No matter how much we all want to remain financially stable, sometimes it just doesn’t work out the way we hoped. Whether it’s a series of poor decisions, some costly mistakes or through no fault of your own, the loss of a steady income, the choice to pay bills or feed your family causes your debts to rise beyond your control. This type of circumstance can lead to heavy amounts of stress and frustration to the point that you think there’s no way out. But no matter how bad it may seem, the law allows for forgiveness in the form of bankruptcy, wherein an individual, business, organization or municipality who can no longer afford to pay the debts they’ve collected can either pay down a consolidated debt, or have the debt completely expunged.

Though we at King Law Firm Attorneys at Law, Inc. do not actively practice bankruptcy law, we understand the emotional toll it can take on your life and want to help in the form of information and resources that can help you through this very difficult time.

Bankruptcy Myths

There are several myths people believe about bankruptcy that aren’t necessarily true.

  • In most cases, you will not lose everything you own.
  • Bankruptcies only appear on your credit report for 7 to 10 years, so your credit will not be ruined for the rest of your life. As long as you stay responsible, you may start rebuilding credit mere months after bankruptcy.
  • Bankruptcy does not put an end to child support.
  • Bankruptcy is not the best way to put an end to creditor harassment, even though a court order will keep them from calling you. There may be better options to dealing with creditor harassment. Speak to an attorney if you feel you are being harassed.

Benefits of Bankruptcy

Bankruptcy should never be rushed into, but after a thorough examination of your situation, should you decide bankruptcy is the best option, don’t consider it simply a negative affair. Though there are many negatives to bankruptcy, such as the loss of credit maturity, there are plenty of benefits to filing for bankruptcy as well, including:

  • Discharge or elimination of your debt.
  • An end to wage garnishments and collection attempts.
  • The prevention of foreclosure on your home.
  • The ability to get a fresh start, or a second chance to rebuild your life.

Chapter 7 Bankruptcy

Also known as “liquidation bankruptcy,” filing for chapter 7 allows for a person to eliminate the debts they owe to creditors so they can have a fresh start. There are specific eligibility requirements that must be met before moving forward (see the means test below), and a person filing for chapter 7 bankruptcy must endure the liquidation process, which is when assets and property, including homes, cars, land and precious valuables, are auctioned or sold to pay off the debt. Learn More

Chapter 13 Bankruptcy

Also known as a “wage earner’s plan,” chapter 13 bankruptcies are for those who have the income to repay their debts. Under a chapter 13 bankruptcy, finances are reorganized and debts are given a repayment plan that last between 3 to 5 years. Unlike a chapter 7 bankruptcy, when those filing for a chapter 13 are successful in their petition, they can keep all of their assets and property because they are able to avoid going through the liquidation process. Learn More

Differences Between Chapter 7 and Chapter 13 Bankruptcy

Learn more about the differences between chapter 7 and chapter 13 bankruptcies and which one will work best for your current situation.

The Means Test

To file for bankruptcy in California, you must first pass the means test. The means test is an investigative process wherein the person’s income and debts are reviewed and assessed in order to determine whether or not someone can file, and which type of bankruptcy (chapter 7 or chapter 13) they are eligible for. Learn More

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