How a Chapter 7 Attorney Can Help You With the Homestead Act

If you are considering working with a Chapter 7 attorney and filing bankruptcy, you need to consider all of your options and ensure that your family is protected.  This is an excellent way to get a clean slate and start fresh without a mountain of debt.  For families that are simply in over their head, this can be the best way to move forward and get ahead of your bills instead of always feeling that you are behind while struggling to catch up.  This type of bankruptcy provides the option of wiping away your debts instead of making payments.

Since you can wipe away your debts, all of your assets are also on the chopping block.  If you have a lot of equity in your home (s), cars, boats, etc. they can all be claimed and sold as a way to give your creditors some money.  This is especially true on any assets that are collateralized.  For example, if you own a boat with a loan on it, the boat is probably collateral for that loan and the bank has the right to reposes it.  There are, however, ways that you can protect yourself and your family.

The homestead laws have been established to help people that are going through a difficult time financially. They are designed to ensure that people do not end up homeless.  The laws vary from state to state but in California anywhere from $75,000 to $175,000 can be claimed as part of the homestead provisions.  Everyone qualifies for the lower amount of $75,000 with higher amounts allowed incrementally based on income and age. In order to qualify for $175,000, you have to be 65 or older or disabled.  What these laws allow people to do is to claim that dollar amount of equity is protected from creditors in a Chapter 7 or other legal action. As a Chapter 7 attorney, we can ensure that the form is filed correctly. 

When the bankruptcy judge looks at the assets that you have that can be sold to pay debts, they cannot include equity that is covered by the Homestead Act.  In many cases, this prevents a home from being sold because the equity above the protected amount is insignificant and wouldn’t be able to satisfy the outstanding debt.  In order to qualify for this protection, you must complete a homestead declaration and file it in the county where you live.  If it is not filed correctly, your home may not be safe.  As a Chapter 7 attorney, we can help with this process to ensure that you and your family are protected and able to stay in the family home.

As a lawyer, we can also help to protect some of your other assets.  For example, we can make a case that you need to keep a car so that you can drive to and from work every day, important for ensure that your financial problems to do not escalate even further.  During your consultation, we will review your assets and debts than create a strategy for each one.  To file your Chapter 7, give us a call today. 

Learn Which Debts Can Be Included in a Chapter 13 Bankruptcy Filing and What is Exempt

Working with a Chapter 13 Attorney in a Chapter 13 bankruptcy, you can get a fresh start by creating a way to get out from under your debts.This type of bankruptcy does not wipe out your debts but creates a way for them to be repaid over time.  In most cases, only a portion of the total debt is paid, and once the payments have all been received, the remaining debt is discharged or wiped out.  This provides a way for creditors to receive some form of payment without you going under from trying to keep up with debt obligations.  In essence, it is a compromise. 

Most of your debts can be included in a bankruptcy filing.  There are, however, a few debts that you cannot include and will have to continue making payments on.  These include:

• Home mortgage.  If you are planning on remaining in your home, you will need to keep making the loan payments as agreed.  If this is difficult to do, ask your lender to consider a loan modification.  They may offer you the option of paying a lesser amount for a set period of time before reverting to your original payment.  In other cases, you may be able to reduce the interest rate and lower your monthly payment by refinancing. 
• Child support.  Parents that are obligated to pay child support as part of a court order will need to continue making that payment as agreed.  This also applies to alimony. Both a Chapter 13 bankruptcy and a Chapter 7 bankruptcy, will not eliminate these debts. If you need a reduction, you will have to seek one through family court in the state that ordered it initially. 
• Student loans.  If you have student loans or other government guaranteed debt, you will need to continue making these payments and cannot get rid of them through filing a bankruptcy. 
• Taxes.  It may go without saying that tax obligations cannot be eliminated through bankruptcy.  The IRS, however, may be willing to reduce the amount that you owe directly.  There is an application process that you need to go through in order for them to consider this. 

While these debts cannot be included in your bankruptcy filing as you work with a Chapter 13 Attorney, they are included in the calculations of what you can afford to pay towards debt on a monthly basis.  The way that a Chapter 13 works is you list out your income after paying taxes and all of your monthly expenses.  This includes paying for housing, utility bills, cell phones, groceries, gas, insurance, etc.  You can also include the payments that you have to make to debts such as child support and student loans.  After deducting everything that you have to pay, the amount that is left can be allocated towards debt payments.  In this way, while you cannot discharge all of your debts you still get credit for them in determining what you can pay towards your other ones as you work with a Chapter 13 Attorney.

To learn more about the process and how a Chapter 13 bankruptcy works, call and schedule an appointment.