San Diego Bankruptcy – What Happens When You File Bankruptcy?

San Diego bankruptcy is a legal procedure that allows people to discharge debt and prevent creditors from collecting on unpaid debts. It offers a fresh start for individuals and businesses.

The Roman Catholic Diocese of San Diego has warned it may have to seek bankruptcy protection due to “staggering” legal costs in hundreds of lawsuits alleging sexual abuse by clergy. It’s the second time the diocese has considered this step; it first did so in 2007, ultimately settling 144 cases for $198 million.

Chapter 7

The bankruptcy laws provide for liquidation and reorganization. Individuals and establishments other than corporate may file under either Chapter 7 or Chapter 13. The law sets different limits for disposable income and debt amounts for each category of bankruptcy.

The debtor’s assets are converted into monetary value and used to pay back a large portion of the debt. The remaining debts are wiped out in the form of a discharge, which means they are no longer legally enforceable.

Before a debtor can receive this discharge, they must complete the required steps. These include filing with the court, completing a U.S. Trustee approved credit counseling course, disclosing assets, debts and income, attending a meeting of creditors, and more. An experienced bankruptcy attorney at Contreras Law Firm will assist in ensuring the process is completed quickly and efficiently. This includes ensuring the case is filed correctly and avoiding errors. If you are struggling with debt, contact us today to learn more about your options for bankruptcy.

Chapter 13

Chapter 13 is a repayment bankruptcy that allows individuals to repay unsecured debts over a 3 to 5 year period. Such debts include credit cards, personal loans, medical bills and property taxes. Chapter 13 can also help debtors who are behind on their mortgage payments to catch up by bringing their loan current during the bankruptcy. In addition, under certain conditions, a debtor can wipe out junior mortgage liens by filing a lien strip motion in the bankruptcy.

To file for Chapter 13, a debtor must have regular income. This can be from employment, self-employment, pensions, rental income, investment dividends and interest, social security benefits or a combination of these sources. An experienced San Diego bankruptcy lawyer can work with you to present an appropriate proof of income for the Court. To receive a discharge in a Chapter 13, the debtor must complete the repayment plan. This is typically accomplished within three months of filing the bankruptcy petition.

Exemptions

There is a popular myth that people who file for bankruptcy must give up all of their property. This is a falsehood, as Federal and California bankruptcy law allow debtors to keep certain assets and property in the bankruptcy process. These are called “bankruptcy exemptions.”

Exemptions from Chapter 7

Federal bankruptcy laws allow States to either use Federal bankruptcy exemptions or enact their own set of exemptions. The State of California has opted to use its own exemptions, which are very generous and provide for such things as a $29,400 vehicle equity exemption, $33,650 in cash that can be kept in bank accounts and up to $2,725 worth of equity in a motor vehicle.

In addition to these basic exemptions, a San Diego bankruptcy lawyer may be able to help a client apply more specific bankruptcy exemptions for such items as public and private retirement accounts, pensions, annuities and life insurance policies. In Chapter 13 bankruptcy, a San Diego bankruptcy attorney can often work out a plan to pay unsecured creditors much less than what they would receive under a theoretical Chapter 7. This is due to the fact that most of a debtor’s disposable income goes toward paying secured debts like mortgages and car loans and to priority debts such as taxes.

Meeting of Creditors

One of the first things that happens during bankruptcy is a mandatory hearing called the Meeting of Creditors. This hearing is required by Bankruptcy Code Section 341. The trustee holds this meeting to allow creditors (or their attorneys) to ask questions of the debtor.

This is usually a short and painless process for most debtors as the amount of questions that can be asked are limited by law. The debtor must attend this hearing and answer the questions under oath, as providing false information can result in the dismissal of the entire case.

While the debtor must attend this meeting, the attorneys at OakTree Law can generally take care of the majority of the questions for their clients. The hearing is held via telephone and it can be heard by everyone on the call, so it’s important to make sure that you are calling from a quiet location. Also, if you have an interpreter for the hearing, please let us know so that we can arrange it as soon as possible.