Bankruptcy Attorney in Ventura, California

Most people equate bankruptcy with the loss of everything and a ticket to a challenging – if not embarrassing -- future.  However, bankruptcy is pretty much the opposite. You don’t generally lose everything, since there are exemptions and practical means to protect your assets. Actually, bankruptcy leads to a renewed future in which debts no longer overwhelm you.  

The federal bankruptcy code is broken down into what are called chapters. For individuals and families, and even for some businesses, the most basic of the bankruptcy options are Chapter 7, Chapter 11, and Chapter 13. Which one you choose will depend upon your individual circumstances and preferences. 

If you are facing overwhelming debt in or around Ventura, California, contact us at the Kenneth H.J. Henjum Law Office. We will review your financial situation with you, advise you of your best options under the bankruptcy code to achieve a fresh start in life, and help you navigate the system to get that new lease on your financial future. We will work side by side with you every step of the way. 

The Kenneth H.J. Henjum Law Office proudly serves clients seeking bankruptcy protection throughout Ventura County and neighboring areas, including Thousand Oaks, Simi Valley, Camarillo, Oxnard, Carpinteria, Santa Barbara, Lompoc, Santa Maria, and Paso Robles. 

Understanding Bankruptcy 

Bankruptcy is a federal financial relief program, which is augmented by state laws that determine which assets can be exempted from seeking bankruptcy protection. California, fortunately, is very generous in its exemptions. Even in a liquidation bankruptcy, individuals and families can often keep their homes up to a pretty high equity valuation.  

The exemptions will be explained below, but for now, it is important to understand that bankruptcy is truly a means to achieve a fresh start, not an end to what you’ve worked for your entire life. At the conclusion of your bankruptcy, your unsecured obligations – credit cards, personal loans, even medical and hospital expenses – will be discharged, and you can start building up your credit once again. 

Your Bankruptcy Options 

As noted above, bankruptcy is divided into what are called chapters, depending on who is involved, the level of debt, and the level of income of the filer, whether an individual, a family, or a business. Let’s look at the three most relevant options: 

CHAPTER 13: This is what is known as the “wage earner’s plan.” This is for individuals, families, and sole proprietors of businesses with debts in their own names. It’s the wage earner’s plan because it is for those who have a regular income that -- though inadequate to cover their current debt load -- can be used to pay back part of their obligations.  

How this works is that the filing party creates — with the help of a bankruptcy attorney — a reorganization plan to pay back their debts with their disposable income. Disposable income is what’s left over after living expenses have been met. You then submit the amount to an assigned bankruptcy trustee, who apportions it to unsecured creditors. The plan runs for three to five years depending on one’s income and debt load, after which all unsecured debts are discharged, even if they’ve only been partially repaid.  

As for secured debts, such as mortgages and car loans, the filer will have to continue to pay those in order to retain their possessions. The good news is, if you are behind in these payments, you can include the arrears amount in the reorganization plan, but then must make the regular monthly payments to stay current. 

CHAPTER 11: Chapter 11 is similar to Chapter 13, but it is used by businesses and high-income individuals. Under Chapter 11, a reorganization plan is also submitted to a creditors’ meeting for approval, but a bankruptcy trustee is generally not appointed. The person filing becomes what is known as a “debtor in possession” and can continue operating their business while going through Chapter 11. The downside is that creditors can reject the plan and force you into Chapter 7, discussed next, and Chapter 11 can also be lengthy and expensive to complete. 

CHAPTER 7: This is the liquidation plan. Liquidation means that the assigned bankruptcy trustee can sell off non-exempt assets to satisfy, at least partially, the creditors and their demands. California is one of the more generous states when it comes to exemptions. For instance, if you own a home, you can exempt up to $600,000 of equity in your home. However, to retain your residence, you will have to continue making your monthly payments. 

Federal law also protects your retirement accounts. These retirement accounts include 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and traditional and Roth IRAs up to $1,512,350 per person. 

Under Chapter 7, there is an income means test. If your income is too high, you would have to file under Chapter 11 or Chapter 13. The beauty of a Chapter 7 is that it is relatively quick and can be over in a few months’ time, after which your unsecured obligations will be discharged, and you will enjoy your fresh financial start in life.