Bankruptcy may be a good choice for people who truly cannot find another way to handle their debt. It allows debtors to obtain a discharge of their debt and gives them a fresh start. However, there may be individuals who can avoid taking this step by streamlining their budgets or making other modifications to their lifestyle. Both Chapter 7 and Chapter 13 bankruptcy require you to complete a credit counseling course before filing for bankruptcy. This is designed to probe the possibility of an alternative solution to bankruptcy for an individual in Los Angeles or elsewhere. A bankruptcy attorney can also advise you on whether there are other options that you should consider as you reorganize your finances. Devin Sawdayi can take a close look at your needs and interests, and offer you the various option available for dealing with excess debt.The Role of Credit Counseling in Financial Reorganization
When you file for Chapter 13 bankruptcy, you must commit to making payments on your plan for three to five years before receiving a discharge of debt. The credit counseling agency you select can help you determine an appropriate repayment plan.
You will need to consult an agency that is approved by the U.S. Trustee's Office within 180 days before filing for bankruptcy. The website of the Office will provide you with a list of local approved agencies, or you can get a referral from your attorney. You may need to pay the credit counseling agency a "reasonable fee," which may be up to $50. If you are below a certain income level, however, it will provide services at reduced rates or waive the fees altogether.
The agency will work with you, in the event that Chapter 13 bankruptcy is appropriate, to develop a debt repayment plan. After discussing your case with you and finding out your income and other details about your finances, the agency can prepare a budget based on your income and reasonable expenses. Often, it will confirm that you lack options other than bankruptcy for dealing with massive debt, but sometimes there are better solutions, such as learning to live within a stricter budget or negotiating individually with a small number of key creditors.
There are exceptions or modifications permitted with regard to the credit counseling requirement. For example, you can sometimes avoid going through this process before filing if you certify to the court that you had to file for bankruptcy immediately, such as if you needed to stop a foreclosure, and you couldn't get a counseling appointment within five days of asking the agency. However, it is best to complete your credit counseling prior to filing your bankruptcy case. Most of the other exceptions are narrow, applying to groups such as active members of the military.
If the agency suggests a repayment plan with which you disagree, you do not need to approve it. However, you will still have to file it with your petition and other paperwork that the court will consider in weighing whether you are eligible for bankruptcy.Contact a Bankruptcy Attorney for Advice in the Los Angeles Area
It can be difficult to meet all the requirements associated with reorganizing your finances without professional help. That is why it is may be vital to consult a bankruptcy lawyer if you are hoping to gain relief for your debts near the Los Angeles area. Devin Sawdayi can guide you toward a good credit counseling agency and give you a sense of what strategies may make sense in your particular case. Contact us at 310-475-9399 or via our online form.