If you are thinking of filing for bankruptcy, you probably have lots of questions. Before making this decision, you should educate yourself as much as possible about the process. You will not have a hard time finding a Los Angeles bankruptcy attorney. However, before you decide to contact one, you should do a bit of research on your own about bankruptcy. It can seem like a magical solution, but there are many factors to consider. Here are a few things to think about when deciding whether or not to file.
Types of Bankruptcy
Several different chapters of bankruptcy exist. Chapter 12 is available to family farmers and fisherman. Chapter 11 usually pertains to businesses. The two types generally filed by individuals are Chapter 13 and Chapter 7.
When you file Chapter 13, you do not eliminate your debt. Instead, you enter into a court-approved rehabilitation plan, in which you make regular payments determined to be feasible when your income and expenses are examined.
In Chapter 7 bankruptcy, most unsecured debt (such as credit card debt) is liquidated. Many types of unsecured debt, however, cannot be discharged through Chapter 7. Some of these types of debt are:
Child Support
Spousal Support
Most Student Loans
Property Taxes
Income taxes less than 3 years old
Effect On Credit Score
Bankruptcy does indeed stay on your credit report for up to ten years, which is definitely something to consider when deciding to file. However, in most cases, once bankruptcy becomes a realistic option, the individual’s credit score is already ruined. If paying off your debts one by one is a possibility, or if several of your debts may fall off of your credit report in the near future, perhaps bankruptcy would indeed have an unnecessary negative effect on your credit score. However, by the time most people begin seriously considering bankruptcy, the effect on the credit score is of minimal importance.
Bankruptcy Abuse Prevention and Consumer Protection Act
Put into effect in October 2005, this piece of legislation changed the terms surrounding bankruptcy. It implemented a means test, which determines whether a potential filer’s income is low enough, compared with their debt and based on the calculation of a state-specific median income, to qualify for bankruptcy. It also mandates that anyone filing for bankruptcy must undergo a one-hour counseling session with a non-profit credit counseling agency, in which they discuss all options for dealing with the debt. They must provide written proof of this counseling session when filing.
Other Methods of Filing
There are a few other ways to file bankruptcy besides contacting an attorney. Federal Bankruptcy forms are available for download, and you can fill them out yourself. Be advised, however, that this is not the best idea unless you have a strong knowledge of the ins and outs of bankruptcy laws. Some companies provide bankruptcy software, which works similarly to tax-preparation programs, guiding you through the process of filing. Another option is full online service, in which a paralegal prepares your forms. However, the online preparer is not a lawyer and can give no legal advice.
It costs $300 to file, and attorneys generally charge $1-2,000 in fees. Although you should do as much research as possible, and not enter into the decision lightly, it may be that bankruptcy is the best choice for you. If that is the case, it definitely may be worth the fee to have the guidance of an attorney. Explore all possibilities before making your decision.
Trying to find a Los Angeles Bankruptcy Attorney? There’s valuable information regarding the conditions of bankruptcy and how they’ll effect you. Make sure you talk to bankruptcy lawyers before it gets too late!