California Consumer Bankruptcy Attorneys Helping Individuals and Families Get a Fresh Start
The lawyers at Rounds & Sutter are experienced California bankruptcy attorneys who work every day to help individuals and families from Santa Barbara to San Clemente find their way out of overwhelming debt with the help and protection of our nation’s bankruptcy laws. The two most common types of bankruptcy relief for consumers are Chapter 7 and Chapter 13. Each type of proceeding has its own set of rules and procedures, so it is important to discuss your complete financial situation and goals with your bankruptcy attorney to make sure you utilize the procedure that is right for you.
Get a fresh start with Chapter 7
A Chapter 7 bankruptcy is commonly called a “clean slate” bankruptcy because the effect of the proceeding is to wipe away your debt and give you a fresh start. Chapter 7 is also sometimes referred to as liquidation, because in theory the bankruptcy trustee will liquidate your assets (sell them or convert them to cash) and use the money to pay off your creditors before you can get a discharge of remaining debt. However, California bankruptcy law contains many exemptions from liquidation for many different types of property. Most people are in fact able to get a discharge of debt without having to sell any property. The first step is to talk to an experienced bankruptcy attorney to find out how much of your property is exempt or non-exempt and how much of your debt is dischargeable in Chapter 7.
Save your home with Chapter 13
Chapter 7 does not discharge all types of debt, such as student loans, child support obligations, certain tax debts, and loans which are secured by collateral, such as car loans and home mortgages. Also, in order to be eligible for Chapter 7, you have to pass a means test, and many people have too much disposable income to qualify for Chapter 7. It is generally much easier to qualify for a bankruptcy under Chapter 13.
In a Chapter 13 proceeding, rather than receive a discharge of debt following a sale of non-exempt assets, your debts are consolidated and repaid over a three or five year plan, enabling you to more comfortably meet your obligations with the constant pressure of bill collectors or the worry that you cannot afford to pay your bills. Many debts can also be negotiated down or discharged in this process. If you are in default on your mortgage and the bank is foreclosing, Chapter 13 can stop this process, enabling you to catch up on any missed mortgage payments by rolling them into your Chapter 13 plan. If you have a second mortgage, and your home is under water, that second lien may be stripped away in bankruptcy.
Which bankruptcy is right for you?
Chapter 7 is most attractive to people with large amounts of unsecured debt, such as credit card debt or medical bills. A Chapter 13 wage earner’s plan is better for people with a steady source of income who can afford to put away some money each month toward a payment plan, and who have valuable assets or secured property such as a home that they want to protect.
At Rounds & Sutter, we take the time to analyze your situation and listen to your needs so that we can provide you with all your options, including even non-bankruptcy options such as a loan modification or debt settlement. Take the first step towards ending those sleepless nights and stressful days. Contact Rounds & Sutter at our offices in Ventura, Santa Barbara, San Clemente and Westlake Village for a free consultation, and put yourself on the road out of debt.