Bankruptcy Legal Disclaimer

---

DISCLOSURES REQUIRED UNDER 11 U.S.C. §§ 527 AND 342
NOTICE #1: Notice Mandated by 11 U.S.C. §§342(b)(1) and 527(a)(1)
PURPOSE, BENEFITS AND COSTS OF BANKRUPTCY

Bankruptcy is a federal court proceeding that provides relief to people and businesses that are having financial difficulty. The relief comes in the form of an "automatic stay" which generally stops most collection proceedings and harassment from creditors. The cost of filing a bankruptcy consists of a filing fee which varies depending on the type of case you are filing (see below) and if you choose to hire a lawyer to represent you, the lawyer will likely charge you a fee for the representation. Additionally, there may be costs to obtain necessary information and documentation required by the bankruptcy code, bankruptcy rules and local rules.

The discussion here is meant only as a brief overview and no one should base their decision as to whether to file or not to file bankruptcy solely on this information. Bankruptcy is complex and a number of factors and considerations must be taken into account in making a determination to file or not. Anyone considering bankruptcy is encouraged to seek the advice and assistance of experienced counsel who practices bankruptcy law.

 

What Bankruptcy Can & Can't Do

Bankruptcy may be able to help financially distressed people to:

1. Discharge (eliminate) liability for most or all of their debts and a get a fresh start. When the debt is discharged, the debtor no longer has any legal obligation to pay it.
2. Stop foreclosure proceedings! The automatic stay in bankruptcy can freeze a foreclosure proceeding and provide an opportunity to catch up on missed payments.
3. Prevent repossession of a car or other property! The automatic stay can prevent a finance company from exercising its repossession rights, or might even be able to force a creditor to return a vehicle that has already been repossessed.
4. Prevent utility shut-offs! The automatic stay in bankruptcy can prevent a utility company from terminating service because of non-payment and can even force the company to reconnect service that has already been terminated.
5. Stop wage garnishments and creditor harassment! The automatic stay in bankruptcy can suspend wage deduction proceedings and other types of debt collection efforts.
6. Lower monthly payments! The automatic stay in bankruptcy can alter your contractual relationships with your creditors by lowering or eliminating interest and can allow payments to creditors for less than the outstanding balance.
7. Can provide an opportunity for debtors to challenge then claims of certain creditors who might be seeking to collect more than they are entitled.

Bankruptcy, however, may not be the cure-all for every financial problem. There are limitations. For instance, a debtor usually can not:

1. Eliminate certain liens of secured creditors. Although it is possible to force secured creditors to take payments over time and although it is possible to modify the terms of payments in some cases, a debtor usually can not keep the collateral unless the debtor continues to pay the debt.
2. Discharge types of debts identified in the bankruptcy code. The most common exceptions to discharge are domestic support orders (child support, maintenance, or alimony), most student loans, criminal fines, and most taxes.
3. Discharge debts incurred after the bankruptcy is filed. Bankruptcy only helps with debts already existing at the time of filing; it doesn't provide relief for future debts.
4. Protect co-signors. If someone co-signed for you, the co-signor is usually going to be liable to pay the creditor whatever part of the loan you don't pay or that isn't paid through a bankruptcy case.

If you need help with filing bankruptcy in the State Of California, please call our 24 hour hotline at 1-800-551-7922. We're ready to help you make a move in the right direction.