subject: Bankruptcy In California - The First Step Towards Financial Stability [print this page] Bankruptcy in California has many guidelines, both basic and complex. If you are filing personal bankruptcy, it may be approached differently than if you are filing as a business. Depending on the situation, the focus on personal bankruptcy may be liquidation, debt consolidation, foreclosures, repossessions or wage garnishments. If it will be filed as corporate bankruptcy it will include asset liquidation and/or reorganization. In recent months we have heard the term bankruptcy being used a lot, from national finance experts to the local news anchors. Do most people really understand what it is, though? Is it an end or beginning to financial stability?
There are three types of bankruptcy in California, Chapter 7, Chapter 11 and Chapter 13. Chapters 7 and 13 are most commonly filed for individuals. Chapter 11 is for businesses. In both Chapter 7 and 13, a petition is filed with the court, detailing information regarding assets, debts, income and "exempt" assets. In Chapter 7, the court appoints a trustee to review the filing, conduct meetings with creditors, liquidate specific assets and distribute proceeds to the creditors. The process is usually completed in three to four months. In Chapter 13, a repayment plan is set up for a three to five year period of time.
Chapter 11 is used by sole proprietors, partnerships and corporations for reorganization. The business files a petition with the court that itemizes assets and liabilities, details finances, projects earnings and provides a history and cause of the filing. A plan, preferably created by the debtor, will also be filed, detailing the steps they intend to take to clear its debts. This plan is voted on by the creditors. If accepted, it will be confirmed by the court. Guidelines for bankruptcy in California allow the debtor to act is its own trustee, retaining possession of property and assets.
Though circumstances vary from one individual to another, there are some questions to ask yourself before deciding to pursue the bankruptcy option. Are you able to pay only the minimums on your bills? With strict budgeting, are you unable to yourself out of debt in five years? Are your loans or mortgage being foreclosed? In many cases, bankruptcy in California does not remove all debts. Alimony, Child Support, taxes and student loans are among the debts you may still be held responsible for. A qualified, experienced attorney can help you sort through the differences and decide which option is best for you.
