Monetary problems have become extremely common these days, considering that the pandemic has resulted in job loss, huge amounts of medical debts, as well as credit card debts. In addition, this has resulted in business closures, foreclosure, and repossession of properties which can cause tremendous stress to people. Filing for bankruptcy may be your way out of this financial mess.
Many people often have multiple properties, usually purchased by taking a loan. Individuals live in one, the remaining properties are let out. They depend on their tenants to pay for the mortgage. However, unfortunate circumstances can lead to the individual defaulting on their loan and losing their property. In such circumstances, filing for bankruptcy can help solve the financial crisis.
How does bankruptcy help in this case?
Different bankruptcy chapters can be used to help people get rid of their dischargeable debts while protecting any equity in their property. Chapter 13 can help people stay in their homes and keep the equity while paying for arrearages over time. On the other hand, Chapter 7 can help stop any lawsuit by credit card companies and prevent wage garnishment. These bankruptcy chapters can also help business owners who have been forced to close their shops and lay off their employees. Bankruptcy lawyers can help you prevent wage garnishment if the credit card company has filed a lawsuit or obtained a judgment against you. They can also help you decide which bankruptcy chapter would best protect your property depending on your household income and monthly expenses.
Different bankruptcy chapters
You can choose between these four bankruptcy chapters depending on your personal financial situation:
- Chapter 7 bankruptcy helps you get rid of most of your unsecured debts to provide you with a fresh financial start. In this case, you can use bankruptcy exemptions to protect the equity in your property. Any non-exempt property you have is liquidated to repay your creditors. The chapter lasts from three to six months. After completing this chapter, your unsecured non-priority debts, such as medical bills, credit card bills, personal loans, etc., are discharged.
- Chapter 11 bankruptcy is ideal for corporations and partnerships. In this case, a plan is developed and approved by the bankruptcy trustee and the Judge allowing the debtor to continue running the business while reorganizing their finances. As a result, the business continues operating while keeping its employees. You can also catch up on your debts over time through this bankruptcy chapter.
- Chapter 12 bankruptcy is meant to help farmers who are facing financial problems but would like to continue farming. Here, the client may have many mortgages against their farmland which may be on the verge of foreclosure. Filing for bankruptcy can prevent foreclosure and help create a repayment plan as per the income from farming.
- Chapter 13 bankruptcy allows both individuals and small business owners to resolve their financial problems. The debts are restructured, and your disposable income is used to pay off your arrearages and debts through a three- to five-year repayment plan. In addition, the chapter allows you to catch up on previous due payments if you wish to keep your home and vehicle.
The current situation has left many people struggling with debts. Instead of putting your family and yourself at risk, you can opt to file for bankruptcy to get rid of your debts and prevent constant creditor harassment. Experienced bankruptcy lawyers can help you deal with the complexities of bankruptcy laws. You can call 888-297-6203 to know how bankruptcy lawyers in Los Angeles can help you.