Bankruptcy

A Chapter 7 Bankruptcy can wipe out all your unsecured debts within a period of months. In a great majority of cases debtors have no assets that they would lose because California’s laws protect them for you. A Chapter 7 bankruptcy gives a person a relatively quick “fresh start”, and eliminates your debt, while keeping all of your exempt assets.

A Chapter 13 Bankruptcy is for those that have some money left over after paying all their necessary expenses, or who have assets of significant value. People in these situations can reorganize on their debt and pay back only what they can afford to pay over a period of three to five years. Chapter 13′s can also allow a person to strip their second and junior mortgages if the value of the home is less than the balance owed on the first mortgage.

Many people don’t know this, but a Bankruptcy may be the quickest way to reorganize and even eliminate one’s debts, in order to get a fresh start and second chance to reestablish their credit. In a Chapter 7 Bankruptcy, all your debts will be discharged. Meaning you will not owe anyone any money, and new creditors will be very willing to extend credit. You will begin receiving new credit cards within a matter of months. These new credit cards are a stepping stone to a bright new future. If they are used responsibly, meaning that they are not maxed out and they are used and paid on time every month, then this will be reflected in your credit report. With each month of on time payments, your credit score will increase, thus giving you the opportunity to grow.

As your credit score and credit history begin to look better, other creditors will also be willing to extend credit. Our clients have been approved major credit cards within months of filing a bankruptcy, and for new car loans within one year of filing bankruptcy. They have also been approved for home loans within 2 years of filing bankruptcy!

There is a common misconception that a bankruptcy will ruin your credit for life. But nothing can be further from the truth. It is actually the quickest way to start over and rebuild your credit. Because so many people are now filing bankruptcies, those that review your credit report will not focus on the fact that you filed bankruptcy. Instead, the focus is on how responsible you have been with the new credit you are given. This is what we mean when we say a bankruptcy will give you a second chance and a fresh start.

Different types of bankruptcies can provide a person with different results depending on their situation. A person may not just have credit card debt, medical bills, or loans they need to eliminate, but may have a mortgage or car loan that they are behind on, and want to get caught up. A person may also owe taxes that they cannot just discharge in a Chapter 7. Or a person may have too much income or too many assets to qualify for a Chapter 7 bankruptcy. In these situations, that person can file a Chapter 13 bankruptcy to Reorganize on their debts. This means they can set up an affordable monthly payment plan to get caught up on their major debts like the mortgage, car, and/or taxes, while significantly reducing or even eliminating minor debts like credit cards, medical bills, or personal loans. A Chapter 13 bankruptcy will essentially cut the fat to allow a person to only pay for the important things, while keeping all their assets and income.

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