Bankruptcy in Riverside California
What Debts Can be Included in a Bankruptcy?
If you’re considering bankruptcy in Riverside California there is a great deal of information that you should know. But while this might include items like how to find a Riverside bankruptcy attorney, how to determine which chapter you should file and other concerns, most people really want to know just one simple thing: What kind of debts can be included in a bankruptcy?
MORTGAGE: The number one consideration for most people contemplating bankruptcy in Riverside is the fate of their home, property and mortgages or equity lines of credit. For most people who file individual bankruptcy such as Chapter 7 or Chapter 13, this is where bankruptcy can provide the most protection.
Generally your ability to retain your property depends upon whether your equity reaches a certain threshold or not. This changes from state to state and locality to locality so it’s difficult to list a specific range. However, if the equity in your property is less than this equity threshold you will be able to keep it in most cases.
If the equity in your property is above this threshold, the bankruptcy trustee has the option to sell your home, return the exempt equity threshold amount to you and divide the rest between your various creditors. People who are in this situation should probably consider Chapter 13 reorganization versus Chapter 7 liquidation.
CREDIT CARDS: Credit cards are considered unsecured debt and are therefore very easy to include in a bankruptcy. Often unsecured lenders will be quick to offer settlements or other incentives because they understand that they will probably lose 100% of the account if you file Chapter 7. However, if any of your accounts were obtained or used fraudulently, your case may be rejected.
LOANS: Secured loans are treated in a manner similar to property: if you have more than a certain equity threshold in the item borrowed against, it will probably be sold to satisfy creditors.
MEDICAL BILLS: Like credit cards, medical bills are very easy to discharge via bankruptcy.
TAXES: There are special rules for discharging federal tax debts and they usually only apply to personal income taxes that meet the following requirements:
- The return was due a minimum of three years ago
- The return was filed a minimum of two years ago
- The Assessment of tax is at least eight months old
- The return was not filed fraudulently and the taxpayer is not guilty of tax evasion
STUDENT LOANS: If you can resolutely prove that repaying your student loans would place an insurmountable burden on you and your family it may be discharged in bankruptcy. This is very rare however, so create a backup plan to repay these debts.
The most important thing to remember when filing for bankruptcy in Riverside is that you must follow all instructions of the court and trustee, and you must not do anything that could be deemed fraudulent. To learn what is considered fraud by US bankruptcy courts, ask for a free initial consultation with a bankruptcy attorney in Riverside.