Bankruptcy is a legal process in which people or entities that are struggling with debts or can not repay debts can seek relief from some or all of their debt. This allows them to get rid of certain obligations that are imposed on them and have a fresh new start. The two main types of bankruptcy that are filed are Chapter 7 and Chapter 13 bankruptcy. Both of them have their different benefits and both treat debt differently. Either of them is chosen by your attorney depending upon whatever they deem right for you on the basis of your income and property. Let’s see why should you hire a bankruptcy attorney.
What a Bankruptcy can do
While going through a bankruptcy procession, here are a few things that you can expect regardless of whether you file for Chapter or Chapter 13.
Stay order and stopping creditor harassment
A bankruptcy case can be used to stop the creditor from harassing your with overpayment. The court puts an automatic stay order on the creditor which stops them from imposing calls, wage garnishments, and lawsuits. Of course, it may not stop them from all activities like collecting support payments or criminal cases.
Temporarily stop an eviction, repossession or foreclosure
A stay order can temporarily out an eviction, repossession, or foreclosure on pending. Evictions may come to a halt after bankruptcy filing but this is only temporary and once the case is complete a bankruptcy may not necessarily help you from not being evicted in some cases. In case the landlord had already filed an eviction judgment against you then in such cases, there’s not much hope for a bankruptcy case.
As for foreclosures, the automatic stay may temporarily halt it but it can’t help you retain the property. If you are unable to meet the payment demand then you will certainly lose the property once the stay is lifted especially if you have filed for Chapter 7. However, filing for a Chapter 13 may allow you to catch up on your previous payments. This may help you keep your assets.
Clearing out unsecured credit debt
Bankruptcy cases can help out in clearing any unsecured credit card debt. This also includes any medical bills, or utility payments that are overdue as well as personal loans. Other than school loans it can generally clear out any non-priority unsecured debts.
Unsecured debt implies that you haven’t made an agreement to return the purchased property in case you are unable to pay for it. Secured debt means that you need to return the item that you purchased back, this includes things like electronics jewelry, furniture, appliances etc. You can generally tell the secured one by reading their credit contracts or receipts.
Clearing out secured credit debt
Clearing out a secured credit debt means you have to give up the property that you purchased. This happens when you are unable to pay for what you secured through a collateral. A bankruptcy can clear out the debt for you in such a case but you would be unable to keep the property, house, car, appliance or whatever item you have secured under debt. In these cases you have voluntarily agreed to either pay for what you owe or you must return it.
What a Bankruptcy Can’t Do
A bankruptcy may be able to clear all your debt problems but here are a few things that it can’t do
Bankruptcy can’t prevent a secured creditor from repossession
Bankruptcy may be able to eliminate or discharge all of your debts but any kind of foreclosure or stay is only temporary. Once the case ends the lender can practice a lien which allows them to auction off the property in order to apply for a loan balance. A lien may stay on the property until the debt is relieved. This means that a lender has a lien on any form of secured debt which may allow them to auction off whatever item they have lent you in order to have their debts repaid especially if you are unable to pay for it. Bankruptcy in general can help you get out from the obligation to pay that debt but you can no longer own it due to the lien. In fact the creditor may recover it from you safely to get a recompense for the collateral. As long as the mortgage is unpaid the creditor’s lien will allow them rights over their property whether you file for a bankruptcy or not.
A bankruptcy cannot dissolve child support obligations and alimony
Child support obligations and alimony are not something you can get rid of through a bankruptcy, you must continue to may these debts in full through a course of plan. In case you use Chapter 13, you’ll have to go through the proper process of paying these debts in full but you can never be exempted from them. So in case of Child support or alimony don’t expect a bankruptcy to work out for you in any case, you must pay them even with an ongoing bankruptcy.
Bankruptcy can not eliminate student loans other than in some circumstances
Bankruptcy can not be used to clear out student loans. In a very few circumstances with very tough standards it may happen. However, these tough standards that show “undue hardship” are very difficult to meet in the first place. They require you to prove that you are completely unable to pay off your loans presently and may not even be able to do so in the future.
Bankruptcy is unable to clear out most tax debts
While it may not be completely impossible if your case is strong enough, most tax debts cannot be cleared out through bankruptcy. At the very least it is certainly not easy to do so and may be even possible only if you have some old unpaid tax debts. Though generally this is not an easy case to win.
Bankruptcy Frauds may not be eliminated
In case your bankruptcy case involves a fraud related debt then the creditor has the right to go through an adversary proceeding. This lets them convince the judge to remove the bankruptcy especially in frauds like lying about your credit application or using the property as a collateral for some other loan. In such cases bankruptcy won’t do much for you.
- Other debts that bankruptcy cannot eliminate may include the following
- Debts that were not mentioned in your bankruptcy
- Debts that are caused by DUI (Driving under Influence) or DWI (Driving while intoxicated)
- Debts due to any imposed fines like traffic tickets or criminal restitution
In most cases, especially with a Chapter 13, you may be required to pay these debts under a full plan.
Why you should hire a Bankruptcy Attorney
When stuck in a case where you are unable to eliminate your debts on your own and are constantly getting harassed by your creditor over it, you may find yourself going for a bankruptcy case. Do remember that a Bankruptcy case isn’t something that you may be able to handle on your own. Here are a few reasons why you may need a Bankruptcy Attorney for your case to sail smoothly.
- A bankruptcy attorney can increase the chances of success in your case. Individuals that represent themselves in court may not have the proper understanding of how things work out in court. A proper lawyer with knowledge and experience at their backs are more likely to have a more successful outcome than an individual who may be entering the court based on mere bookish knowledge
- Bankruptcy lawyers know which bankruptcy option is better for you. They have a better understanding of the options that are available to you and may have better planning over dealing with such debts sometimes even without going through a bankruptcy.
- Bankruptcy lawyers know the bankruptcy laws better and know which chapters fit your needs more. They are able to access your financial situation and use their experience to choose which chapter will be a more favorable option for your case. They can also properly guide you throughout the case without you having to worry about it.
- Bankruptcy lawyers can help identify and eliminate all debts that are eligible for it. They have a clearer understanding of debt situations and limitations for their collections. They can help you discharge any debts that are beyond the limitations of payments.
- Their experience and knowledge saves you from a lot of time that may be spent on research and review. Moreover you don’t have to handle the paperwork of complicated procedures and yet you can still stay very much informed about your case.
- Lawyers have close connections and relationships in courts and in most cases they make the process and communication much easier for you. You can have your own peace of mind without having to worry about the harassment from your creditors as they are responsible for handling them legally.
Risks of not hiring a Bankruptcy attorney
- A simple mistake for your lack on knowledge can overthrow your case and your may lose the protection of court
- You may not be familiar with laws that can protect your or your assets or the ones that can be used against you
- You can easily get into criminal charges like fraud or perjury without proper assistance.
- You can end up with more debt than your were originally required to pay
- You may end up losing the case to the prosecutor’s experience and knowledge
While bankruptcy may be able to get you out of your debts situation, it may not help you with possessing the property or securing properties with a lien on them. A bankruptcy case needs to be dealt with a lot of caution as you may easily get sued back for fraud or perjury. Therefore it is better to let a professional bankruptcy attorney deal with your case to increase your chances of success. Reach out to Los Angeles Bankruptcy Lawyer today for filing your bankruptcy case and eliminating any debt situations.