Bankruptcy

At the Sefyan Law Firm, P.C., debt relief strategies are put into practice in order to help people move their lives forward, without being weighed down by pressure from creditors.

If you need help with a Bankruptcy case, please contact Armen Sefyan at (323) 488-4649 for a free consultation.

What is Bankruptcy?

When a person or company owes a certain amount of debt, they may seek options that allow them to receive forgiveness or other options to climb from out of a mountain of debt. Bankruptcy is a legal option that allows them to either repay the debt or eliminate it altogether. Chapter 7 and Chapter 13 bankruptcy are the two types of debt relief a person or company can seek. Armen Sefyan handles Chapter 7 bankruptcy cases for Southern California residents.

What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

Bankruptcy is a blanket term used for this legal practice, but many people get Chapter 7 and Chapter 13 bankruptcy confused, or just don’t know which option to choose. Armen Sefyan is glad to help you if you have a need for Chapter 7 bankruptcy.

Chapter 7 allows applicants to rectify their debt issues, to ward off creditors and rebuild their finances. When seeking Chapter 7 bankruptcy, certain types of property are exempt, including vehicles of certain value, primary housing and heirlooms. To get the most out of your case, bring the situation to the office of Armen Sefyan, so that he can offer an overview of the terms that apply to you.

This form of bankruptcy differs from Chapter 13, which instead splits debt into consolidated payments lasting as much as five years. This debt is handled through monthly payments, which will allow you a specific timetable to be sure that your debt is repaid.


How Do I Receive Bankruptcy Relief?

In order to receive Chapter 7 bankruptcy debt relief, your first step should be to get in touch with Armen Sefyan. He will help determine your eligibility, while letting you understand the repercussions associated.

It’s important to understand that not all debt is eligible for bankruptcy filing. Some of these issues include:

  • Debt from taxes
  • Child support, alimony payments and attorney fees dealing with both
  • Student loan debt
  • Debt from tax-advantage retirement plans
  • Homeowners association fees
  • Court costs

Non-dischargeable debt is outlined as certain debt that isn’t accepted by creditors. Some of these examples might include:

  • Debt obtained through fraudulent practices
  • Debt occurred through injuries to another person or to their property
  • Cash advantages in greater amounts than $875, which were garnered within 70 days of bankruptcy filing

If you need help with a Bankruptcy case, please contact Armen Sefyan at (323) 488-4649 for a free consultation.

We are a debt relief agency.

1. I’ve Heard There’s a New Law That Will Make Filing Bankruptcy More Difficult. Is That True?

Yes. It is called the Bankruptcy Abuse Prevention and Consumer Protection Act and President Bush signed it in April 2005. The key to the new legislation is the so-called “means test,” which will determine whether potential Chapter 7 filers could afford to pay back their creditors under a Chapter 13 schedule. The problem is, the test will disqualify from Chapter 7 filing anyone whose income is higher than the median for the state (as determined by the IRS and Bureau of Labor Statistics) and who can afford to pay at least $6,000 or 25% of their unsecured debt (whichever is greater) over five years. This will affect many middle-income individuals or families who earn above their state’s median, but are forced into bankruptcy after accruing large debts, often because of divorce or medical emergencies. For details on the new bankruptcy rules, see our story.

The new law, which had been pushed for eight years by banks and credit card companies and was fiercely opposed by consumer advocates and bankruptcy attorneys, will go into effect in October 2005. Until then, the old rules — explained in the answers below — apply.

2. What’s the Difference Between Chapter 7 and Chapter 13 Bankruptcy?

If you file for Chapter 7 bankruptcy, most of your unsecured debts are written off within 90 days of filing. The bankruptcy will then stay on your credit report for 10 years. While debts will be forgiven, you may also have to give up some of your property, which may be sold, the proceeds of which will be distributed among your creditors. In most cases, this means you may lose your house (if you own it), as well as any expensive items such as art and jewelry, and pricey consumer electronics.

Chapter 13, on the other hand, is a repayment plan: You set up a three- or five-year schedule with your creditors. Chapter 13 bankruptcy remains on your credit report for seven years. With this type of bankruptcy, you get to keep all of your property, including your home, but need to show that your income will be enough to live on while you’re still paying down debts.

3. Is Chapter 7 Bankruptcy Right for Me?

You may be a candidate for Chapter 7 if after you pay for your basic monthly expenses you have no money left to pay off debts. Chapter 7 essentially wipes the slate clean, but you’d most likely lose any valuable possessions.

Bankruptcyaction.com, a bankruptcy information Web site, has a detailed list of exemptions by state.

4. When Does Chapter 13 Make Sense?

Chapter 13 is typically recommended for debtors who’ve fallen behind on their payments because of a temporary problem (such as a job loss), but can get back on track if given more time to catch up. After filing Chapter 13, a repayment schedule is established that eliminates all interest payments as part of the deal.

5. Under Chapter 7, Are There Any Restrictions on the Kind of Debts That Can Be Discharged?

Yes. Child-support and alimony payments, for example, are never dischargeable. Neither are past tax bills, even if paid by credit card. Student loans can be forgiven in very rare situations.

Creditors also have the right to object to the discharge of certain unsecured debts, such as large purchases or cash advances made within 60 days of filing.

6. Can I Choose Not to Discharge Certain Debts in Chapter 7, Like a Car Loan or Mortgage?

That depends on how much equity you already have in those properties. Theoretically, you can keep a debt obligation after bankruptcy by signing a reaffirmation agreement with your creditor. With such an agreement, you’re basically stating that you’ll continue to make payments on the debt, even after all your other debts are written off. So, for example, if a Chapter 7 filer wanted to keep a car, he would sign a reaffirmation agreement with his auto lender and continue to make the car payments during and after his bankruptcy.

7. What Happens to My Credit After Bankruptcy?

The most obvious thing that happens when you file for bankruptcy is that you get a notation on your credit report. Your credit score, which is the number creditors use evaluate your credit-worthiness, will also take a hit.

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