Over 10,000 Bankruptcy Cases Filed
Chapter 7
You may have heard that bankruptcy can help you rid yourself of credit card debt and give you a fresh start. The quickest and simplest way to achieve this objective involves the use of Chapter 7 bankruptcy, which is a straight discharge of your obligation on your unsecured debts, such as credit card, medical bills, and lawsuit and deficiency judgments.
Read MoreChapter 13
You may have also heard that bankruptcy can help you save your home by stopping foreclosure and stripping off your 2nd mortgage. The best way to achieve this goal is through Chapter 13 bankruptcy, whereby you reorganize on your finances and catch up on your mortgage arrearages, while possibly eliminating your 2nd mortgage payments.
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Bankruptcy Attorney Encino
While many people believe that when you file bankruptcy all of your debts are completely wiped clean, this is not always the case. At the end of a successful bankruptcy case, all of the eligible debts that you have are discharged and you are no longer liable for them. These debts include credit card debt, medical bills, deficiency balances for repossessions, most civil judgments, past due rent and utility bills, and social security overpayments.
However, not all debts are eligible to be discharged. Secured debts such as your home mortgage and your car loans are not discharged. For how these loans are dealt with in bankruptcy, consult with a bankruptcy attorney Encino.
Another such debt that is not dischargeable is federally insured student loan debt. The only way to discharge them is to prove that the loans constitute an ‘undue burden’ upon you, which can be very difficult. In California, this involves showing that there has been a good faith effort to repay the loan, that you would be unable to maintain a reasonable standard of living for yourself and your dependants, and that this inability to maintain a reasonable standard of living would persist. The rationale behind this rule is that if these loans were subject to discharge and lenders had to foot the bill, they would be forced to charge higher interest rates and make them less available to those seeking an education.
Other debts are dischargeable no matter the impact on the debtor. These include debts that were incurred fraudulently, domestic support obligations, and those incurred due to willful and malicious injury to another. These are all deemed nondischargeable due to public policy reasons. The Bankruptcy Code was designed to give the honest and deserving debtor a fresh start, and was not meant to allow people to get rid of debts that were incurred by hurting others, and debtors’ families should not be impacted. The reasons for not allowing these debts to be discharged are usually intuitive. However, some are not so, such as certain tax debts. Obviously, tax debts incurred by fraud are not dischargeable, but neither are income taxes for which a return was due less than three years before filing bankruptcy. However, tax debts that are unsecured (in other words, is not a lien on your property yet) that had a return due over three years from the date of filing may be discharged. The issue of dischargeabitiy of tax debts is often a very important topic, and the details are beyond the scope of this article, so always seek the advice of an Encino bankruptcy attorney. The bankruptcy attorneys Encino, such as those at Wadhwani & Shanfeld, A Professional Law Corporation, will be able to full assess how each of your debts will be treated in bankruptcy.