy petition. Bring your proof of identity and social security card. Your attorney also attends. The trustee will ask you questions about your income, assets, and creditors.
Take a Debtors Education Class – A second required class about debt management. File a Form B23 certifying you completed the class.
Then, wait to receive your court Discharge Order.
Speak to our Los Angeles Lawyers about Chapter 7 Bankruptcy with a Free Consultation.
Learn more about Chapter 7 to see if you qualify and how our Chapter 7 bankruptcy lawyers can help you get back on your feet.