Many Americans are living paycheck to paycheck. It only takes a single illness to send them into insolvency. Even if a person has health insurance, medical care can cost thousands of dollars. Most insurance plans have sizable deductibles and require the patient to pay 20 percent of the total cost. This can wipe out almost anyone. If the medical bills start to pile up and the sick person loses their job, they probably won’t be able to cover their monthly bills. As soon as this happens they should speak with an attorney about declaring Bankruptcy in Murrieta.
Since their annual income will probably be less than the median income in the state, they will be able to use Chapter 7 of the federal law to declare bankruptcy. This is also known as the liquidation or fresh start bankruptcy. A judge appoints a bankruptcy trustee to watch over the process. There is a hearing where any creditors can appear. Generally this meeting lasts less than 10 minutes and no creditors attend. They just send letters outlining how much money the debtor owes them.
Then the bankruptcy trustee, the debtor and the debtor’s lawyer review the assets that are available to be sold to pay off the debts. While federal law describes the overall process, it allows the states to describe which types of property are exempt from the process. These are protected assets that the bankruptcy trustee is not allowed to sell to pay off creditors. Part of the lawyer’s job is to make sure that the trustee abides by this law. Usually the debtor can keep their home, car, some furniture, clothes and the equipment they need to make a living.
There are gray areas in all of these categories. The lawyer will make sure that as many of the debtor’s possessions as possible are protected from sale. Once the assets are sold off, the trustee determines how much each creditor will get. The remainder of the debts are forgiven. The entire process takes between three to six months. The debtor is free to continue with their life. They can regain their health without being hounded by creditors.
