The idea of filing for bankruptcy can be scary and confusing. It is not a decision to enter into without the proper information. You may have seen an advertisement for a Los Angeles bankruptcy attorney on television or on a website, and the idea of paying a few lawyer fees and having your debt wiped out may seem like magic. But before you decide to file for bankruptcy, you should educate your self about the process, and gain an understanding of what bankruptcy actually means. Here are some things to consider when deciding whether bankruptcy is the right decision for you.
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.
In Chapter 13 bankruptcy, the debt is not eliminated. Instead, the court comes up with a plan for repayment which they determine to be within the filer’s means. Credit is then rehabilitated by payments made through this court-approved plan.
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 Going Back More than 3 Years
Effect On Credit Score
Many people balk at the idea that when you file for bankruptcy, it remains on your credit report for ten years. Although this is definitely a point to consider, it may not be as as big of a deal as you think. If you are thinking about filing for bankruptcy, chances are that your credit score was ruined a long time ago. Of course, if you are able to pay off your debts on an individual basis, or if they are scheduled to disappear from your credit report shortly, then it would be better not to file. But for most people, once bankruptcy has become a real possibility, its effect on their credit score will not make a huge difference.
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.
Bankruptcy attorneys generally charge between $1,000 and $2,000 for their services, and there is a filing fee of about $300. If you truly have no other option, bankruptcy can be a way for you to make a new start, and may be worth the fees to have an attorney who will advise and guide you through the process. Whatever you decide, make sure you have considered all possible options.
What exactly is 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!
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