Many individuals facing bankruptcy in Orange County feel that they have nowhere to turn for help. There may be many questions that need to be addressed in a small amount of time.
That is why it is so important for anyone in financial difficulty that may be considering bankruptcy to speak with a lawyer from the firm immediately. When creditors are calling constantly and everyday life has become too burdensome due to unpaid debts, one may start to feel that normal life is just a memory.
Fortunately, there are highly skilled and experienced attorneys that can help those individuals that have fallen of track to regain their life. Federal bankruptcy laws give many people back their lives. Living without constant financial trouble may seem like a faraway dream, but it is possible. Bankruptcy is still the answer for many individuals out there. The main question that comes up is: which type of bankruptcy is right for me?
Chapter 7 vs. Chapter 13
If you are struggling with insurmountable debt but are unsure which Chapter of bankruptcy is best for your situation, do not hesitate to contact an Irvine bankruptcy attorney to discuss your situation. When trying to decide which Chapter is right for your family, it is important to understand the differences between Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 bankruptcy is commonly referred to as liquidation bankruptcy. To file for this Chapter you must first pass the means test, and then a court-appointed bankruptcy trustee liquidates your nonexempt assets to repay your creditors. Once all funds have been distributed, you will be released from the balances of most unsecured debts. There are a number of ways in which Chapter 7 could benefit your situation, such as:
- You can obtain debt relief in a shorter period of time
- Most of your unsecured debts will be eliminated
- You will not have to make monthly payments
- Your bankruptcy process will be completed within 6 months to 1 year
Chapter 13 bankruptcy is also referred to the reorganization of debts, and allows you to repay your creditors over a longer period of time. In this Chapter you will work with a court-appointed bankruptcy trustee to create a repayment plan that will last from 3-5 years. During this time you will make one manageable payment per month that helps you steadily repay your creditors and overcome your debts. After the repayment plan has been completed, you will be discharged from most of your remaining unsecured debts. The benefits of Chapter 13 include:
- You will not have to risk any assets to liquidation
- You will only make one payment each months, rather than payments to each creditor
- You can halt foreclosure and any lawsuits against you
- You have more time to repay your debts
- There will be less impact upon your credit score
Determining Your Goals
There are numerous benefits offered by both Chapter 7 and Chapter 13, but before making a decision it is important to determine what goals you hope to achieve through a bankruptcy filing. By thinking through the following questions, you can better understand which Chapter of bankruptcy could be right for your circumstances.
Am I comfortable risking my assets and properties?
Chapter 7 uses the liquidation of nonexempt assets to repay creditors. If you are willing to risk your assets to finish the bankruptcy process sooner, Chapter 13 could be beneficial for your financial situation. If you do not want to risk losing any of your possessions, this Chapter may not be a good choice for you; consider Chapter 13, which allows you more time to repay your debts while protecting your personal assets.
Do my debts qualify for elimination?
Many people pursue bankruptcy as a way to be discharged from their debts, but it is imperative to first know if your debts are even eligible for elimination. There are a few common types of debts that cannot be discharged through either Chapter of consumer bankruptcy, such as student and educational loans, child support payments, alimony payments, most unpaid taxes, and any debts that were incurred since the original bankruptcy filing. If most of your debts do not qualify for elimination, Chapter 13 could be a fitting solution, as it provides you with more time to pay off these debts through monthly payments.
When do I hope to be free of debt?
Consider how soon you want to be finished with the bankruptcy process: In a few years? Before the year is over? If you would like to steadily repay your creditors and protect your assets and credit score, Chapter 13 may be the right solution for you. Rather, if you want to achieve debt relief as soon as possible and are comfortable risking your assets and possible negative effects on your credit, Chapter 7 could help you achieve this goal.
Do I still want to avoid bankruptcy?
Regardless of the amount of debts you have, if you are not comfortable with going through the bankruptcy process, it is best to wait to file. Our experienced firm can help you explore alternatives to bankruptcy and determine which are available for your situation and which could be most beneficial for your family's financial needs.
Contact a skilled bankruptcy lawyer in Irvine, CA!
At The Law Offices of Joseph M. Tosti our team is dedicated to providing the community with knowledgeable and caring legal counsel to help our clients regain control of their finances and achieve freedom from debt. We understand that every situation is unique, but our firm's experience and attentive representation can help your family find the best solution. Why wait another day?Contact our bankruptcy attorneys to discuss how you can finally achieve debt relief!