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Bankruptcy Overview

Understanding Bankruptcy: A Way to Get Out of Debt
Bankruptcy is a legal process designed to help people with too much debt. It allows them to start over while ensuring everyone is treated fairly. It is a set of laws that allows struggling businesses and those in debt to make finalized legal settlements with their creditors. The Law Office of Christopher Hewitt has offered professional help and answered questions regarding bankruptcy for nearly two decades in Riverside and Orange Counties.
The main goal of bankruptcy is to help people honestly in debt, but it also stops people from misusing it. When someone goes through bankruptcy, they give up some of their things and control over their money, but in exchange, they get protection from the people they owe money to. This way, they can work on getting back on their feet. It is a set of rules that help businesses that are struggling, give people a break from their debts, and make sure that everyone gets a fair share of the money and cars, houses, and other personal belongings that are left. Both debtors and creditors find essential benefits in this process.

Navigating the World of Personal and Business Bankruptcy
Bankruptcy is a powerful tool for those struggling with unmanageable debts, and it comes in two primary forms: personal bankruptcy and business bankruptcy. These distinct options have significant differences that can greatly impact your financial future. Personal bankruptcy includes Chapter 7 and Chapter 13, each with specific outcomes. Chapter 7, known as liquidation bankruptcy, discharges eligible debts and might be right for you if you have limited income. In contrast, Chapter 13 allows you to reorganize your debts over three to five years while keeping your assets. Business bankruptcy has its own chapter, Chapter 11, primarily used for commercial organizations, allowing for asset reorganization and debt repayment. Whether you're facing personal or business bankruptcy, it's vital to understand the nuances of each option and consult a bankruptcy professional to make the right choice for your unique situation. 

California Bankruptcy Exemptions: A Clear Explanation
Understanding California bankruptcy exemptions is essential for anyone considering Chapter 7 bankruptcy in the state. These exemptions determine what property, such as your car or household belongings, you can keep after filing for bankruptcy. Most Chapter 7 cases in California are termed "no-asset" cases, which means you typically don't have to surrender any assets to a bankruptcy trustee. These exemptions exist to help individuals become debt-free without losing everything they own.

It's important to note that California doesn't permit the use of federal bankruptcy exemptions. Residents filing for bankruptcy in California must adhere to the state's exemption laws. California offers two sets of exemptions: Set 1 (704 exemptions) and Set 2 (703 exemptions), giving filers flexibility in protecting assets like clothing, furniture, tools, pensions, cars, and homes. You can choose one set but not both.

California's exemption system is designed to ensure you don't lose your essential property while seeking debt relief. In essence, these exemptions provide a safety net, allowing you to preserve important possessions during your bankruptcy process and begin anew with a more stable financial footing.

What debt can be erased or Discharged?

Filing for bankruptcy in California can erase various unsecured debts, including:

  • Credit Card Balances
  • Overdue Utility Bills
  • Medical Bills
  • Personal Loans

Secured debts include things that can be taken back such as cars, houses, boats and even that new shed you bought for the yard. The only way to eliminate these secured debts is to be current on them or give them back.

Non-Dischargeable Debts means ones you can’t get rid of easily or at all and they include:

  • Debts arising from fraud are generally not dischargeable in bankruptcy. Creditors must prove fraud to prevent discharge.
  • Certain tax debts may be dischargeable, but they must meet specific criteria, including the timing of tax returns and assessments.
  • Student loans, in most cases, are not easily discharged, and you need to prove "undue hardship" to eliminate them. As of 2023 there is a path to discharging student loans.
  • Debts related to injury or death caused by drunk driving are typically not dischargeable.
  • Spousal or child support obligations are usually not dischargeable in bankruptcy.

The bankruptcy discharge stops creditors from collecting, and the automatic stay protects debtors during bankruptcy. The automatic stay ends when the discharge is granted. If someone is coming to take your house or car soon, in order to stop them you will need an automatic stay.

Why do I need an Automatic Stay?

What it does: When you file for bankruptcy, an automatic stay order from the court stops most lawsuits against you and actions by creditors, agencies, or the government to collect money from your assets.

Effects: It can help you prevent foreclosure, wage garnishment, lawsuits, and annoying calls from creditors and collectors.

Secure debts: The automatic stay lasts as long as you make your payments. If you miss payments, your creditor can ask the court to end the stay.

Motion to end the stay: If a creditor wants to take your property or restart collections, they file a motion with the court to get permission.

A Simple Guide to Personal Bankruptcy Options: Chapter 7 vs. Chapter 13

When you're drowning in debt and there seems to be no way out, bankruptcy becomes a lifeline. Bankruptcy should be your last resort, after exploring options like credit counseling, debt management, or debt settlement. But if bankruptcy is your only hope for breaking free from overwhelming debt, you face a crucial choice: Chapter 7 or Chapter 13.

Chapter 7 Bankruptcy: A Fresh Start

Chapter 7, also known as liquidation bankruptcy, offers a fresh start for those with little to no disposable income. To qualify for Chapter 7, you must pass a means test to prove you can't afford to pay back your debt. The process is relatively quick, typically taking around 90 to 100 days. Once approved, your eligible debts, like credit card balances, medical bills, and unsecured personal loans, are discharged. This means you're no longer legally required to repay them. However, there are exceptions to the debts that can be discharged, so seeking advice from a bankruptcy lawyer is wise. While Chapter 7 provides debt relief, it comes at a cost: you may lose some assets, and it can significantly impact your credit, staying on your credit reports for up to 10 years.

Chapter 13 Bankruptcy: A Repayment Plan

Chapter 13, known as the wage earner's plan, is designed for individuals with regular monthly income. It allows you to keep your assets while creating a three to five-year reorganization plan to pay off your debts. If you're facing foreclosure or have significant secured debts like a home or car, Chapter 13 can help you catch up on payments while also discharging unsecured debts. However, the process takes longer compared to Chapter 7.

The choice between Chapter 7 and Chapter 13 hinges on your financial situation, income, and specific debts. Both paths offer a chance to break free from the burden of debt, but they have different timelines, eligibility requirements, and consequences. Ultimately, bankruptcy can provide relief from debt collectors and reduce your monthly debt-repayment load, but it's a decision that should be made after careful consideration of your unique circumstances.

Summary

Bankruptcy can be a lifeline when financial troubles have you feeling trapped. It's not just for big companies or business owners; regular people, like you and me, can use it too. Imagine you've been dealing with debts that seem impossible to pay off, like credit card bills or medical expenses. Bankruptcy is there to help you get back on your feet. It's like a safety net for people who are struggling.

You'll also need to work with a bankruptcy lawyer to guide you through the process. They'll help you prepare all the necessary paperwork and explain the rules to you. Once everything is in order, you'll go to court, where a judge will review your case. Please note that currently in California most bankruptcy cases are done over the phone or with Zoom so you usually won’t even need to go to court.

Bankruptcy is a way to protect you from the stress of creditors hounding you day and night. It's not an easy decision, and it can affect your credit score, but it's designed to help you rebuild your financial life. Remember, bankruptcy is just one option out there. You can also explore alternatives like debt counseling or negotiation with your creditors. The important thing is that you're not alone, and there are ways to get your financial life back on track.

Client Reviews
★★★★★
I highly recommend Christopher Hewitt. Chris was doing pretty good job on my case with full support from processing, scheduling and other questions. We are in desperate situation facing foreclosure and credit card debt at that time, he saved us. He has my highest recommendation with regard to his expertise. Rizal H K
★★★★★
We found the law office of Christopher Hewitt to be a pleasant relationship in our legal situation. The law office was always responsive and always treated my questions as important and answered very quickly. The law office always advised me and I got great advise on our situation. I would highly recommend this law office for your legal dilemma. John H
★★★★★
Ibegan a business relationship with the Law Office of Christopher Hewitt and dealt with Mr. Hewitt directly. I utilized his service in debt management and because of him i am debt free within 6 months!!! I cannot thank him enough for all the hard work he did and how effective he was with all my creditors. I definitely could not have been this successful with eradicating my debt if i had not employed Mr. Hewitt's services. I strongly recommend him and his Law Office to anyone looking for legal help. Thank you so much!!! Debra B.
★★★★★
The Law Office of Chris Hewitt was great at handling my debt settlement. I was able to speak directly with the attorney multiple times and he always knew what was going on with my accounts and gave me clear advise. I did not feel like he made any false promises and was very realistic about what the outcomes would be. At the end of the year I was able to pay off all my credit cards at less than 40% of what I owed at the time I hired him. I would highly recommend Chris Hewitt for any one who has debt issues and does not want to file for bankruptcy. Karen H.
★★★★★
Basically, if I could describe my experience with Chris Hewitt in three words they would be, professional, straight-forward, and helpful. Going into filing chapter 7 bankruptcy, I had no clue where to begin. Chris took me where I was at and guided me along a process that proved to be clearing financially and emotionally. Plus, I am quite certain nobody could have done it for a better price. I would recommend his service to anybody. Thank you. Dylan H.