Los Angeles Bankruptcy: Focusing on the Positive
So much of what is written about Los Angeles Chapter 7 bankruptcy filings is negative.
Media outlets focus their pieces on “doom-and-gloom‚” and rarely analyze the aspects of the process that drive so many people to seek it out.
Here‚ we’re offering up a healthy dose of the positive. It’s important that bankruptcy filers may informed decisions. While it’s certainly not a process we would recommend rushing‚ many people who do ultimately file wonder why it took them so long to do so. In some cases‚ the sooner you file the more assets and income you may be able to retain in the process.
When the economy tanked back in 2008 at the start the recession‚ the number of bankruptcies soared. In the beginning‚ there was unquestionably a fair amount of judgment lobbed at those who were struggling to keep up with their bills. However‚ as more and more became ensnared in the downturn – whether in the form of a lay-off or reduced hours or falling behind on inflated mortgage payments – the amount of understanding grew.
In the last few years‚ we’ve seen a substantial shift in the way people view those who initiate bankruptcy proceedings. There is a recognition that it’s not “the easy way out.” Rather‚ it’s a way through which people can confront debt and financial woes head-on – and still come out the other side no longer shackled to that debt.
In 2008‚ there were approximately 1.1 million bankruptcy filings‚ an increase of about 32 percent over the previous year. In 2012‚ the number of new bankruptcy filings totaled about 1.3 million. This year‚ we are beginning to see them somewhat level off‚ with U.S. courts estimating about 1.1 million will be filed this year.
Those who still say that filing for bankruptcy is irresponsible need to consider the alternative. That is‚ let’s assume that you have a pile of overwhelming debt that includes credit cards‚ vehicles‚ mortgage‚ medical bills and more. If you legitimately don’t have the money to pay these bills – and therefore you don’t – your credit is pretty much shot anyway. What’s more‚ your creditors can and very often will aggressively pursue you to get paid. If you don’t fight them in court (far too many people don’t) they can obtain a judgment against you that will result in granting them the authority to garnish your wages and put liens on your home. This often puts people in even worse financial shape.
When you file for bankruptcy‚ you stop the collections processes and you let your creditors know you truly are unable to pay them. At the same time‚ you retain the ability to feed your family‚ keep a roof over your head and hang onto your basic assets‚ including retirement and pension accounts.
Far too many people drain retirement accounts in a fruitless attempt to stay afloat. When that doesn’t work‚ that’s money they can’t get back. But because these are typically protected in a bankruptcy‚ that’s why it’s often advisable to pay file sooner than later.
You need to know that when you file for Chapter 7 protection‚ you liquidate your non-exempt property. In California‚ property that is exempt from liquidation includes a home of a certain value (or equity in that home)‚ personal property including appliances‚ furnishings‚ clothing‚ burial plots‚ jewelry‚ heirlooms and art (up to $5‚000)‚ Social Security benefits up to $2‚000 monthly ($3‚000 for husband-and-wife filers). health aids‚ certain forms of insurance‚ public benefits‚ retirement accounts and more.
You also have the benefit of discharging personal liability for most forms of debt‚ and it frees you from any further obligations to your creditors.
It’s true that your credit will be damaged for a time. But likely‚ it was already suffering anyway. Bankruptcy offers you the opportunity to finally put that behind you and start over again with a clean slate.
If you are contemplating bankruptcy in San Fernando Valley‚ contact Nader‚ Naraghi & Woodcock‚ APLC to schedule your free consultation. Call (800) 568-0707.
The good thing about bankruptcy‚ Oct. 21‚ 2013‚ By Sakina Spruell‚ CNBC