Many Americans are struggling to repay their personal and business debts. We are living through a global pandemic, and our markets have been incredibly volatile throughout 2020. We do see signs of economic recovery; however, many business owners and individuals are struggling financially. If you are unable to pay your debt and are concerned about foreclosure, filing for bankruptcy could be your best option.
Types of Bankruptcy
While bankruptcy is not a one-size-fits-all solution for those struggling financially, the process does give thousands of Americans a fresh financial start every year. In 2019, over 770,000 people filed for bankruptcy. Experts expect to see an increase in bankruptcy filings in 2021 as businesses continue to struggle with coronavirus-related shutdowns.
There are several types of bankruptcy, and Chapter 7, Chapter 11, and Chapter 13 are the most commonly used. In Chapter 7 bankruptcy, a bankruptcy trustee will liquidate or sell your assets to pay your creditors. In a Chapter 11 bankruptcy, the trustee will work with you to restructure your debt and create a five-to-seven-year repayment plan. Many businesses file for Chapter 13 bankruptcy.
Bankruptcy Can Eliminate Certain Types of Debt
According to U.S. federal bankruptcy law, certain types of debt can be discharged or eliminated after a bankruptcy. Whenever the debtor involves any kind of fraud or misconduct, the debtor will not discharge the related debt. For the most part, the following types of debts are dischargeable through bankruptcy:
- Repossession deficiency balances
- Student loans when you can prove undue hardship
- Personal loans from family, friends, and employers
- Credit card charges, including late fees and overdue charges
- Outstanding medical bills
- Past due amounts on utility bills
- debtDishonored checks, unless fraud is involved
- Auto accident claims, except those involving drunk driving
- Business debts
- The money the debtor owes under lease agreements, including past due rent amounts
- Civil court judgments, unless the judgments are based on fraud
- Unpaid taxes and tax penalties past a certain number of years
- Attorneys fees the debtor owes, not including alimony and child support awards
- Debt related to revolving charge accounts
- Overpayment for Social Security benefits
- Overpayment of veterans assistance loans or benefits
Stop Collection Calls by Calling a Bankruptcy Petition
Receiving collection calls from creditors can be difficult and draining. One of the benefits of filing for bankruptcy includes putting a stop to cold calls from creditors. You will be able to show the creditor a copy of your bankruptcy petition, and they must stop calling you during the automatic stay imposed on them by the bankruptcy court. The automatic stay will give you the time you need to develop a plan to repay your debtors.
Contact a Los Angeles Bankruptcy Lawyer Today
If you are considering filing for bankruptcy in Los Angeles, the Bankruptcy Law Center can help. We will carefully review your financial situation and advise you as to your best legal option. Contact us today to schedule your free initial consultation.