Should You File For Bankruptcy?LABankruptcy
If you’ve acquired a lot of debt and are unsure if you can pay them off, you might have already considered filing for bankruptcy. But is filing for bankruptcy an ideal solution? Are any of your assets spared when you file for bankruptcy?
There are a few situations when bankruptcy is really the only solution to massive debt. The first and most basic is when there is no real possibility of you paying off your debt considering your financial circumstances. That is to say that if you owed $450,000 and your monthly payments were $3000, but you only had an income of $1500 per month and $80,000 in assets, it would be almost impossible to repay that debt if you do the math.
However, in this case you may be able to negotiate with your creditors to work out a plan to repay your debt based on your income and value of your assets. There are plenty of debt consolidation and credit counseling companies that can help you reduce your monthly payments. Even if bankruptcy is imminent, you can file for Chapter 13 bankruptcy, is a simpler form of bankruptcy similar to Chapter 11, which lets you work out a way to pay your debts within three to five years. However, in some cases your creditors might not be able or willing to negotiate on your debts. In this case you will need to seriously consider filing for Chapter 7 bankruptcy.
However, some of your assets may be able to be protected under California bankruptcy law. For example, the retirement savings in your IRA as well as your 401(k) plan are protected. Some of your property can also be protected from liquidation. You may be able to mark properties as exempt from bankruptcy liquidation, however it’s highly recommended to consult a bankruptcy law attorney to ensure you can maximize the number of assets you can protect before you file for bankruptcy.