A Few Things To Explore Before Contacting A Los Angeles Bankruptcy Attorney
Although bankruptcy can seem like a magical way of dealing with your debt, the idea of actually filing can also be intimidating and confusing. Perhaps you were watching television and saw an advertisement for a Los Angeles bankruptcy attorney. You may have seen an ad online or in a newspaper or magazine, as well. Bankruptcy is beginning to look like a viable option for you. However, before you decide whether or not to file, you should educate yourself as much as possible about the process. Here are a few basic facts about bankruptcy.
Types of Bankruptcy
The two types of bankruptcy that are of concern to individuals are Chapter 7 and Chapter 13, although there are several other chapters, such as Chapter 11 (used by businesses) and Chapter 12 (available to family farmers and fisherman).
Chapter 13 bankruptcy does not wipe out debt, but puts the debtor on a court-approved payment plan, allowing them to rehabilitate their financial situation under terms that the court believes are within their means.
If you file Chapter 7, most of your unsecured debt, such as credit card debt, is in fact wiped out. There are some types of debt that cannot be liquidated through Chapter 7, however. These include:
Child Support
Spousal Support
Most Student Loans
Property Taxes
Income tax going back less than 3 years
Effect of Bankruptcy 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.
It costs $300 to file, and attorneys generally charge $1-2,000 in fees. Although you should do as much research as possible, and not enter into the decision lightly, it may be that bankruptcy is the best choice for you. If that is the case, it definitely may be worth the fee to have the guidance of an attorney. Explore all possibilities before making your decision.
Trying to find a Los Angeles Bankruptcy Attorney? You need to know about the various types of bankruptcy and how they’ll effect you. Make sure you talk to bankruptcy lawyers before it gets too late!