A Guide For Businesses Filing For Bankruptcy In Los Angeles
You may file for bankruptcy if you cannot pay your outstanding bills. You may either return the assets you owe money on in exchange for debt relief or reorganize how these obligations are paid back, depending on the form of bankruptcy you file. While this might impact your credit score, this is a legal action that can help businesses before more problems occur.
Our prescreened Los Angeles Bankruptcy Lawyers advise that you shouldn't be afraid of failing and don't wait too long to file for bankruptcy. Acknowledging that there is a problem with your business early on is better than causing further issues in the future.
That said, here's a quick guide to bankruptcy and how they're filed for in California:
What Are The Types Of Bankruptcies Your Los Angeles Business Can File For?
Here are two chapters of bankruptcies that your business can file for in California:
Chapter 7 Bankruptcy
You no longer owe money on your debt after filing for Chapter 7 bankruptcy. However, you must first liquidate your assets to pay off as much of your debt as possible before you can discharge it. Then, the court determines who is eligible to receive the money generated by selling your assets.
This is a choice if your assets are exempt from taxation or if most of your debts are unsecured. It takes four to six months to complete and is the quickest way to apply for bankruptcy.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy may be better if you have secured debts, such as a mortgage or car payment, and you want to keep your assets. With this kind of bankruptcy, a court-appointed trustee will help you reorganize your debt and make payments to your creditors. As a result, you can reduce the interest you pay on your outstanding obligations.
Because you must make payments in increments over a long period, Chapter 13 bankruptcy discharges can take three to five years. So it is a choice if you want to stop your house from going into foreclosure or your car from being repossessed.
Which California Chapter Bankruptcy Should I File For?
If you don't know the best approach to filing for bankruptcy for your business, you should consult experts to help you take the best route. So, make sure you speak with an accountant and a California bankruptcy law attorney to find the best solutions for you and your business.
How To File For Bankruptcy In Los Angeles, California
Because bankruptcy is governed by federal law rather than state law, filing bankruptcy in California isn't all that different from filing in other states. The main distinction is that bankruptcy regulations in California differ from those in other states in terms of the kinds of assets you are permitted to keep.
Here is the procedure to follow if you're thinking about declaring bankruptcy:
Do your homework and research bankruptcy to see if it's appropriate for you. The two most crucial questions you must address are whether you qualify for bankruptcy and whether there are any potential better options.
Although filing for bankruptcy without a Los Angeles Bankruptcy Lawyer is conceivable, most people would profit from a lawyer's knowledge and experience. Therefore, you should seek a California bankruptcy lawyer with experience in bankruptcy law.
Before filing for bankruptcy, you must acquire several financial records, including bills, bank accounts, tax returns, pay stubs and income statements, and other financial information. If you hire a bankruptcy lawyer, they can assist you in compiling this data.
Don't make any more payments on the debts that can be discharged through bankruptcy. Please be aware that certain debts, such as student loans, domestic support obligations like child support or alimony, and most tax payments, cannot be erased through bankruptcy. Your creditors will stop pursuing payment for your debts when the court receives notice that you have filed a request for bankruptcy.
You must register for a credit counseling course to be eligible for bankruptcy. To prevent you from falling behind on your payments, this is aimed to teach you skills that could help you budget more wisely in the future.
You must attend a 341 meeting held by a trustee or agent of the U.S. Trustee program after filing for bankruptcy. Your creditors might inquire about your assets and debts at this conference.
There will also be a confirmation hearing if you file Chapter 13. A bankruptcy court will determine your bankruptcy eligibility and authorize a payment plan at this meeting so you can pay off your obligations. A repayment plan may be approved, rejected, or sent back for revision by the judge.
You must submit your course certificate to the court after finishing your credit counseling session for the court to erase your debt.
Hire The Best Los Angeles Bankruptcy Lawyers Near You
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