Should You Declare Bankruptcy?(California Information)

Whether or not to declare bankruptcy in California, or any other State,  is a very important decision to make.  While bankruptcy law is federal, it defers to State law for many of its provisions, such as exemptions.   Where you can declare a bankruptcy case depends on where you have lived for the greater portion of the 180 days prior to filing.   Which State's exemption laws apply can depend on where you've lived for the past two-plus years!

It requires an experienced attorney to figure out the answers to even these basic criteria before even determining your eligibility to declare a bankruptcy, as well as assessing whether declaring a bankruptcy case would be in your personal (or businesses') best interest.

How About Credit Counseling and Debt Consolidation?

There can be advantages to doing debt negotiations and consolidations, and there are many companies out there who offer those services.   If you can work out a payment plan that works for you, then great, but here are a few important points to consider and keep in mind:
1.  Be sure you know exactly how long and how much your payments will be;
2.  Be sure there is a guarantee that if you make all the payments, your obligations will be completed;
3.  How much is the company you're hiring taking for its compensation?

IMPORTANT: One very important factor to consider is that if you negotiate a discount and pay less than 100% on a debt, that creditor may be able to issue you a 1099 for forgiveness of debt income which, in turn, may leave you owing a substantial amount of taxes!  Thus, you could be trading debt which is potentially dischargeable in bankruptcy (credit cards, etc.) for debt that is NOT dischargeable (recent taxes).   There is a specific provision in the Internal Revenue Code which excludes forgiveness of debt income in a bankruptcy case (I.R.C. section 108).  Thus, if you file bankruptcy, you will NOT get stuck with a tax obligation for the debt you get rid of.   This is a very important factor to consider.


To prepare for and schedule a no obligation consultation to fully assess your eligibility and to see if declaring bankruptcy in California is right for you, click here.