Benefits of Bankruptcy
If you are in a tough financial situation, drowned in debt or need a way to stop borrowing from Peter to pay Paul then bankruptcy is a solution for you. There are different types of bankruptcy. In some cases bankruptcy can eliminate most (if not all) of your debt. In others, bankruptcy will balance your finances through reorganization of your debt.
Additionally, among other benefits of bankruptcy, it may make it possible to:
- Stop harassment from creditors.
- Bar lawsuits or other creditor actions against you.
- Stop foreclosure on your home to allow you more time to catch up on payments or work on a loan modification.
- Prevent repossession on vehicles or property.
What is a Chapter 7?
People commonly call Chapter 7 liquidation. However, this term is somewhat misleading. In most cases, people who file Chapter 7 do not lose anything at all. At Chen & Tran, we will make sure we do everything we can to completely discharge your debt without losing any of your property. Those that qualify for Chapter 7 will receive a discharge of their unsecured debt without making any other payments to the courts or creditors.
What is a Chapter 13?
Many people refer to Chapter 13 as a reorganization or restructuring of debt. To put it more accurately, a Chapter 13 is a 3 to 5 year payment plan. The payment amount is determined by the amount you can afford each month. Basically, the payment plan is your gross monthly income subtracted by your necessary expenses (e.g. taxes, mortgage, health insurance, food, clothing cell phone bill). The Law Offices of Chen & Tran have experience working in the Central District of California. We will work with you and the Bankruptcy process to obtain a plan payment that is affordable and works.
What is the “means test?”
The means test refers to a calculation to determine your “means.” It is calculated by using your income for the past six months. The test helps determine whether you qualify for a Chapter 7 or Chapter 13. It also helps to figure out whether you have any disposable income each month to make plan payments for a Chapter 13.
What is “disposable monthly income?”
Disposable monthly income, also referred to as DMI is the amount of money you have left over after paying all of your necessary expenses. It is calculated using the “means test.” Your necessary expenses include taxes, health insurance, mortgage or rent, car payments, food and clothing etc.
What costs are involved when filing bankruptcy?
The court filing fee for Chapter 7 is $306 ($281 for Chapter 13). Additional costs may include pulling your credit report, and enrollment in courses required by the bankruptcy court.
Attorney’s fees are determined by the type of bankruptcy being filed and the complexity of the case. Fees are different for each case because each situation is different. Please call or make an appointment for a free consultation. The Law Offices of Chen & Tran are committed to keeping our fees competitive. We are bankruptcy attorneys in Orange County. Our main goal is to work with you and get your life moving forward financially.
Will I lose my home, car or property in bankruptcy?
Most people call Chapter 7 bankruptcy liquidation. However, this is sort of a mischaracterization. In most cases clients do not lose any property at all. There are exemptions which allow you to keep your home, car and personal belongings. The exemptions limit the amount of assets or equity you can keep. However, we will review your property and make sure you can keep whatever you are entitled to under the law.
Can I own anything after bankruptcy?
Yes. Many people believe they cannot own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain when you file bankruptcy. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after your bankruptcy, you might have to turn over that money or property. The trustee will use it to pay your creditors if the property or money is not exempt. You can also keep any property covered by California bankruptcy exemptions.
Will Chapter 7 eliminate all of my debts?
Yes, with some exceptions. Bankruptcy will not normally wipe out:
- money owed for child support or alimony, fines, and some taxes
- debts not listed on your bankruptcy petition
- loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan
- debts resulting from “willful and malicious” harm
- student loans owed to a school or government body (except if the court decides that payment would be an undue hardship)
- mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).
- Taxes (with certain exemptions)
Will I have to go to court?
In most cases, you will have to go to the “341a meeting of creditors.” Here, the trustee will verify the information your provided on your bankruptcy petition. The creditors may show up at this hearing to voice any complaints they have against your bankruptcy. If such issues arise, we will be there with you. In most cases, we will have already worked out any issues in your case. Our job is to determine if any issues exist, explain them to you, and provide you with solutions to move your case forward.
Can I get a credit card after discharge?
Yes, there are several options available. While technically not a credit card you could use a bank or debit card to perform activities for which you normally would use a credit card. You also may be able to keep the credit card you already have if the creditor grants approval. If these options do not work you can get secured credit card which is backed by your own bank account.
Can employers discriminate against me for filing bankruptcy?
No. 11 U.S.C. sec. 525 prohibits governmental units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.
What happens to co-signers such as my parent or child?
If someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt.
Can I file bankruptcy by myself if I am married?
Yes, but your spouse will still be liable for any joint debts. If you file together you will be able to double your exemptions. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable then it might be advisable to have only one spouse file. If the spouses have joint debts, the fact that one spouse discharged the debt may show on the other spouses credit report. You should always contact a bankruptcy attorney in your area to discuss your situation.