Once a person realizes that they will not be able to pay all of their bills that month or the month after that, they should consider filing for bankruptcy. If they wait too long they may lose their home or car. Their best strategy is to hire a Bankruptcy Attorney in Temecula that will look at their finances and tell them the best way to proceed. That will depend upon how much money they earn. A person who earns less than the median income in their state will be able to file for bankruptcy under Chapter 7. Everyone else will have to use Chapter 13.
Using Chapter 7 is the fastest way to file for bankruptcy. It usually is complete in three to six months. The court-appointed bankruptcy trustee makes a list of all the property that he is legally allowed to sell. There is a bankruptcy hearing where creditors sign up to be paid. After that, the trustee sells everything and divides the proceeds among the creditors. The remainder of the debts are forgiven and the debtor goes on with their life. The debtor’s attorney makes sure that the trustee sells only the assets that he is entitled to sell. This varies for each state.
A Chapter 13 bankruptcy can take up to five years to complete. It is used for upper income people who still have the means to pay their living expenses and some of their debt. A bankruptcy trustee examines all of the debtor’s living expenses and reduces them to the minimum. After the trustee has paid these each month, all of the remaining income is divided among the creditors. This budgeting process can last up to five years.
In this case, the debtor’s attorney makes sure that the trustee gives the debtor sufficient funds to live. This is important because the debtor must complete the entire length of the process. If they fail to make payments on just the last month, none of the remaining debts will be forgiven. This will put them in a worse position than before, because this process can only be used once every six years.
