What is Bankruptcy? – Los Angeles Bankruptcy Lawyer
Many people hear the word “bankruptcy” and think of disaster. Through word of mouth and false assumptions, people think that bankruptcy is something to be avoided at any and all costs. Unfortunately, most people file too late and as a result lose thousands of dollars they could have saved if they had filed bankruptcy earlier.
The greatest obstacle to overcome when filing for bankruptcy is not its impact on a credit score but the fear people have about filing for bankruptcy. Bankruptcy is a tool, authorized by federal law, which should be used when a fresh financial start is needed. Filing for bankruptcy should strictly be a financial decision, instead of an emotional decision fraught with fear.
The most common mistake people make when filing for bankruptcy is waiting until the last possible moment to file bankruptcy. But waiting for a judgement, wage garnishment, or bank levy in order to file bankruptcy usually involves some monetary loss which likely would have been prevented if a bankruptcy was filed earlier.
Types of Consumer Bankruptcies
Individuals and business can file for bankruptcy under Federal Bankruptcy Law. When individuals file for bankruptcy and the debts are not related to a business, it is referred to as a consumer bankruptcy.
There are a number of different types of bankruptcies that people and businesses can file under. The most common bankruptcies for individuals are Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy is also referred to as liquidation bankruptcy. It has the power to liquidate nearly all types of debt (with some exceptions) and give a fresh start within 4 to 6 months of filing for bankruptcy. Chapter 13 bankruptcy is a payment plan that lasts for 3 or 5 years. The payment amount is dependent on a number of factors. At the end of a chapter 7 or chapter 13 bankruptcy, there is usually a discharge of debt. The discharge is an order from the court that wipes out the debt.
Whether a bankruptcy is filed under chapter 7 or chapter 13, the automatic stay comes into effect immediately upon filing. The automatic stay acts like a restraining order against creditors and prevents them from taking action to collect. The automatic stay will stop harassing phone calls, collection letters, pending lawsuits, wage garnishments, bank levies and any other collection efforts.
The Process of Filing Bankruptcy
Filing for bankruptcy is a straight forward process. Prior to filing for bankruptcy, the debtor is required to complete a Credit Counseling class, fill out a bankruptcy questionnaire, and provide our bankruptcy attorneys with documents such as tax returns, pay stubs, and bank statements. Once the bankruptcy case is filed, the debtor is required to complete a course in Financial Management and attend the Meeting of Creditors, also known as a 341(a) meeting. After the 341(a) meeting, the debtor should receive their discharge is 60 to 100 days.
The Los Angeles Chapter 7 Bankruptcy Lawyers at MacLean Chung Law Firm offer free initial consultations and can usually give a quick assessment of a case in a short telephone conversation. Our bankruptcy attorneys can help determine what is best for each situation.
Filing for bankruptcy is a big decision and you should always consult with a bankruptcy lawyer before filing a bankruptcy petition. We offer free bankruptcy consultations in most cases. We have offices throughout Los Angeles in Los Angeles, Burbank, Pasadena, and Santa Clarita and our bankruptcy attorneys can meet you at the location that is most convenient for you. Call our office today to schedule a free consultation with a qualified bankruptcy attorney.