Bankruptcy

The Solutions Law Center is one of the largest bankruptcy filers in San Diego County and helps countless individuals throughout Southern California obtain debt relief through Chapter 7, Chapter 11, and Chapter 13 bankruptcy, as well as debt settlement and help with home mortgages and foreclosure issues.

Chapter 7

Consumers and businesses alike may file for Chapter 7. Chapter 7 is known as a "straight bankruptcy" because it involves the discharge of debts as opposed to a payment plan such as is found under Chapter 11 or Chapter 13. In Chapter 7, your non-exempt assets are sold, and the proceeds are used to pay off your creditors in priority order. Once the proceeds are disbursed, remaining debts are discharged by the Bankruptcy Court, giving you a clean slate and letting you start over debt-free. This liquidation process is not as bad as it sounds, since the law allows you to exempt many forms of property from sale. It is even possible to receive a discharge without selling any property at all, which is known as a "no-asset" bankruptcy.

A business in Chapter 7 usually ceases operations. For consumers, it is important to know that not all debts are dischargeable in Chapter 7, such as certain tax debts and student loans. Also, consumers must meet eligibility requirements, which may be established by passing a means test. Chapter 7 is usually most attractive to businesses needing to start over or people with large amounts of unsecured debt, such as medical debt or high credit card balances. We can help you determine whether you qualify for Chapter 7, and whether this option is the right one for you.

Chapter 11

Although Chapter 11 is used most often by businesses on the brink of insolvency, it may also be utilized by individuals with large amounts of debt beyond the Chapter 13 debt limits. A business in Chapter 11 continues to operate while it reorganizes and restructures and works out a plan to pay off its creditors over time.

Chapter 11 may also help a holder of investment property who owed more on the mortgage than the property is worth. Chapter 11 allows the debtor to "cram down" to amount owed on the mortgage to the value of underlying property securing the claim.

Chapter 13

Available to consumers only, Chapter 13 involves developing a "wage earner's plan" through which current obligations are paid off over a three-year or five-year period. This process gets the bill collectors off your back and gives you the breathing room to work out a plan that allows you to keep going while paying a little each month toward becoming debt-free. Chapter 13 works well for people with a steady job and regular income that can stick to a plan and put a little aside each month to servicing their debt.

Another major attraction of Chapter 13 is its ability to help homeowners in default avoid foreclosure by catching up on missed payments through the Chapter 13 plan. Even homeowners not in default can benefit by having their second mortgage removed. This process is known as "lien stripping" and is available on primary residences or investment properties when the senior mortgage is already undersecured by the present value of the property, i.e. the homeowner is "upside-down" or "under water" on the first mortgage. The junior mortgage is treated as unsecured debt and discharged as part of the Chapter 13 wage earner's plan.

Other Alternatives

Bankruptcy is not for everybody, and some people facing financial difficulties can benefit from other forms of debt relief. For instance, we may be able to negotiate a debt settlement with your creditors, whereby they agree to accept a lesser amount on the debt in exchange for a lump sum payment. If you are upside down on your home mortgage or behind in payments, we may be able to negotiate a loan modification or workout to keep you in your home with a mortgage that is reasonable. When it makes more sense to walk away, we can negotiate a mortgage buyout through a short sale, deed in lieu, or other means.

At The Solutions Law Center, we take the time to understand your unique financial situation. We develop a strategy and solution that best meets your needs and goals and advise you on your options. We can help you with the bankruptcy process from petition to discharge, or with any other form of debt relief. If you are overwhelmed with debt and don't know where to turn, contact The Solutions Law Center for a free consultation and immediate assistance.