Requirements When Filing for Bankruptcy in California

January 01, 2013

Requirements when filing for bankruptcy in California

With the downturn in the economy over the past few years, bankruptcy has become an even more important debt relief tool that can help individuals and businesses restructure and stay afloat. Bankruptcy allows individuals and businesses an opportunity to rebuild their credit and to regain their standing. If you are considering filing for bankruptcy, the following information can serve as a good place to start considering your options.

Pre-bankruptcy counseling

Pre-bankruptcy counseling is a required action that everyone must take before filing for bankruptcy. When selecting a provider for pre-bankruptcy counseling, it is important to do some research; you should make sure that the provider you want to use is approved in your district.

During the counseling session, there is an open discussion about possible alternatives to bankruptcy and the creation of a personal budget plan. The counseling does cost money, but a waiver is available for those who are unable to pay for the service. Once the counseling has been completed, a certificate must be produced and filed with the court as proof of completion.

Types of bankruptcy

Typically, individuals file for either Chapter 7 or Chapter 13 Bankruptcy, and businesses, whether sole proprietorships, corporations or partnerships, file for Chapter 11 Bankruptcy. However, it is possible for individuals to use Chapter 11 as well.

Chapter 7 Bankruptcy is a more complete discharging of debts and relinquishing of assets. Chapter 13 Bankruptcy involves a reorganization of debts and putting a regular payment plan into place. Chapter 13 also gives the debtor the option to hold onto certain property like homes and cars if he or she can make continuous payments on them.

Chapter 11 is an attractive option for businesses because it allows them to retain control of their daily operations while establishing a plan to pay back creditors. Chapter 11 can also be an option for individuals who may not qualify for Chapter 13 because of debt or income limits.

In many cases, Chapter 11 bankruptcy helps debtors not only through the restructuring of debt and the establishment of a payment plan, but also by the opportunity to hold onto their homes and avoid foreclosure. Additionally, Chapter 11 filing can end harassment by creditors, halt lawsuits and stop repossession actions.

If you are considering filing for bankruptcy, it is advisable to seek out an accomplished California bankruptcy attorney who can help you assess which type of bankruptcy option is best for you and who can advocate on your behalf.

Article provided by Law Offices of Andrew H. Griffin III
Visit us at http://www.andrewgriffinlawoffice.com