Bankruptcy

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy is a solution for individuals who cannot pay their debt, even with debt reorganization and an extended repayment plan.  In Chapter 7, known as liquidation, the debtor’s nonexempt property is sold and the proceeds are distributed to creditors.  Debtors are discharged from paying most remaining debts.

At the Law Offices of Alisha A. Wood, we help clients in need of Chapter 7 bankruptcy. Many Chapter 7 cases are what we call “no asset cases.”  This means that all assets are exempt, allowing you to keep them all.  We begin by evaluating the assets, debts, and income of an individual debtor to see if filing for chapter 7 is the best solution for debt relief or if Chapter 11 bankruptcy is a better alternative.

In order to qualify for Chapter 7, the Bankruptcy Code requires the debtor to meet a means test to see if his or her income is above the state median.  The debtor must also undergo credit counseling with an approved agency.  During the bankruptcy process, a trustee gathers and sells the nonexempt assets of the debtor.

California law has two sets of exemptions—California Code of Civil Procedure sections 703 and 704—either one of which may be used in a bankruptcy case.  We will help you choose which exemption is best, given their circumstances.  The types of exempt assets we help debtors keep in whole or part, depending on the case, may include:

Clothes and personal effects
Home Equity
Insurance Policies
Jewelry
Ordinary Household Goods, such as furniture and appliances
Other Assets
Retirement Plans
Tools of the Trade
Vehicle Equity
Workers Compensation and Personal Injury Claim Income

Once the trustee gathers and sells the nonexempt assets, and the creditors are paid according to the Bankruptcy Code, the remaining debts are discharged. Certain debts cannot be discharged, including:

Alimony and Child Support
Certain Taxes
Certain Educational Loans
Certain Personal Injury Debts
Certain Criminal Restitution Debts

Chapter 7 is a complex process, so it is important to have an experienced bankruptcy lawyer on your side to help maximize the assets the debtor keeps and minimize the assets that are liquidated.

Chapter 11 Bankruptcy

Chapter 11 Bankruptcy is known as reorganization bankruptcy.  It is used by businesses – including small businesses, partnerships, sole proprietorships, and corporations, to reorganize assets, save the business and pay off debts.  A Chapter 11 debtor has the exclusive right to file a plan of reorganization with the bankruptcy court for 120 days under 11 U.S.C. § 1121(b) of the Bankruptcy Code.  This period can be extended by the bankruptcy court but after it expires, creditors or trustees may file separate plans with competing interests.

The Law Offices of Alisha A. Wood help debtors work out a plan of repayment for approval by a bankruptcy court judge.  Filing a repayment plan makes debt more manageable for businesses because it stops creditors from pursuing collection actions and foreclosures, and it allows businesses to restructure their assets to continue operating successfully.



Chapter 13 Bankruptcy



Chapter 13 Bankruptcy is designed for individuals with regular income who do not qualify for chapter 7 bankruptcy.  It is also available to homeowners whose mortgages are in default, but who want to save their homes from foreclosure.  Corporations and partnerships are not eligible to file Chapter 13.

11 U.S.C. Section 109 of the Bankruptcy Code sets for the following limits: secured debt cannot exceed $1,080,400 and unsecured debt cannot exceed $360,475.  Depending on your disposable monthly income and the amount of priority debt that must be paid in full within a 3 or 5 year repayment period, we will prepare a plan which will need to get approved by a Bankruptcy Judge at the Confirmation hearing. Examples of priority debt that must be paid in full within the repayment period are arrears on the residence, domestic support obligations, and certain tax debts.  The length of the plan (3 or 5 years) depends on the household size and previous six months income.