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When to File for Bankruptcy in California

If you find yourself drowning in debt, you may wonder if it is time to file for bankruptcy in California. Doing so can help boost your credit score if you follow the bankruptcy plan and a certain amount of time passes. Plus, it can give you a fresh start. Signs you should file for bankruptcy include a mountain of debt you do not think you can pay off, creditors threatening foreclosure, and an abysmal credit score. Bankruptcy is not for everyone, but for some people, it can be liberating, allowing them to start over. 

To understand the implications of filing for bankruptcy, you need a trusted attorney. Pakpour Banks LLP knows the struggles experienced by individuals, families, and businesses in financial distress. We can review your current situation and develop a plan to pay off your debts or file for bankruptcy to eliminate or reduce what you owe. Contact us today!

When to File for Bankruptcy in California

The decision to file for bankruptcy should not be taken lightly. It can pave the way for a better financial future, but it is not suitable for everyone. Here are some signs that bankruptcy might be for you. 

You Are Drowning in Debt

Most people have at least some debt, whether from a credit card, mortgage, student loan, or other financial obligation. When times get tough, worrying if you can make ends meet can be stressful. But it may be time to take action if your financial situation is spiraling out of control and you risk defaulting on your payments (or already have). Filing for bankruptcy can allow you to decrease or eliminate your debts. Depending on the type of bankruptcy you pursue, you may be able to restructure your payments to fit your budget. Plus, at the end of the repayment plan, you may be debt-free and experience a boost in your credit score. 

You Have a Poor Credit Score Because of Your Debts

Debts can negatively impact your overall credit score, especially if you miss payments entirely or are late making them. Bad credit can close many doors for you, such as buying a house or taking out a loan. If you have an extremely low credit score and cannot keep up with your payments, bankruptcy can pave the way for you to start anew. Your credit score may take a hit at first, but after several years, your credit score will likely bounce back. 

You Are Facing Foreclosure and Do Not See a Way Out

If you are facing foreclosure or think foreclosure is around the corner, bankruptcy may be a good way for you to take action proactively. Once you file for bankruptcy, the creditors (like the bank) typically cannot take action on the debt, such as by filing a foreclosure action or asking for money. Filing for bankruptcy in time can stall the foreclosure process and allow you to keep your house. Of course, this depends on the type of bankruptcy claim you qualify for and other important factors. But it is an option. Consider contacting a knowledgeable bankruptcy attorney to find out if bankruptcy can help you keep your home. 

You Cannot Negotiate a Debt Repayment Plan With Your Creditors

It can be overwhelming if every other piece of mail or phone call you receive is from a debt collector. If you have an unmanageable amount of debt, one way to better your situation is to negotiate a debt repayment plan with your creditors. You can tell them how much you can pay in a lump sum or in monthly installments to work toward getting rid of the debt. If you can agree on a payment schedule that works for both parties, it can enable you to manage and pay off your debt. 

If you have tried to work with creditors and they refuse to agree to your terms, it may be time to look into other options. Bankruptcy can help you restructure your debts and create a repayment plan approved by the bankruptcy court. This allows you to live a debt-free life and enjoy more financial freedom once the bankruptcy process ends and your debts are a thing of the past. 

You Want to Start Over

If you feel overwhelmed by the debt you owe and see no end in sight, it may be time for a fresh start. Despite the horror stories about bankruptcies (often rooted in fear-based myths), bankruptcy is, at its heart, a way for a person in serious debt to wipe the slate clean and start over. How they accomplish this differs depending on the type of bankruptcy. For example, one method allows you to structure a repayment plan to pay off the debt in installments. Another approach can enable you to liquidate your assets to pay off the debt and make it disappear. 

The type of bankruptcy and its impact on your life depends on your specific situation and how closely you follow the plan. People who stick to the repayment plan may experience a credit score boost and peace of mind after their debts are behind them. Developing healthy spending and debt habits can help prolong the positive effects of bankruptcy and set the person up for long-term success. 

Pakpour Banks LLP: Bankruptcy Attorneys Serving California

Bankruptcy gets a bad reputation, but much of this is unfounded. Bankruptcy is a big decision and can immensely impact your life, but it can be liberating for those who are genuinely struggling and underwater financially. Our firm leverages our excellent negotiating skills to help people first attempt to restructure their debts with their creditors. If this does not work, filing a formal bankruptcy proceeding may be necessary. Jason Falina’s passion for bankruptcy law began during law school, where he gained practical experience in the McGeorge Bankruptcy Clinic. He takes a nonjudgmental approach to helping his clients, meeting them where they are so he can effectively advocate for them. If you wonder if bankruptcy is right for you, contact our team today to schedule a consultation.

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Brian enters the family law profession with a refreshing approach to these proceedings: heal families; don’t destroy them. In some cases, this means the family is going to look different than it did before. In other cases, this means a new family is created where there was none before. Either way, individuals should leave family court knowing their voices were heard, and with healthy attitudes about themselves and those they love.

Read More Legal Blogs By Brian Pakpour

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