Sacramento, CA Bankruptcy Lawyers

Many negative and untrue myths are circulated about bankruptcy in the United States, keeping many people from getting the fresh financial start they need. But bankruptcy is simply a legal avenue that allows Americans to get out from under massive debts and rebuild their lives. Whether you are facing something serious like a vehicle repossession, an eviction, or a foreclosure, or simply are tired of getting phone calls and letters from debt collectors and creditors, the experienced Sacramento bankruptcy lawyers at Equal Justice Law Group can help. We can solve your financial crisis and put an immediate stop to debt collection actions; our legal guidance will simplify the process and get you back on your feet!

What Is Bankruptcy?

Bankruptcy is a legal method of dealing with debts. In some cases, it rearranges debts to make them more affordable; in others, it completely erases debts. Under U.S. Bankruptcy Code, anyone can file for bankruptcy, from individual or married debtors to small businesses and major corporations. Bankruptcy also prevents or reverses many of the negative consequences associated with debts. 

What Is The Automatic Stay?

As soon as you file for bankruptcy, something called the “automatic stay” immediately goes into effect. The automatic stay prevents creditors and debt collectors from taking any further collection actions. Any actions or processes that have already started must come to a full halt right away, including:

• evictions
• foreclosures
• repossessions
• wage garnishment
• bank levies

Creditors and debt collectors are also not allowed to contact you in any way while this stay is in effect; therefore, you will stop getting phone calls and letters. They can face serious fines and penalties if they continue to contact you or continue in other collection efforts. 

However, sometimes a creditor will ask the bankruptcy court for relief from the automatic stay. If the bankruptcy court grants it, they are allowed to continue with collection efforts, which is why it is so important to have skilled Sacramento bankruptcy lawyers on your side who can build a strong case for this not to happen. 

Types Of Bankruptcy

Under the law, there are many different types, or chapters, of bankruptcies. The most common ones are Chapters 7, 13, and 11. Chapter 11 is used mostly by businesses, while individual or married debtors most commonly file Chapters 7 and 13. 

Chapter 7

Chapter 7 bankruptcy is commonly known as liquidation bankruptcy. You can only qualify to file this type of bankruptcy based on having a lower or nonexistent income. In Chapter 7, debtors are only allowed to keep up a certain value of various assets, including vehicles, property, electronics, tools, and household goods. Suppose the value of their belongings exceeds the federal or state bankruptcy exemption amounts. In that case, they must either agree to pay the excess to their creditors or relinquish their property to the bankruptcy trustee. The trustee will then sell the property to pay some of their debts. 

However, don’t let the possibility of having to sell your belongings scare you or prevent you from speaking with an attorney to learn more – many Chapter 7 bankruptcy cases are “no asset” cases, meaning the debtor’s belongings are valued under the exemption amounts, and they don’t need to give up any property. 

Within about four to six months of filing, they will receive a discharge of their bankruptcy. At this point, their debts are erased and no longer owed. They now have a fresh financial start! If they own property or a vehicle, they have the right to sign an affirmation agreement not to have the debt discharged. If they can keep paying for that asset, they can keep it. 

Chapter 13

A Chapter 13 bankruptcy is also known as a reorganization or wage-earners bankruptcy, and involves a three-to-five-year repayment plan. It is meant for debtors who do have income, but who have just fallen behind on payments. Although debtors aren’t required to give up property that exceeds certain exemptions, they do have to agree to make regular (normally lower) monthly payments over three to five years that will repay some or all of their debts. The payments go to their bankruptcy trustee, who distributes them to the appropriate creditors. 

Chapter 13 can help restructure debts and allow debtors to get caught up on their car or mortgage payments. Once the repayment plan is complete, they will receive a discharge of any remaining debts that weren’t scheduled to be paid in the plan.

Either type of bankruptcy can provide a clean slate to move forward and the vital protection of the automatic stay! Neither type of bankruptcy will “ruin” your credit; while bankruptcy is a mark that stays on your credit for a few years, bankruptcy lowers your debt to income ratio immediately in most cases, which can actually improve your credit score. 

Are You Considering Bankruptcy? Call the Equal Justice Law Group Today

At the Equal Justice Law Group, we know how burdened you can feel by overwhelming debt. We can help you find peace of mind and lay a better foundation for your financial future! Our Sacramento bankruptcy lawyers can assess your financial situation and explain  your bankruptcy options so that you can make the right decision for you and your family. Call today to schedule a free, no-obligation consultation and take your next steps.