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Embarking on the bankruptcy journey can be daunting, but understanding the eligibility criteria is the first step toward a fresh financial start. Individuals and businesses in Encino, CA considering this path must navigate a series of legal prerequisites. The means test, for instance, is a pivotal assessment that determines whether your income is low enough to file for Chapter 7 bankruptcy. This test compares your monthly income to the median income for a household of your size in your state.

Types of Bankruptcy Explained

Bankruptcy is not a one-size-fits-all solution; various chapters cater to different financial situations. Chapter 7, often referred to as liquidation bankruptcy, is designed to erase most unsecured debts, such as credit card balances and medical bills. For those looking to reorganize their debts, Chapter 13 offers a repayment plan that allows debtors to keep their property. On the other hand, Chapter 11 primarily serves businesses allowing them to stay operational while repaying creditors under a court-approved plan. Each type of bankruptcy carries its unique aspects and suitability, and understanding these differences is crucial to selecting the path that aligns with your financial goals and circumstances in California.

Legal Dos and Don'ts in Bankruptcy

Engaging with Creditors

Communication with creditors is an inevitable part of the bankruptcy process, and it's important to handle these interactions with care. For those in Encino, CA, it's advisable to be transparent with creditors about your financial situation, but also to be aware of the information you are obligated to disclose. It's essential to avoid making promises you can't keep or providing misleading information. Instead, direct creditors to your bankruptcy attorney, who can manage communications on your behalf.

Avoiding Fraudulent Transfers and Penalties

In the lead-up to filing for bankruptcy, it's critical to avoid any actions that could be construed as fraudulent. Transferring assets to friends or family members to shield them from the bankruptcy process can lead to severe penalties and may jeopardize your case. The court scrutinizes such transfers closely, and if they are deemed fraudulent, you could face denial of discharge or even criminal charges. To maintain the integrity of your bankruptcy filing in California, it's important to consult with a knowledgeable attorney who can guide you through the legal implications of your financial decisions and help you avoid any missteps that could be interpreted as an attempt to defraud creditors.

If you're facing the complexities of bankruptcy in Encino, CA, remember that you don't have to go through it alone. At RHM LAW LLP, we understand the intricacies of bankruptcy law and are dedicated to guiding you through every step of the process. Our compassionate approach ensures that you receive not only expert legal representation but also the support you need to emerge from bankruptcy with your finances and dignity intact.

Contact us today to explore how we can help you achieve the fresh start you deserve.

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