Los Angeles Bankruptcy Attorney Natella Royzman discusses:
Bankruptcy 101: the Purpose of Bankruptcy
Different Types of Bankruptcy
What It Means to Get a Discharge
Click below to listen to Part 1 of Bankruptcy 101 in which Ms. Royzman shares Bankruptcy 101 tips on how to discharge your debt and the various ways to handle your debt.
If you are considering bankruptcy and don’t know what your options are, Ms. Royzman can help you — by looking at the whole picture, asking you what your goals are, and discussing realistic plans to resolve your financial situation.
Although Ms. Royzman has vast experience with basic bankruptcy filings, she has expertise helping individuals and businesses struggling with more complicated debt issues. Her aim is to help those in distress recover and thrive, rather than continue to be stuck in a perpetual rut.
Types of Bankruptcy
Note that the information provided here is general and not complete. To determine the best strategy for your unique situation, speak with a qualified bankruptcy attorney to learn about how to get your financial life back on the right track.
Chapter 7 – The two main considerations in this chapter are eligibility and asset exposure. Both individuals and businesses can file for Chapter 7. In order for individuals to qualify, they must pass the Means Test (or be exempt from it), which evaluates your income and expenses. Chapter 7 is considered the simplest, most straightforward chapter, and is best for someone who doesn’t have valuable property that can be sold by the trustee assigned to your case. You do not pay anything to any creditors, and in most cases, all of your debt is completely wipe out. You can protect your home, car, and general household items using exemptions, depending where you live and your attorney’s ability to apply exemptions skillfully.
[Read more about How to Discharge Debt through a Chapter 7 Bankruptcy, what the Role of the Trustee is, and how to protect your home using California Bankruptcy Exemptions]
Chapter 13 – This chapter is commonly known as the “Wage Earner’s Bankruptcy.” You pay some or all your debts over a period of time, depending on circumstances. You must be an individual, have regular income, and be able to make payments to creditors under an approved plan in order to get a discharge. You must also fit within certain debt limits. Chapter 13 may be a good choice if you need time to catch up on your mortgage payments, but you must be realistic about what you can and cannot afford in the long term. A lot can happen over 3-5 years, and you have to be able to keep up with your payment plan in order to get a discharge.
Chapter 11 – This is by far the most complicated and costly of the bankruptcy chapters and is used mostly by businesses, though is also an option for individuals with exposed assets who do not qualify for Chapter 13.
Which Types of Debts are Discharged
Most unsecured debts are fully discharged, meaning you are no longer legally obligated to pay them. However, liens arising from secured debts (such as a mortgage) remain on the property. That means even if you successfully get a discharge, you can only discharge your personal liability. Also, there are some exceptions that will not be discharged: e.g. recent tax debt, student loans, government fines and penalties (including parking tickets), criminal restitution, and spousal/child support. Certain debts that come from fraud and other intentional bad conduct can be held “non-dischargeable,” meaning you will still be liable.
The Automatic Stay
When you file for bankruptcy, an automatic stay is triggered immediately after filing (with some exceptions):
- Immediately stops all collection activity: NO MORE ANNOYING PHONE CALLS OR LETTERS
- Immediately stops action against your property: Nobody can do anything against you or any of your property
- No legal action can be taken unless permission is granted by bankruptcy court
The Bankruptcy Process is Simpler than You Think
At Royzman Law Firm, we make the bankruptcy process as easy and risk free as possible for you. Ms. Royzman has extensive experience representing bankruptcy debtors (both individuals and businesses), bankruptcy trustees, and creditors. She understands all sides of the bankruptcy process, and provides careful and creative legal analysis to further your best interests. Her evaluation of your financial situation is not only a legal one, but a practical one, considering all options that can help accomplish your goals. Call Royzman Law Firm at 310.954.8503 or contact us online to schedule a free consultation.
Please note that the materials appearing on this blog are provided for informational use only, and are in no way intended to constitute legal advice or the opinions of this law firm or any of its attorneys. The law is constantly changing, and the materials appearing on this blog are not guaranteed to be correct, complete, or up-to-date. You should not act or rely upon any information appearing on this blog without consulting a qualified attorney for individual advice regarding your own unique situation. Transmission of information through this blog or this website does not create any attorney-client relationship between you and Royzman Law Firm, Inc. or Natella Royzman, Esq.