The Bankruptcy process

The bankruptcy process starts with the filing of a petition. In the petition you list all your assets as well as your liabilities. I typically pull a credit report from all three credit bureaus and then review with my clients to ensure that all debts are in there since some creditors don’t necessarily list them with the credit bureaus(personal debts, pay day loans etc, medical debts that aren’t too old etc). In the petition we have to be thorough to be sure that we listed any kind of financial transactions that the trustee would be interested in knowing about. This could include paying back preferred creditors, selling a home within a year and other important financial events. You have to take a mandatory credit counseling class which you can do online before you can file. Most importantly is the pre-bankruptcy preparations that I go through with my clients to make sure all their property is protected and that they are filing at the right time. We have to calculate your income for the last six months to make sure that you qualify for a chapter 7 and if you are well over the median income then we have to do a 13 or some pre-bankruptcy planning to squeeze you into a chapter 7. If you have any questions please call me or fill out your name and I will get back with you to see whether filing for bankruptcy is your best solution.

Frequently Asked Questions: Debt Consolidation in California
How does debt consolidation affect credit scores?

Initially, it might cause a slight dip due to credit inquiries. However, consistent payments can improve your credit score over time.

What is the difference between debt consolidation and debt settlement?

Debt consolidation involves taking a new loan to pay off debts, while debt settlement is negotiating to pay less than you owe. Settlement can negatively impact your credit score.

What are secured vs. unsecured debt consolidation loans?

Secured loans require collateral (like a house or car), usually with lower interest rates. Unsecured loans don't require collateral but typically have higher rates.

Is debt consolidation right for me?

It depends on your total debt, interest rates, credit score, and payment capability. It's suitable if you can pay off your debt within five years and secure a lower interest rate than your current debts.

Should I consider long-term financial planning?

Yes, debt consolidation should be part of a broader financial strategy including budgeting, cutting expenses, and building an emergency fund.

How do Chapter 7 and Chapter 13 bankruptcies in California differ?

Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 allows debt restructuring over a set period, usually three to five years.

Can my spouse's bank account be garnished for my debt?

Bankruptcy laws offer protections against such actions, but specifics depend on individual cases and state laws.

How can I learn more about my options?

Consulting a California bankruptcy attorney can provide clarity. Firms like The Law Offices of Christopher Hewitt offer free consultations to explore debt relief paths.

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