Bankruptcy Overview

Orange County Bankruptcy Lawyer

Understanding bankruptcy is important when facing overwhelming debt. The federal government has enacted laws that enable citizens and businesses to get a fresh start if they have gotten into serious financial trouble. When an individual is facing a situation in which they cannot pay their debts due to divorce, loss of employment, radically increased mortgage payments, medical bills or other circumstances, there are two options of bankruptcy that may be available. Businesses dealing with too much debt also are provided with options for recovery. At the Law Offices of Joseph M. Tosti, an Orange County bankruptcy attorney can assist you with filings and solutions of the following types:

Chapter 7
Chapter 7 bankruptcy uses the liquidation of nonexempt assets to help a debtor repay their creditors. After the process is completed, the debtor is released from the remaining balance of many of their debts. This form of bankruptcy has many benefits, but it is important to note that not all debts qualify for discharge and you cannot file unless you are able to pass the means test.

Chapter 11
This Chapter of bankruptcy is used by businesses that have been overwhelmed by debt, often because of the downturn of the economy. Chapter 11 protection enables the business owner to reorganize their business without the burden of debt, so that they are able to start fresh and make their company profitable again.

Chapter 13
Chapter 13 bankruptcy is often referred to as the debt reorganization plan. Instead of making multiple payments per month to a number of different creditors, the debtor is able to make a single, more affordable monthly payment to help repay their debts over a three to five year period. This option is a great choice for those filers who do not qualify for Chapter 11, want to protect their assets from liquidation, or do not want to impact their credit scores as heavily.

Bankruptcy FAQ
Bankruptcy is a confusing subject, and the legal complexities can be difficult to understand without a background in law. To shed some light on the topic, we have answered some of the questions most commonly asked by individuals and families considering bankruptcy to alleviate their debts.

Bankruptcy Myths
Sadly, far too many people who would benefit tremendously from the relief offered by bankruptcy avoid filing because of the negative connotation that surrounds the legal process. Before making up your mind, it is important to have the facts; this page can help you separate the myths from the truth!

Bankruptcy Process
The bankruptcy process is determined by each filer's unique circumstances and the Chapter through which they seek relief. For instance, if you would like to file for Chapter 7, you will first have to take the means test to see if you can pass. If you file for Chapter 13, you will work with a court-appointed trustee to create a repayment plan. An attorney from our firm can help you understand how your process may play out based on your situation.

Credit Counseling
Recent laws now make it a requirement for a person to undergo credit counsel before they can file for bankruptcy relief. This means that the government wants to know that you first sought other debt solutions before seeking assistance from the bankruptcy courts. There are a number of approved credit counseling firms you can consult with if you are overcome with debt.

Life After Bankruptcy
After you've made it through the bankruptcy process, you will likely feel like a burden has been lifted off your shoulders. In the midst of the peace, it is also important that you take the proper steps and make the changes necessary to ensure your financial future stays under your control and free from debt.

Bankruptcy & Spouses
If you are married, you are likely wondering how bankruptcy would affect you and your spouse. Although you are not required to file jointly, it may be an appropriate choice if you and your spouse share much of the debt acquired during your marriage. A lawyer can assess your situation and help you determine whether you should file alone or as a couple.

Bankruptcy Exemptions
Many people are afraid that they will lose all their possessions if they file for bankruptcy, which probably stems from the process of asset liquidation used in Chapter 7. Fortunately the law provides for a number of exemptions, which means there are many treasured and necessary assets that cannot be used to repay your creditors.

Which Chapter is Right for Me?
Perhaps the most significant question people want answered when considering bankruptcy is how they can know which Chapter will most benefit their families' situations. There are many advantages to both Chapters, as well as legal implications that must be considered before making the decision.

Understanding the Three Main Chapters

Chapter 7

Chapter 7 Bankruptcy may be an option if there is no possibility of paying your debt. There are restrictions as to who may file this type of bankruptcy, as it includes the "discharge" of debts. This means that a large portion of any debt owed will be completely discharged - you will no longer owe the creditors. There are certain types of debt that cannot be discharged in a Chapter 7 bankruptcy such as child support, recent taxes and student loans. Your income must be below a certain level to qualify for Chapter 7 bankruptcy, and you will need to provide a "means test" to determine whether you qualify. It is crucial that you get legal assistance when filing your means test, as those that file it incorrectly may lose the opportunity to discharge their debts through a Chapter 7 bankruptcy filing.

Chapter 13

When an individual is employed and making a paycheck, including being self-employed, and wishes to protect their assets, a Chapter 13 bankruptcy filing may be the best option. This legal action stops all foreclosure proceedings and a debt restructuring is done which usually gives the individual the opportunity to pay off back debt over a 3 - 5 year period. This is often the best legal action for those who wish to keep their homes and have a steady income. It also provides more protection for a co-signer on your home mortgage.

Chapter 11

Chapter 11 is a business reorganization that provides troubled businesses with the opportunity to restructure their debt and get on with focusing on making a profit instead of dealing with creditors. The business keeps their assets and is able to continue to operate. Some outstanding debts may be relieved if unfeasible, and others will be paid over time. A debt restructuring makes operating your business possible. You lose some ability to make business decisions. For example, if you were to decide to liquidate business assets, you likely would need a court approval before moving forward. This type of bankruptcy filing can be of great service to those who had bad business decisions in the past that led to unmanageable debt. It gives opportunity to move forward and become profitable again.

There may be other types of debt relief solutions for those who are suffering from crushing debt. A free consultation from the team can answer your questions and help you make a confident decision to address your debt. Contact the firm for additional information today!