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Bankruptcy? Where Do I Even Begin?

Tips and Tactics From The Leading Los Angeles-area Bankruptcy Attorney

People have many legitimate reasons to find themselves struggling with debt. When that occurs, it’s natural to start thinking of every type of solution to the problem. One solution is filing for bankruptcy, which is a process designed to help people reorganize their lives to cope with the debt and get back on their feet. But when the problems are overwhelming, it’s hard to know how to begin to solve the problem. It’s easy to simply say, “Bankruptcy! I don’t even know where to start!”

Well, here’s where to begin. The first decision you need to make involves consulting with an expert. We always encourage people to reach out — give us a call. A free initial consultation is the first step in a three-step process.  In the initial consultation, we explain the difference between Chapter 7 and Chapter 13 bankruptcy. We usually don’t discuss Chapter 11 bankruptcy unless that that’s the only thing a person qualifies for. Chapter 11 is a last choice because it’s expensive.

The next step is to determine four things: the amount of your debt, the nature of your debt, your income and your expenses.  If you have disposable income, then there’s a good chance you’ll qualify for Chapter 13. If you select this solution, be aware that you’ll be involved with the process for a while — Chapter 13 bankruptcy is designed to last three to five years. However, if you don’t have disposable income — that is, if your expenses exceed your income — you won’t qualify for Chapter 13 because you won’t be able to afford the plan payments.

This directs us toward a Chapter 7 bankruptcy, which is essentially a liquidation. The typical Chapter 7 will last on average about six months. The qualifications for Chapter 7 are determined by the “means test.” This is a determination that calculates if you have an income below a certain amount of money — which is the median income for your state. If you make below median income, then you qualify for Chapter 7 bankruptcy.

There’s more to each type of bankruptcy, of course, which again is why we counsel people to reach out to an expert. Give us a call and we can help educate you on the advantages of each type of bankruptcy. It’s time to organize your life and get you back in control.

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