Bankruptcy

Bankruptcy is a process under federal law to assist distressed debtors recover financially.  Bankruptcy can be filed by individuals or corporate entities. Filing bankruptcy offers debtors immediate relief through what is known as “the automatic stay”.  The automatic stay immediately takes effect upon the filing of the Petition for Bankruptcy. The automatic stay stops all collection efforts. That means no more calls from creditors, no more threat of your car being repossessed, and no more fear of your house being sold at foreclosure during the period of the automatic stay, although in some circumstances creditors can request the court lift the stay to allow them to take some actions. The length of the stay varies depending on multiple factors and circumstances.

The ultimate goal in bankruptcy cases is to receive a discharge of your debt. When your debts are discharged, you are no longer responsible for those debts. There are exceptions to the discharge, however, as you may choose to keep certain secured debts and some debts are non-dischargeable. Non-dischargeable debts include, but are not limited to domestic support obligations (child support and alimony), student loans, most taxes, judgments based on fraud fo the debtor, injuries resulting from driving under the influence, and government fines or penalties.

Through bankruptcy, although your debts are primarily discharged, you may choose to reaffirm certain secured debts. A secured debt is a debt that is secured by a specific asset of the debtor. Examples include a mortgage being secured by a house or an auto loan secured by a vehicle. In those situations, you can choose to discharge the debt and surrender the property, redeem the property, or you can choose to reaffirm the debt and keep the asset. Surrendering the asset and discharging the debt can be a desirable option when the debt on the property is more than the property is worth. Redeeming the property happens when a debtor pays for the asset in full. Reaffirming the debt means that the debtor enters into a reaffirmation agreement whereby the debtor agrees to keep the debt, so that it is not discharged, in order to keep the asset.

The bankruptcy court must approve a reaffirmation agreement. The court will ensure that the debtor can afford the debt, and that it will not be an undue burden on the debtor. In cases with automobiles, the Bankruptcy Judge will not reaffirm an auto loan if it would be too heavy of a burden on the debtor especially because there is a Nevada law that protects consumers if the vehicle was purchased after October 2011 and the debtor remains current on loan payments and maintains insurance on the vehicle.

There are multiple different types of bankruptcy, but traditionally there are two options for individuals looking to file bankruptcy, Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. For businesses, the options are usually Chapter 7 or Chapter 11 (although individuals can file Chapter 11). Chapter 7 is considered the “liquidation” bankruptcy. Chapter 7 is the quickest of the bankruptcy processes, but you have to qualify to file Chapter 7. Additionally, if you are behind on your mortgage payments, you may not wish to file Chapter 7 Bankruptcy, even if you qualify. Chapter 13 is essentially forcing your creditors into a repayment plan based on what you can afford to pay. Chapter 13 is an incredibly useful process if you are behind on your mortgage payments and want to try to save your home. There is also a mortgage modification mediation program available under Chapter 13 bankruptcy.

Businesses that are looking to shut down, but that have way more debts than assets, may choose to file a Chapter 7 so that the Trustee will take the assets of the business, liquidate them, and disperse them amongst the creditors based on the filed prrofs of claim.

At Lizada Law Firm, Ltd., you will have a free Bankruptcy with attorney Angela J. Lizada, Esq. and Attorney Lizada will be present with you at your 341 meeting. We will discuss the bankruptcy process based on your specific facts and explain the requirements, procedures, and what to expect at your 341 meeting with the Trustee assigned to your case. At Lizada Law Firm, we focus on you as an individual and your reasons for choosing bankruptcy to ensure that filing bankruptcy is the right option for you and your financial situation.