Resourceful Bankruptcy Attorney in Los Angeles, CA
When economic hardships arise, sometimes the best you can hope for is a fresh start. Fortunately, the U.S. Constitution offers this to individuals and businesses alike. Article 1, Section 8, Clause 4, empowers Congress to enact bankruptcy laws, and the purpose of this power is as already mentioned: to give you or your business time to recover and start again. It doesn’t only benefit you, but it benefits our economy, too.
That said, bankruptcy isn’t meant to completely clean your slate free of any debts. It is also meant to make sure creditors get something in return, if at all possible. Much of this depends on you or your business, the financial state of affairs, and the type of bankruptcy filed.
If you have questions or think you may need to file bankruptcy, contact Mohsen Parsa, an experienced attorney representing clients in and around the Los Angeles metro area. He will listen to your story, review your case, and provide you with your best options moving forward – the latter of which is the point: to keep moving forward, something that bankruptcy can allow you to do.
Bankruptcy in California: You Are Not Alone
If you are in financial dire straits and believe bankruptcy may help you but are too embarrassed to address, the first thing to keep in mind is you are not alone. Individuals and businesses file for bankruptcy. In 2019, at theU.S. Bankruptcy Court of the Southern District of California, there were a total of:
- 6,567 Chapter 7 filings
- 43 Chapter 11 filings
- 1,436 Chapter 13 filings.
Comparing the months of this year with last year, the number of filings is comparable. Now that you know you can do this, you should know which bankruptcy chapter is right for you.
Bankruptcy in California: Know Which Chapter is Right for You
There are three types of bankruptcies, but typically only one is right for you. These three types, known as chapters, are summarized below.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is by far the most common type of bankruptcy as the above-data suggests. This is true whether you are in California or anywhere else in the United States. Individuals use this type of bankruptcy, and through it, they must liquidate or sell all non-exempt assets. Creditors are paid back some of their debt via asset liquidation.
A repayment plan is not required under this bankruptcy chapter. That does not mean all debts are cleared. Some filers are able to keep things like an auto loan so that they can secure transportation for themselves and/or their family.
Chapter 11 Bankruptcy
Chapter 11 is the least filed bankruptcy, but that’s only because it’s the type of bankruptcy filed by businesses. This type of bankruptcy requires restructuring and reorganization. Therefore, debt is not completely cleared, but businesses will have to repay creditors under different terms and conditions. These terms and conditions allow the business to stay alive and –hopefully – grow.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is the second type of bankruptcy most filed, and it is usually used by individuals as well as sole proprietors. This type of bankruptcy allows you to restructure and reorganize debt.
A repayment plan is required, which is preferred by some because it means you can keep your assets and not sell them off. For people with substantial assets, like a home, extra cars, and other assets, this is important.