Declaring bankruptcy is usually attributable to financial hardship rather than irresponsible spending. There are many causes for a bankruptcy including an unexpected reduction in earned income, sudden job loss or the inability to find a new job, overdue credit card debt, sudden illness or medical expenses and divorce. Any person, married couple, partnership or corporation may file for bankruptcy, yet anyone considering bankruptcy should be advised that it will adversely affect your credit and will likely be noted on your credit report for upwards of 10 years.
Bankruptcy in California
California leads the Unites States in the number of bankruptcies declared almost every year, largely due to the unstable housing market and its impact on California real property values. From 2006 to 2010, the time of the collapse of the housing bubble, it is estimated that California homes diminished in value by 30%. In 2012, the average California resident owed around $300,000 dollars in mortgage debt. When individuals are financially unstable, they tend to be more careless with credit card debt, which can lead to trouble. The average Californian carries over $7,000 in credit card debt. With Californians trying to manage these massive debts, it is no wonder that so many Californians file for bankruptcy, with over 240,000 bankruptcy cases filed in 2011. This equates to 17% of all bankruptcy cases filed across the country.
Types of Bankruptcy
There are several types of bankruptcy filings, each with their own requirements and unique characteristics. Chapter 7 bankruptcy liquidates the debtor’s assets in order to pay back some of the outstanding debts. Certain assets can be earmarked as exempt from the bankruptcy estate, meaning the debtor will not unexpectedly lose those exempt assets during the bankruptcy proceeding. Chapter 13 bankruptcy permits the debtor to keep his or her assets by restructuring his or her debts so that they are either paid in a lump sum or over a course of time via an installment plan. Bankruptcy requires the debtor to follow very particular rules. A knowledgeable bankruptcy attorney will guide you through the process and make sure that all of the applicable rules for your bankruptcy case are followed precisely.
The Advantages of Declaring Bankruptcy
Sometimes declaring bankruptcy is the best course of action. If you are being sued for debt collection, filing for bankruptcy will put an immediate stop to the proceedings of the debt collection suit. If your wages are being garnished to pay your debts, filing for bankruptcy will also put a stop to the garnishments. Bankruptcy can also protect your home from foreclosure and your vehicle from repossession. Finally, debts discharged through bankruptcy proceedings do not carry with them tax implications.
Contacting a Bankruptcy Attorney Serving the Los Angeles Area
Bankruptcy requires prudent planning. For example, when a person files for bankruptcy, rather than a business entity, certain assets can be earmarked as exempt from being included in the bankruptcy estate. Planning the timing of a bankruptcy filing is also important. Contact the bankruptcy lawyers at the Law Offices of Kenechi R. Agu for immediate assistance with your bankruptcy filing.