Bankruptcy in Sacramento, CA
Are you contemplating bankruptcy or hiring a bankruptcy attorney in Sacramento, California? Are you tired of creditors calling for payments you can’t make? Maybe looking for a way to get out of debt and have you exhausted all other options? Then bankruptcy might be the solution you seek. It is a legal option that can erase a portion or all of your debts.
Types of Bankruptcy in Sacramento, California
Bankruptcy is a legal process that helps individuals and businesses get a fresh financial start. It eliminates a portion of or all of their debts or financial liabilities. In Sacramento, CA to be approved, individuals must prove they have a hardship that prevents them from staying current on their financial obligations. Keep in mind that not all debts qualify. Some liabilities, such as child support arrears, delinquent taxes, alimony, and student loans generally do not qualify for discharge. Consumers who find themselves falling behind in debt can file either Chapter 7, 11 or 13. To determine which option is right for you, you’ll need to assess your goals, assets, and income. You should also consider working with an experienced bankruptcy attorney.
For residents of Sacramento, their case may take them into hearings with the U.S. Bankruptcy Court of the Eastern District of California.
Chapter 7 Bankruptcy
Many people find Chapter 7 to be the right solution for their circumstances because it provides them with the opportunity to start over financially. However, before filing for Chapter 7 bankruptcy, you should thoroughly assess your income and ability to repay what you owe. You should also speak with a bankruptcy attorney in Sacramento who can help you to decide if a liquidation plan is right for you.
Typically, individuals approved for Chapter 7 lack stable income or have experienced a change in circumstances that has resulted in an inability to manage their debts. Though Chapter 7 erases debts, the tradeoff is you may have to give up certain possessions, such as your home, car or some other assets. However, once you file your petition, an automatic stay goes into effect that requires all collection activity against you like foreclosures and garnishments, to stop temporarily. However, the automatic stay does not prevent all collection attempts. For example, if you owe child support or restitution for a criminal case, you are still liable for those payments.
In line with other states, the Judicial Branch of California reports that Chapter 7 is the most common type of bankruptcy. Before you can file, federal law requires that you complete means-testing and credit counseling.
In Sacramento, a nonprofit like Clearpoint Credit Counseling offers solutions to avoid bankruptcy. These services are usually free or low-cost, and you must complete the process to receive the certificate necessary for filing.
Means-testing is the responsibility of the U.S. Department of Justice. After filing the official forms, the agency uses Census Bureau and IRS data to investigate your income. If you make more than the median income, you may not qualify for bankruptcy. Based on the latest data from the U.S. Department of Commerce, the numbers to consider are $31,574 for individuals and $62,335 for households.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is more complex than other types of bankruptcy. It is often used by businesses and certain types of people. It allows petitioners to restructure their debts with a reorganization plan, so they are easier to manage over a determined length of time, usually four to 18 months. The main benefit of Chapter 11 bankruptcy is that it does not require petitioners to sell off or liquidate their assets to pay what they owe. It does allow debtors to negotiate with their creditors a reorganization plan that enables them to stay current on their debts moving forward.
The Administrative Office of the U.S. Courts states that Chapter 11 usually involves a partnership or corporation. That does not mean that individuals from Sacramento cannot benefit from this reorganization also. In fact, it’s common for an individual or business to petition under these laws when they do not qualify for Chapter 13.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is a debt restructuring or wage earners plan. In Sacramento, CA after you file, the courts will assign a trustee to examine your liabilities and assets and ability to pay bills. Unlike other types of bankruptcy, Chapter 13 involves you restructuring your debt with a three to five-year repayment plan. The flexibility of this repayment plan will depend on what property you want to keep and how steady your income is. It may also give you the opportunity to have some or most of your debts discharged.
The U.S. Courts describe Chapter 13 as an adjustment bankruptcy for individuals or businesses from Sacramento. Some of the forms you will need to get turned in by a strict deadline include:
- Chapter 13 Plan
- Notice of Chapter 13 Bankruptcy Case
- Statement of Current Monthly Income
- Calculation of Your Disposable Income
- Debtor’s Certification Regarding Domestic Support Obligations
The Bankruptcy Process in Sacramento, California
There is never an ideal time to declare bankruptcy. However, if you are unable to pay off what you owe within five years, filing for bankruptcy can help you to lessen the negative impact on your situation and help you get back on track.
In Sacramento to begin the filing process, gather all of your financial records, including monthly expenses, debts, assets and annual income. This information is crucial to give the courts an accurate picture of your circumstances. Failure to provide all necessary information can result in your petition being denied.
With that understood, it’s also crucial to know that you need to choose between state and federal exemptions. If you own your home in Sacramento, for example, current legislation can allow you to keep up to $600,000 in equity. Federal law only allows up to $25,150 at the time of writing. While the choice may seem obvious, your circumstances can change what leaves you with the most value in assets.
At least six months before you file for bankruptcy, eliminate unnecessary spending. Do not run up the balances on your credit accounts. You’ll also need to complete an approved credit counseling course, usually online or over the phone. Credit counseling is necessary to help you learn financial literacy and help you learn better financial habits. Once you complete the course, you’ll receive a certificate of completion to include in your filing. If you don’t have the certificate of completion from the credit counseling course that you took, the courts will reject your bankruptcy petition.
Work With an Experienced Sacramento, California Lawyer
Hiring a local bankruptcy lawyer in Sacramento during this process can help reduce the costly risks of self-representation in court. An experienced bankruptcy lawyer understands state and federal bankruptcy laws. He or she can help you understand which laws apply to your case, especially which debts that can be discharged or can’t be discharged. An experienced California attorney can also offer you guidance to improve the outcome of your case.
Keep in mind that there are debt management alternatives and financial resources that may benefit you more than bankruptcy, such as debt consolidation. Though bankruptcy is an attractive solution, it is best as a last resort. Do you need immediate help? Then one of our experienced lawyers in Sacramento can guide you through the entire bankruptcy process. We can even help you connect with an attorney across California state lines.
Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!