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Chapter 7 Bankruptcy

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Debt Reorganization for Consumers

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Debt Reorganization for Businesses

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With over 18 million residents, Los Angeles is the second largest metropolitan area in the US behind New York. LA is an expensive area to live in as well as to start and maintain a business. Wages have remained stagnant in a slow economy. Many individuals depend on credit cards to build their business, to pay for unexpected medical emergencies or to keep up with the cost of living. When credit cards max out, a business fails or other sources of income disappear, the burden of too much debt can become too overpowering. If this happens to you, consult with one of our Los Angeles bankruptcy lawyers.

Whether you are contemplating filing under Chapter 7, Chapter 13 or a Chapter 11, or are unsure which type of bankruptcy protection is suited to your particular needs, you should meet with a Los Angeles Bankruptcy lawyer to discuss this and other issues related to your financial situation.

Our attorneys from the Los Angeles Bankruptcy Attorney Group handle these types of filings:

Chapter 7

A Chapter 7 is a liquidation of debts. It can be used by individuals, couples, small businesses, LLCs and corporations. You do have to meet certain eligibility requirements, or a means test, before you can file. For example, if you are a single person with an income of $48,498 or below, you may file under this chapter. For a family of four, the median income is $76,211. The income ceiling typically rises each April. But even if your median income is above the current level, you may still qualify if your disposable income is below a certain level. Have one of our Los Angeles bankruptcy attorneys calculate this for you as you may qualify even if you think you do not.

Before filing for bankruptcy, all debtors must complete a short credit counseling class. You will have to take another debtor education course before your discharge will be granted. Once we file your bankruptcy petition, all collection activities must cease and creditors are prohibited from any further contact with you. Your petition will contain a list of all your debts, secured and unsecured, assets and their value, and your monthly expenses.

Most consumer debts are exempt from being seized by the bankruptcy but you must choose between either of two state exemption systems used in California. If you have a large amount of home equity, you would use the first system that exempts $75,000 for a single filer and $100,000 for a couple. Check with one of our Los Angeles bankruptcy attorneys regarding how the exemptions apply to your assets.
Unsecured debts are generally discharged in a Chapter 7 and you may reaffirm a secured debt. You can expect a discharge in most cases in about 4 months after filing.

Chapter 13

For small business owners, for individuals who do not qualify for a Chapter 13 and for homeowners who are facing foreclosure, a Chapter 13 or “wage earner” plan is an option. When filing under this chapter, you must submit a repayment plan that provides for payment of your debts over a 3 or 5 year period. Unsecured creditors are paid a percentage of the debt but you must have a stable and reliable source of income to qualify. A single monthly payment is required over the life of the plan. For homeowners dealing with mortgage arrearages and looming foreclosure, they must be able to meet their current monthly mortgage while paying the arrearages over the 3 or 5 years. If you have a second mortgage on your home, it is typically discharged at the completion of the plan.

You may also continue to pay past due taxes without penalties attaching though interest will continue to accrue.
This chapter also allows debtors with nonexempt assets to retain them, such as second homes, multiple motor vehicles or large boats. Again, consult with one of our Los Angeles bankruptcy lawyers regarding the feasibility of filing under this plan.

Chapter 11

A more complicated process is Chapter 11, which is a reorganization. Large businesses, corporations, partnerships and even individuals can file under this chapter. In some cases, creditors can force an involuntary petition. Similar to other chapters where you submit schedules of your debts, assets and financial affairs, you as the debtor-in-possession will usually submit a written disclosure and reorganization plan to be confirmed by the creditors and then later by the court. You can still operate your business as the debtor-in-possession and perform such functions as renegotiating leases and contracts on more favorable terms and paying back creditors at discounted rates.
Small businesses and individuals who file under Chapter 11 follow some different and more streamlined procedures. In any event, a Chapter 11 requires an attorney with business acumen who can fashion a reorganization plan and deal with any adversarial matters.

Economic distress can be draining but there are solutions where you can relieve yourself of overwhelming debt and retain most if not all of your hard earned assets. Contact the Los Angeles Bankruptcy Attorney Group to see what we can do to give you or your business a fresh start.

Call a Downey Bankruptcy Lawyer

Please call the Downey Bankruptcy Attorney Group today at (888) 754-9877. The Downey Bankruptcy Attorney Group proudly serving these cities in Downey and nearby areas: Bell Gardens, Downey, Huntington, Paramount, Pico Rivera, Santa Fe Springs, South Gate, Brea, Cerritos, Chino Hills, Covina, Diamond Bar, Fontana, Glendale, Hollywood, Long Beach, Los Angeles, Moreno Valley, Northridge, Ontario, Orange County, Pasadena, Pomona, Riverside, Rosemead, San Bernardino, San Fernando, Temecula, Torrance, Van Nuys, Victorville, Westminister, Woodland Hills