When Filing for Bankruptcy Protection Is The Best Option – RJB Law Offices

Are you considering bankruptcy as an option to get out of debt once and for all? Do you worry about not having enough income to cover all your living expenses? Financial problems can cause a lot of stress and anxiety about the future.
A lot of people who do not understand the legal process mistakenly believe that bankruptcy means that they are ruined forever and that they will never get credit again. This is a lie often told by bill collectors because they know that once you file, they can no longer collect money from you.
Of course, this doesn’t mean that you should take the decision to file lightly. Filing for bankruptcy is still a serious decision and is one that must be made with the expert assistance of a knowledgeable and experienced attorney. When done correctly, however, it could be the best decision you can ever make to turn a hopeless situation around.
There are 2 types of bankruptcy for individuals. Chapter 7 you discharge all unsecured debts that you can no longer afford to pay except for certain types of debts such as student loans, most taxes and child support.
While it is true that the bankruptcy trustee can take and sell “non-exempt” assets to produce cash and pay creditors, in most cases, all of the debtor’s assets are protected by the bankruptcy exemption laws so there is really nothing for the trustee to take. For example, in almost 100% of the cases that my office handles, the client keeps everything and loses nothing.
Chapter 13, on the other hand, allows you to restructure and consolidate all debts into one monthly payment and pay back creditors, partially or fully, over a 3–5-year period. For homeowners in foreclosure, filing a Chapter 13 can also be an effective strategy in saving their home.
All types of debts can be included in Chapter 13 such as credit cards, personal loans, medical bills, student loans, taxes, back property taxes, IRS taxes, etc. The interest rate is zero on all unsecured debts and your monthly payments are only based on what you can afford. Thus, in most cases, you only pay a very small percentage of your debts. Creditors have no choice but to accept your repayment plan once the court approves it.
Upon filing either Chapter 7 or Chapter 13, creditors are automatically prohibited from pursuing or continuing any legal action against you or your property. Thus, collection calls, lawsuits, wage garnishments, repossessions and foreclosure are stopped immediately.
(Ray J. Bulaon is a debt and tax resolution attorney in Valencia who has helped more than 6,000 clients. For a free confidential consultation, call his Valencia office at 866-477-7772)