In Hemet, California, bankruptcy is a court procedure in which a person or business has some or all of their debts excused (or "discharged"), theoretically allowing them to start with a clean slate, and move on with their lives no longer drowning in debt (and hopefully having learned to better manage their use of credit in the process). Remember, though, that bankruptcy should not be viewed as a convenient way to get out of debt that you don't feel like paying back. It is meant to serve as an option of last resort for people and businesses faced with debt that they will probably never be able to pay back. The decision to file for bankruptcy can result in negative consequences, such as damaged credit ratings, which must be seriously weighed against the potential benefits.
Accordingly, you should speak with a good Hemet, California bankruptcy lawyer. Your Hemet bankruptcy lawyer can inform you of the costs and benefits of filing for bankruptcy, and give his or her professional opinion as to whether or not it's a good option, given your particular circumstances.
Types of Bankruptcy in Hemet, California
In Hemet, California, 3 types of bankruptcy procedures are in common use: Chapter 7, Chapter 11, and Chapter 13. Being governed by federal law, the procedures involved in filing for bankruptcy in Hemet, California will be roughly the same as everywhere else in America. Chapter 7 bankruptcy involves liquidation of part of the debtor's assets to pay off as much of his or her debt as possible. Once the liquidation is complete, and the proceeds given to the creditors, the rest of the debt is discharged. Liquidation is essentially selling assets to the highest bidder. Only some of the debtor's assets have to be sold, and numerous classes of property are exempt, meaning that the debtor can keep them, including homes, cars, insurance policies, and retirement accounts. It should be noted that certain types of debt cannot be discharged through Chapter 7 bankruptcy, including student loans, child support payments, criminal fines, and recent taxes.
The other frequent bankruptcy scheme used by consumers in Hemet is Chapter 13 bankruptcy. In this system, debt is not discharged. Instead, it is restructured. This allows the debtor to have the terms of the agreements that gave rise to their debts in the first place thrown out, and replaced with new terms that call for a structured repayment plan, designed to allow the debtor to survive on whatever income they have, and allowing the creditors to get paid back eventually. Once a payment plan is authorized, creditors are not allowed to attempt to collect payment under the original agreements. Though available to individuals, Chapter 11 bankruptcy is mostly used by businesses. Like Chapter 13, Chapter 11 requires the restructuring of debts. Under this system, the debtor must come up with a plan to reduce debt, cut costs, and improve operations. Once this plan is proposed, it is submitted to the participating creditors, who must approve it by a majority vote before it can be implemented.
While going through Chapter 11 bankruptcy, a business can continue operating, and its stock can continue to be traded.
How Can a Hemet Bankruptcy Lawyer Help?
The need to weigh all the options and consider the costs and benefits of applying for bankruptcy in Hemet cannot be overstated. If you are considering filing for bankruptcy, it would be a good idea to speak with a Hemet bankruptcy attorney beforehand.