Are you behind your mortgage or auto-loan payments? Are you overwhelmed with considerable debts? In these situations, it could be challenging to determine the best course of action to get relief. It is advisable to discuss your financial condition, goals, and concerns with a knowledgeable legal professional like the Los Angeles Bankruptcy Attorney. Bankruptcy is a complex and sensitive issue that might have long-lasting consequences. Fortunately, with proper guidance, advice, and the right information, you can make informed decisions that will give you peace of mind and positively affect your life and finances.
Multiple Bankruptcy Filings: When Could You Bring a Case Again?
If you have previously brought a bankruptcy case, you could be wondering when you will be able to file a bankruptcy case again.
The law does not set the minimum duration that you should wait before bringing a bankruptcy case again. However, if you do it soon following wiping your debts out in your former case, you will not qualify for a second debt discharge.
While it is sometimes sensible to file a bankruptcy case even when you will not receive a debt discharge, the cases are rare. Since filing for bankruptcy too soon often results in wasting money and time, it is crucial to understand proper bankruptcy filing timing.
Timing your bankruptcy depends on several factors. For instance, if a debtor is facing imminent car repossession or foreclosure, they might require to file straightaway. On the contrary, if you'll incur a lot of loans in the future, just moved and plan to take advantage of California's exemptions, or have a great possibility of qualifying for Chapter 7 means test in a couple of months, delaying the filing is sensible.
Bringing Under the Same Chapter
Below are timelines if you want to bring the same chapter you previously filed:
- It would be best if you waited for eight (8) years following the filing date of your previous Chapter 7 bankruptcy case before bringing another case.
- Two years should pass between your filing dates before you can get another Chapter 13 discharge.
Bringing Different Bankruptcy Chapters
Below are the waiting durations when your subsequent bankruptcy case is another chapter.
Filing Chapter 7 After Chapter 13
If the bankruptcy case granted a discharge under a Chapter 13 case, you have to wait for six years before bringing Chapter 7. However, you don't have to wait that duration provided:
- You paid all your unsecured debts in Chapter 13
- You paid more than seventy percent of your claim, and
- You suggested the repayment plan in good faith.
Filing Chapter 13 After Chapter 7
If the judge granted the first discharge per Chapter 7, you should wait for four years between the bankruptcy filing dates.
When Your Second Bankruptcy Filing Could be Useful Even Without a Debt Discharge
Sometimes, all you require is time to clear your debts. Let's assume your federal taxes were not discharged, and you could not have a repayment plan.
Instead of having the wages garnished, a debtor can bring a Chapter 13 case and make their repayments over five years.
A similar method is filing for Chapter 13 bankruptcy immediately after getting a debt discharge in Chapter 7. The main reason for doing so is securing more time to clear non-dischargeable debts like alimony and child support.
However, not every bankruptcy court allows the process. It could be complicated to be eligible for Chapter 7 and then prove that you've adequate income to repay your debts using a Chapter 13 bankruptcy repayment plan. Consequently, it is advisable to first speak with a skilled Valley Glen bankruptcy attorney.
What Takes Place If You Did Not Get a Debt Discharge in Your First Bankruptcy Case?
You could bring a second case and obtain a debt discharge if you did not get one in your first case. However, that isn't always the case. Moreover, you lose your right to automatic stay when you bring several cases soon.
The Bankruptcy Court Dismissed Your First Case
You can bring it again unless the judge orders otherwise. A six-month waiting period might apply if a borrower:
- Did not comply with the court order
- Voluntarily dismissed their case following a lender filing a motion for relief from their bankruptcy stay
- Failed to show up in court
The Judge Denied the Discharge
You could file a second bankruptcy case, but you might not have a right to a discharge of your loans outlined in the initial case. It is another situation where you require the assistance of a seasoned Valley Glen bankruptcy lawyer.
What is Automatic Stay
An automatic stay order prevents government entities, collection agencies, individuals, and creditors from pursuing you for loans.
Per Section 362 of the United States Bankruptcy Code, it becomes effective immediately you bring a bankruptcy case. It applies to businesses and individuals and all bankruptcy chapters.
It stays as long as your bankruptcy case lasts and stops if the case is dismissed. Its length also depends on whether the collection activity is directed towards you or your property. Additionally, the length varies depending on the bankruptcy chapter you are filing. Typically, Chapter 13 lasts longer than Chapter 7.
What Automatic Stay Could Prevent
Below is how an automatic stay order affects some emergencies:
- Utility disconnections— If you are behind your utility bills and the service provider wants to disconnect the electricity, gas, telephone service, or water, an automatic stay order prevents the disconnection for twenty days. While your utility bill does not justify filing for bankruptcy, it could be sensible to bring if you've other debts that could be discharged.
- Foreclosure — If the house is being foreclosed, the order will prevent the foreclose. What will take place next depends on your bankruptcy chapter. For example, if you plan to maintain your home, you should file a Chapter 13 case. On the other hand, Chapter 7 does not allow a debtor to retain their home, and the relief the stay offers is temporary.
- Eviction — If a debtor is being evicted from their house, the order could offer some temporary help. If the landlord has a judgment of possession against the debtor when they file, the order will not affect the eviction proceedings. The landlord could continue as if the debtor had not brought a bankruptcy case. Sometimes, a court order could buy you a couple of weeks, but your landlord might request the judge to lift your stay and permit the eviction.
- Wage garnishment — A bankruptcy case stops garnishment dead in the tracks. You will enjoy your full salary and also discharge eligible debts like personal loans and credit card balance.
What Your Automatic Stay Can't Prevent
Here are instances that an automatic stay will not help you:
- Specific tax proceeding — The Internal Revenue Service could still issue tax deficiency notices, ask for tax returns, issue tax assessments, or demand the assessment payments. Nonetheless, the order temporarily stops the IRS from seizing your income or issuing a tax lien. When you are accountable for your tax following a bankruptcy case depends on whether you cleared your loans in Chapter 13 or the tax is discharged in Chapter 7.
- Filing a bankruptcy case does not support a suit against a debtor seeking to collect alimony or child support or establish paternity.
- Also, the automatic stay does not stop criminal proceedings.
What Happens If Your Creditor Attempts Collecting a Loan During Your Bankruptcy?
If, after filing a bankruptcy case and the court hasn't modified or terminated your automatic stay, then your lender continues the collection action against you, the lender could be violating the automatic stay.
Well, you have many options if your creditor violated the order, including:
Inform your Creditor of Your Bankruptcy
Telling your lender of the bankruptcy of the order will cause the debt collector to rectify their violation. Often, collectors are not aware of bankruptcy cases through negligence or error.
Inform the Court
If your creditor doesn't rectify the collection, the next step is notifying the court. The judge could sanction the lender if the debt collection is willful. The conduct is willful if:
- The order was effective and was broken.
- The creditor was aware of your bankruptcy and ignored the collection order or did not correct the violation after knowing about your case.
- Your lender acted intentionally.
Typically, the judge could sanction the violation of the order under the power of contempt. The court could impose a fine, analyze the lawyer's charges and order your creditor to pay your damages.
Bring a Suit
If the debt collector continues violating the order, they might also break other federal and state laws. To receive damages under the other law, you should file a different lawsuit.
Valley Glen Bankruptcy Mean Test: Why It Matters
A mean test determines if you could file for discharge using Chapter 7. It considers income, family size, and expenses when deciding whether a debtor has adequate disposable income to clear their debts. While it was tailored to limit how many debtors receive a debt discharge, many take the test and pass.
How Means Test Works
In any bankruptcy process that could be overwhelming, confusing, and overwhelming, a mean test explains whether you qualify for a Chapter 7 case or Chapter 13.
Generally, the test is divided into two parts, designed to determine if you've disposable income, which you can use to pay your debts. Your Valley Glen bankruptcy attorney should help you fill out all the necessary forms and submit them to the bankruptcy court.
Typically, the mean test is for persons with consumer debts such as medical debt or credit card loans.
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Step One
The rationale of the first step is checking whether your income is below California's median income.
Begin by collecting documentation about the income for the previous six months.
Although the test is founded on the last six (6) months, there is an adjustment for upcoming or recent changes. Suppose you were employed for five of the 6 months and are now jobless. In that case, the test will consider a drop in your income. And if you secure new employment and earn more, the increase will also be considered.
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Step Two
Collect documentation about the expense over the last six (6) months. Groceries, medical bills, rent, and clothing are allowable expenses. What remains after paying allowable expenses is disposable income, which should be used to clear your debt.
The amount of allowable expense is founded on local and national standards used by the Internal Revenue Service. While national standards cover clothing and food, local standards cater for auto payments and housing expenses. Your legal expert will make sure the expenses are correctly documented.
Avoid making mistakes like outlining conflicting amounts for one expense or omitting items. It could cause your case to the dismissed.
What Happens if a Debtor Passes the Test?
Passing your test allows you to bring a Chapter 7 case. That means Chapter 7 will forgive the unsecured debts, including credit card loans and medical bills. However, that does not always mean that is the most effective method.
It is advisable to file a Chapter 13 case. It permits you to clear your debts and retain your property. Consult with a competent Valley Glen bankruptcy lawyer to advise on the best strategy for your financial goals and situation.
What Happens When You Fail Your Test?
One of your options after failing the test is pausing your bankruptcy for some time.
The expenses and income you use in the test determine the financial situation for the last six (6) months. You could retake your test after 180 days if you believe the situation will satisfy the Chapter 7 threshold.
If you cannot wait for longer and did not pass the test, you should file Chapter 13 bankruptcy and pay your loan for a 3-to-5-year period.
Find a Valley Glen Bankruptcy Attorney Near Me
When considering bankruptcy, there are numerous decisions to make and myths to buy. Filing a case might seem complicated, frightening, and something you never want to get into. With the guidance of the skilled lawyers at Los Angeles Bankruptcy Attorney, bankruptcy could provide a solution to start the next chapter of your life. We can conduct a complete and thorough analysis of your financial situation to determine the right approach that helps you enjoy the benefits of bankruptcy while mitigating potentially adverse outcomes. To discuss the available options, contact us today at 424-285-5525.
