Debt Relief Solutions in California
Individuals facing extremely large debt burdens, the possible foreclosure and loss of a family home, or constant communications from creditors undoubtedly want to find a solution to their debt problems. At The Bankruptcy Group our team of experienced and strategic lawyers can explain your financial situation and potential solutions to your debt burden. We are happy to interpret the law, and provide insights and guidance into bankruptcy and non-bankruptcy solutions.
You can rely on our advice and guidance. As attorneys, we are bound by a fiduciary duty to our clients. A fiduciary duty is a legal duty to act solely in the interests of our clients. We cannot and do not put our financial interests ahead of clients. Instead, we are extremely careful to avoid conflicts of interest that could impact decisions and recommendations we make regarding debt collections. We strive to avoid even the appearance of conflict so we may provide effective and expedient debt relief to our clients.
Negotiation with Creditors for Debt Settlements & Debt Relief Provisions Under California Law
Often, the first steps in addressing debt are quite separate from bankruptcy. That is, creditors and debtors are free to renegotiate a debt. The renegotiation could provide an individual more time to pay, a reduction in the principle, or both. It can be effective for a bankruptcy attorney to contact a creditor, even if they have previously declined to work with you for a number of reasons. First, the experience of receiving a call from a law office immediately changes the tone of the conversation. The possibility of a bankruptcy in which the creditor receives little to nothing on the debt is a powerful motivator to come to a reasonable agreement.
We are also well-versed in the unique features of California law that can permit someone who has fallen behind on debts to catch up. Under federal tax law, forgiven debts are generally considered income and the beneficiary of the debt must pay taxes on this imputed income. However, under federal law and the federal Mortgage Debt Relief Act of 2007, certain debt relating to a mortgage is forgiven. However, California law does not conform to this tax exemption unless the debt is from non-recourse debt forgiveness. Even if the debt is from recourse, two exemptions from being taxable can apply:
- When discharge of the debt is achieved through Chapter 11.
- When the taxpayer is insolvent when discharge occurs.
We understand these peculiarities of California law and work to provide a favorable result for you under state and federal law.
Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is also known as liquidation or straight bankruptcy. It is probably the form of bankruptcy that most people consider when they first broach the topic. Under Chapter 7, property that is not fully protected by an exemption is subject to being sold by the bankruptcy trustee to provide compensation for creditors. However, California’s generous state bankruptcy exemptions do not always protect all property the individual would like to keep. Therefore, he or she may be better served by a different debt solution or approach to bankruptcy.
Chapter 11 Bankruptcy
Chapter 11 of the bankruptcy code is most often used by businesses; although, it is also available for individuals with extremely complex finances. A Chapter 11 bankruptcy requires the filer to set forth a reorganization plan which is approved by the court. Additionally powers to avoid certain recently made transfers are available to claw back assets to satisfy creditors. For small business owners who do not wish to liquidate and want to continue running their businesses, Chapter 11 provides that opportunity. However, planning and financial preparation for a Chapter 11 bankruptcy beings well before it’s filing. Companies and organizations that make proactive preparations prior to a situation’s downfall often find more favorable results.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is often used by individuals with significant amounts of property that would not be adequately protected by the bankruptcy exemptions under Chapter 7. It is also used by filers who means test out of Chapter 7. Under a Chapter 13 plan the filer must devise a repayment plan of a duration of three to five years. The plan provides the individual with more time to pay back his or her debts and allows the individual to retain all secured property, as long as all payments on the plan are made successfully. Chapter 13 plans can provide stability and peace of mind while you satisfy your debts over the course of the repayment plan.
Attorneys Provide Strategic Debt Relief and Bankruptcy Services for Californians
The experienced and dedicated bankruptcy lawyers of The Bankruptcy Group strive to produce strategic debt solutions for all Californians and small businesses. To schedule a free and confidential consultation at either our Folsom or Sacramento law offices, please call 1-800-920-5351 or contact us online today.