As a Riverside Bankruptcy Attorney, I often take for granted the basics of bankruptcy. However, let me address exactly what it means to file bankruptcy and why it makes sense for some clients. De Novo law firm has represented numerous Chapter 7 clients in Riverside, Moreno Valley, Menifee, Temecula, Corona, Norco, Eastvale, Ontario, San Bernardino, Victorville, and Los Angeles and Orange Counties. Chapter 7 bankruptcy is an option for individuals or businesses that are in enormous amounts of debt they cannot hope to repay with their income and assets. Chapter 7 bankruptcy is a process that dissolves most of the individual’s unsecured debts and liquidates some of the property to pay off creditors. Some property can be retained such as the car or the house if payments are current and there is no significant equity in them. Individuals are eligible for chapter 7 bankruptcy if they have not filed within the last eight years. During the process of filing for bankruptcy, an automatic stay is placed into effect so that creditors are forced to stop trying to collect from debtors. This also temporarily prevents creditors from garnishing wages, emptying the debtor’s bank account, repossessing property and cutting off utilities and welfare benefits.
A chapter 7 bankruptcy will stay on an individual’s credit report for 10 years from the date of filing the petition but most clients find their credit score increases after bankruptcy. Individuals will be able to start reestablishing their credit right after bankruptcy but they may have to pay slightly higher interest rates. During the process of bankruptcy, the bankruptcy court manages all the individual’s financial affairs through a trustee. The trustee’s goal is to repay the individual’s creditors as much as possible. The individual may only have to go to the courthouse once, usually for the creditors meeting. If the trustee finds nonexempt property, the debtor must relinquish it if it is a nonexempt asset. Nonexempt assets are property that has value such as a second car or home, cash, bank accounts, stocks, bonds, and other investments and valuable items. For a discussion about bankruptcy exemptions and what can be protected in bankruptcy, check out our bankruptcy exemption page. After bankruptcy, most unsecured debts are wiped out except for child support payments, most tax debts, and student loans. Debts that are nondischargeable because the creditor objected are also not wiped out. A creditor may file a nondischargeability claim in cases where there is evidence of fraud or malicious acts.
Bankruptcy is an effective tool to eliminate debt and get a fresh start. It is most effective for individuals with little property and high debts from credit cards, medical bills, and other unsecured debt. Furthermore, filing bankrupty will allow you to eliminate debt faster and start rebuilding your credit sooner than most debt settlement. For a full analysis of your options, call the bankruptcy attorneys at De Novo Law Firm at (951) 801-5570.