In San Anselmo, 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.
For that reason, it would be advisable to speak with a good San Anselmo, California bankruptcy attorney. This attorney will be able to advise you as to whether or not filing for bankruptcy is a good idea, given your particular situation. This determination is highly dependent on the details of each individual case, so a San Anselmo attorney's advice is truly indispensable.
Types of Bankruptcy in San Anselmo, California
There are three basic bankruptcy schemes that are most commonly used in San Anselmo: Chapters 7, 13, and 11. Bankruptcy is a creation of federal law, so the process for filing for bankruptcy in San Anselmo, California will be roughly the same as it would be anywhere else in the U.S. Chapter 7 bankruptcy requires the debtor to liquidate some of his or her property, and use the funds to pay creditors. While this doesn't sound like much of a relief at first glance, the upshot is that once the eligible property is sold, and the proceeds directed to the creditors, all of the debtor's eligible debts are deemed paid in full, regardless of how much the creditors actually ended up getting. Not all of the debtor's property has to be sold off - the debtor will usually be allowed to keep things like a house, at least one car, some types of personal property, retirement accounts, and insurance policies. It should be noted that some debts are not dischargeable, and will have to be paid in full even if the debtor files for bankruptcy. This includes student loans, taxes, and criminal fines.
Under Chapter 13 bankruptcy in San Anselmo, most of the debtor's debt is not discharged. Instead, the bankruptcy court, working with the debtor and participating creditors, work out a payment plan that allows the debtor to pay off most of his or her debts over a longer period of time, thereby theoretically making the debt far more manageable. Once a payment plan is approved by the court, creditors are prohibited from attempting to collect payment under their original agreements that gave rise to the debt in the first place. Chapter 11 bankruptcy is almost always used by businesses, but there is nothing that legally prevents it from being used by individuals, and its use by individuals is very rare. Chapter 11 bankruptcy requires the debtor to come up with a restructuring plan - telling the court how they propose to cut costs, fix their operations, and pay down their debts. The plan has to be approved by a majority vote of participating creditors.
One advantage of Chapter 11 bankruptcy is that it allows a business going through it to continue operating, and to trade its stock.
How Can a San Anselmo Bankruptcy Lawyer Help?
The need to weigh all the options and consider the costs and benefits of applying for bankruptcy in San Anselmo cannot be overstated. If you are considering filing for bankruptcy, it would be a good idea to speak with a San Anselmo bankruptcy attorney beforehand.