Many people don't have adequate information about bankruptcy. Some of these people find themselves in situations where they are in so much debt but have no idea how they even got there. Whether you saw it coming from a mile away or you suddenly found yourself in endless financial predicaments, you need a law firm which will properly guide you. San Diego Bankruptcy Attorney is a San Diego, California-based law firm with expertise in California bankruptcy law. We are ready to help you if you need any advice on bankrupt situations such as whether a bankruptcy filing is beneficial to you.

First, The Definition of Bankruptcy

As mentioned earlier, individuals can find themselves drowning in debt. If you are unable to clear the money you owe to your creditors, you can seek the legal status known as bankruptcy. Bankruptcy does not apply to people alone but to other entities as well. Thus, it is your right to consider bankruptcy if you cannot manage to meet your financial obligations.

Who Should File for Bankruptcy?

Some people assume reckless spending is the only thing that leads to debt. That is not always the case. If you are a thrifty spender, such logic would definitely puzzle you because bankruptcy is not aligned with your nature. Therefore, don't fall into the misconception that only extravagant people would find themselves considering bankruptcy. When we find ourselves in a growing debt situation it may seem frightening at first.  Still, many avoid thinking about proactive measures to tackle the debt or not take the situation seriously enough, which is a common occurance often with the subject of bankruptcy. 

What you don't know is that some of the causes for debt are not as obvious as they would seem. People forget to factor in things such as the rise in the cost of living. It is surprising, but inflation is not something that will readily pop into your mind when someone asks you why you are in debt. Your daily expenditure will be affected, not to mention any money that you would have saved away.

Some bills may come from medically related procedures. You may be the best at handling your finances, but things like illnesses and injuries might still sneak up on you. Unfortunately, insurance isn’t guaranteed to cover all medical-related costs. People end up having to cater to all the expenses in some cases. Such people would eventually need to file for bankruptcy if they found themselves overwhelmed with medical bills they couldn't afford to handle.

What about your taxes? Did you accumulate them over the years? The sad truth is that not everyone pays attention to their taxes. Taxes can't go unpaid, and the consequences that come with ignoring them are far too great. Other things that lead people to serious debt include bad investments and high interest, to mention a few. As you can see, countless people find themselves filing for bankruptcy because of different reasons.

Anyone can find themselves bankrupt. Do not beat yourself up about considering to take this legal step.

What Type of Bankruptcy Should You File For?

In the U.S, there are different kinds of bankruptcy such as Chapter 7 (liquidation), Chapter 9 (reorganization of debts for municipalities), Chapter 11 (reorganization in debt restructuring), Chapter 12 (reorganization of debts for regular income fishermen and farmers), and Chapter 13 (restructuring debt load). California bankruptcy law is founded on the above types; thus, as an individual, you can file for bankruptcy under Chapter 7 or Chapter 13 depending on your distinctive debt problems.

Various factors such as your income, burden of debt, and the assets you own are used to determine your bankruptcy category.

Benefits of Filing for Bankruptcy

Filing for bankruptcy comes with several gains as discussed below.

  1. Any Proceedings That You Have in Court Will Be Stopped

When you are in debt, you are constantly bombarded with calls from collectors, letters, and even threats of being sued. It becomes a headache having to deal with all these collection agencies. You are left feeling cornered and eventually start to dodge some of your creditors, since you don't have the money to pay them. All these activities will come to a halt when you declare bankruptcy. Your creditors will not be able to make any moves since an automatic stay will be triggered. 

The instant you file for bankruptcy an automatic stay commences. This is true in the United States Bankruptcy Code, section 362. Creditors can carry on after the stay has been lifted. They can also do so after the bankruptcy comes to an end. You will get a break from the relentless pressure which was piling on you on a daily basis. If you are facing eviction but don't have an eviction order, bankruptcy will also help provide you with more time to handle the situation.

If you are facing bank foreclosure, you do not have to worry. An automatic stay will also work in your favor. Catching up on mortgage payments will also be possible under Chapter 13. Not all forms of bankruptcy will be able to do so. Thus, ensure that you seek advice from your attorney on whether you are eligible for an Automatic Stay.

  1. Filing for Bankruptcy Stops Your Utilities From Being Disconnected

Things can get so bad to a point where you can't afford to pay for your utilities anymore. When finances are non-existent, paying for things such as electricity is bound to be a challenge. Once you file for bankruptcy, utility companies will not be able to block you from receiving their services. You will get access regardless of the bills which are past due.

  1. Your Business Will Still Be Operational

Filing for bankruptcy under the provisions of Chapter 13 makes it possible for you to keep your business. You will be able to retain any other assets that you will need for you to continue operating. Retention of the assets ensures that not all is lost. The business that you dedicated to your time and efforts will not go down the drain. With a payment plan and proper restructuring, you will be able to recover successfully from bankruptcy.

The court will assign a bankruptcy trustee. You will pay the trustee every month who, in turn, will pay your creditors on your behalf. Income is often a determinant of the amount of money you will have to pay back. However, priority debts are an exception to this. The clearance of such obligations is mandatory. Repayment plans under Chapter 13 last a period of 3 to 5 years.

  1. A Chance to Recover in Cases of a Drastic Income Change

Several factors can cause drastic changes in one’s income. For example, you may have lost your job leading to the inability to pay your debts. Chapter 7 bankruptcy is the best option for anyone facing low-income situations. If your income was also affected by things like divorce or medical costs, you might also benefit from this. Depending on the actual amount of income you have, you may also qualify for bankruptcy under Chapter 13.

  1. Your Assets May All Be Exempted

Exemption of specific assets applies to individuals who have filed for bankruptcy under Chapter 7. If you qualify, there is a high chance that you may not have to make any payments to unsecured creditors. For further clarification, unsecured creditors are those who lent you money without asking for any collateral. If this happens, you will say goodbye to such debt and come out of this without any losses. Medical and credit card bills fall under this category as well.

  1. You are Able to Prevent the Repossession of Your Car

Preventing repossession of your car will only happen if you file for bankruptcy before your vehicle's repossession. You can avoid the repossession of your car under both Chapter 7 and Chapter 13. Under Chapter 7, you will be able to get enough time to get back on track with your payments thanks to the temporary stay you will be granted. Chapter 13 allows you to include the said payments in your recovery plan.

  1. Vehicle Redemption Will Be Possible

Redemption works out for those who have filed for Chapter 7 bankruptcy. The loan balance of your vehicle will be reduced to the vehicle's current market value. When you declare bankruptcy, a 722 redemption makes this possible. The amount of money you will need to have will be substantially less. The challenge is that the payment is required in one go. The fact that a person is filing for bankruptcy shows that they are already experiencing financial difficulties.

With that being said, it would not be easy for you to come up with all the money immediately, regardless of the reduction.

  1. You Will be Able to Access Opportunities in the Future

Just because you are filing for bankruptcy does not mean that no opportunities will come your way. Taking on new ventures will be easy for you once you have been relieved of all debt. It is better to take matters into your own hands right now and pave the way for progress and to open new doors. Many have been successful in rebuilding their credit rate and have even gone ahead to buy homes and other properties.

Don't be discouraged to do what is right for you and your family for the sake of appearances. Things may be tough for a while, but bankruptcy is the best chance you have at going back to how things were before the debts. It is not as easy as pressing a reset button, but it will all be worth-while in the end.

  1. Bankruptcy Helps You Protect Anyone Who Co-Signed Any Debt for You

Some loans and debts require that one has to have a cosigner. You can see how this would be problematic if there is no money. If creditors are coming after you, what is to stop them from going after the other party who helped you take on the loan? Chapter 13 is the answer to such problems. Under this type of bankruptcy, a co-debtor stay will help stop them from pursuing the other people involved in such transactions.

This kind of protection only applies in cases of consumer debt. Auto loans, mortgages and credit card expenses are some of the examples of consumer debt. They are more of personal rather than business loans. Keep in mind that the co-debtor stay is possible to terminate under certain conditions. Ensure you seek proper advice on this matter when consulting with your bankruptcy attorney.

  1. You Will Gain Control Over The Sale of Your Property

Creditors will not have any claims to your real estate, except for sale proceeds which are not exempt. You will also not be forced to sell, but instead, given the freedom to wait until the property value is highest. Forced liquidations often lead to low prices which will only translate to losses for you. The preservation of your homestead rights is guaranteed when you file for bankruptcy. Liens will not become a hindrance for you.

There are still other benefits which arise from bankruptcy, which aren't in this article. Coming to terms with your current situation and taking action will result in more good than harm. This does not mean that bankruptcy does not have its downside. For you to make a fully informed decision, make sure you thoroughly go over all the facts with your bankruptcy attorney.

Can You Be Challenged When Filing For Bankruptcy?

It is possible for a creditor to challenge the filing. Some of the reasons for objections include:

  1. If the creditor suspects that you are not being truthful regarding your assets.

Not everyone who tries to file for bankruptcy has legitimate reasons. It is possible that some individuals may be trying to run away from the debts they owe. Your case may not be approved if you are found acting in bad faith. Such acts include:

  • Transferring your money and assets to another person then proceeding to declare bankruptcy
  • Hiding or attempting to conceal assets to evade the creditor.
  1. If you are selectively paying your creditors.

Creditors will not take kindly to you exercising bias over who you pay. You can’t make payments to one party yet you are not making any efforts to clear your track record with another. You will be challenged, especially if you do so before you file for bankruptcy.

  1. If you bought luxury items before filing.

Purchasing items which you do not need prior to declaring you are bankrupt is not a good sign. The recent transactions will be challenged and even declared non-dischargeable. The burden of proof will lie with you, to show that the extravagant expenditures were necessary.

  1. Where cash advances were taken out within 70 days before bankruptcy.

Such debts are considered to be non-dischargeable if they total to 950 dollars and above.

  1. If the debt was fraudulent.

These are debts which one takes dishonestly. You would find yourself in such a predicament if you lied or misrepresented information during your application. If a creditor has evidence of such actions, the debts will not be dischargeable.

Why You Need a Reputable Bankruptcy Firm to Enjoy the Benefits of Filing for Bankruptcy

Having a law firm which is experienced and revered for its expertise in bankruptcy will work in your favor. The firm should have an outstanding track record and qualified to help you turn things around. Some individuals prefer filing for bankruptcy on their own. However, there are more disadvantages and risks associated with the lack of extensive knowledge on the matter. Getting the steps to follow is not tasking, but that is not enough at the end of the day. A reputable firm will help you enjoy the full benefits of filing for bankruptcy by helping you avoid some problems you may make while filing on your own. Some of the things people do wrongly include:

  1. Not fully grasping which property is exempt and which one is not. Lack of awareness can lead to significant loss of real estate;
  2. Filing for the wrong bankruptcy. Each type of bankruptcy has its own criteria for eligibility. Wrongful filing may lead to an unsuccessful attempt for declaring bankruptcy. You need proper guidance to help identify the category in which you belong;
  3. Failing to list all debts. You face legal repercussions if you leave out any debts you owe from friends and family to lending institutions. Declaring all of them expresses good faith. It also shields you from accusations of bias.
  4. Improper documentation. Law firms handle bankruptcy cases so often that the chances of messing up the paperwork are practically non-existent. The same can’t be said for an individual taking on such a complex task for the first time. You risk so much by not having the right representation.

As an individual not well versed with such legal procedures, you are more likely to make errors during the filing process. Some may even be more damaging than the few scenarios we have observed. However, seeking legal representation will help you avoid such difficulties and get the benefits associated with filing for bankruptcy.

Find a San Diego Bankruptcy Attorney Near Me

Bankruptcy is a sensitive area in which the utmost caution is essential. The San Diego Bankruptcy Lawyer is here to offer you legal counsel in all bankruptcy-related matters and ensure that you enjoy the benefits associated with the bankruptcy filing. If you need consultation or representation in San Diego, CA, just call us on 619-488-6168 and we will help you regain control of your finances and assets once again.