Insight From Our Fresno Bankruptcy Attorneys
Bankruptcy can give you a fresh financial start by discharging most of
your debts. It also stops creditors from taking actions to collect debts.
Federal law guarantees the availability of bankruptcy protection, and
all bankruptcies are filed in federal courts.
Benefits of Bankruptcy:
- Stop lawsuits
- Stop foreclosure
- Prevent repossession of a car or other property
- Stop wage garnishment
- Avoid judgment liens
- Stop harassing phone calls, letters, etc. from creditors
- The automatic stay
- Cancel legal obligation to pay most debts
How Will Bankruptcy Affect My Credit?
Unfortunately, there is no clear answer to this. A bankruptcy filing can
stay on a credit report for up to 10 years. If you are contemplating filing
bankruptcy, your credit may already be bad and bankruptcy may not make
it significantly worse. In some situations, bankruptcy may allow you to
improve your credit worthiness faster than you could have otherwise because
most of your debts are cancelled. However, there is no guarantee you will
be able to get new credit after filing, and it will probably take several
years to rebuild your credit.
Need help getting debt free? Our Fresno bankruptcy lawyers are here for you!
Contact Fear Waddell, P.C. today.
What Protection Does Bankruptcy Give Me?
Two of the most important aspects of bankruptcy are the automatic stay
and the discharge.
The Automatic Stay
The automatic stay takes effect immediately upon filing bankruptcy, and
requires that creditors immediately cease all collection activity. Creditors
cannot make harassing phone calls or send demand letters. Creditors cannot
continue a lawsuit or sell a property in foreclosure. If a creditor wants
to take any of these actions after a bankruptcy is filed, a creditor must
ask the court for permission first, and the creditor will have to show
good reasons why such permission should be granted.
The Bankruptcy Discharge
The discharge is usually granted at the conclusion of the case. Stated
simply, the bankruptcy discharge causes all of your debts, with a few
exceptions, to be canceled. For a Chapter 7 bankruptcy, debts excepted
from discharge include most student loans, most taxes, child support,
alimony, and debts for willful or malicious acts. The discharge in a Chapter
13 is broader and includes some of these items. Generally, however, the
discharge does not remove liens on property. The discharge is probably
the best benefit of filing bankruptcy, with the automatic stay a close
second. It means that most, if not all, of your debts are removed.
Tell our Fresno bankruptcy lawyers about your situation in a
free consumer case evaluation.
What Are the Types of Bankruptcy?
The three most common types of bankruptcy are
Chapter 11, and
Chapter 13. There are two additional types that are much less common: Chapter 9 (for
municipalities) and Chapter 12 (for family farmers.)
Chapter 7 – Liquidation
Chapter 7 is known as “liquidation” bankruptcy. The debtor
is allowed to keep enough property to make a fresh start, and the remainder
of the Debtor’s property, if any, is liquidated to pay creditors.
Chapter 7 is the most common type of bankruptcy and a discharge is often
granted within 6 months of filing the bankruptcy petition.
Chapter 11 – Reorganization
Chapter 11 is primarily used by individuals and businesses with large assets
and liabilities. In Chapter 11, a plan is proposed to repay creditors.
While providing a great deal of flexibility, Chapter 11 is more expensive
and more complicated than either Chapter 7 or Chapter 13.
Chapter 13 – Payment Plan
In Chapter 13, the debtor pays back at least part of debts owed through
a payment plan that usually lasts 3 to 5 years. Chapter 13 provides some
advantages over Chapter 7, including a broader discharge and the ability
to pay mortgage arrearages, preventing foreclosure, through a Chapter 13 Plan.
What Type of Bankruptcy Should You File?
Each type of bankruptcy has its own advantages and disadvantages, and a
thorough discussion of the merits of each is far beyond the scope of this
page. While bankruptcy can provide effective debt relief, bankruptcy law
contains many traps for the unwary. A competent bankruptcy attorney can
help you avoid these traps. You should consult a bankruptcy attorney before
deciding whether to file bankruptcy and what type of bankruptcy is right for you.
To discuss your options and choose a plan of action, call (559) 418-3022
to speak to a Fresno bankruptcy lawyer.