When you come to The Law Offices of Cheng & Associates , we will provide you a look at your estate, what you own and what you owe. We will work with you and help you determine which bankruptcy option is most ideal for your situation. To help us make this decision, our attorneys will need the following documentations:

  • At least 60 days of pay stubs

  • Credit reports with creditors

  • Any lawsuits, garnishments or levies

Chapter 7

Chapter 7 bankruptcy is a way out for debtors who need assistance to make ends meet. It is a way to eliminate all debts by liquidation of a debtor’s property to repay creditors and give the debtor a fresh start. It is a way to cancel most of your debts by giving up some of your property.

Chapter 7 bankruptcy is recommended when you own little to no assets of great value that you cannot afford to lose. Chapter 7 bankruptcy can get rid of most if not all of your unsecured debts. These are the debts that you do not have collateral for, such as credit card debts and medical bills. This debt is not related to any property you own and creditors can not take your property if you fail to repay the debt. However, creditors can still sue you for your property to repay the debt. Usually if any debt remains after this process, it becomes discharged by the bankruptcy court.

Filing for Chapter 7 bankruptcy will put an “automatic stay” on your debts which immediately stops creditors from trying to collect payments from you. 

Some property is protected and exempt from the hands of creditors which you get to keep. Many states have a specific list of exempt properties to choose from or you can choose from a list set by federal law. In California, the state has two exemption systems that you must choose from replacing the federal system.

What Types of Property Can You Keep?

Exemptions vary from state to state, however you generally may be able to keep your:

  • Home

  • Disability or Unemployment benefits

  • Life insurance policy

  • Alimony and child support

  • Most pensions and some IRAs

  • Personal items such as clothes, appliances, books, furniture, household goods and musical instruments

  • Jewelry

  • Motor vehicles

  • Personal injury recoveries

  • Other payments in compensation for loss of future earnings

  • Worker’s compensation benefits

  • Wrongful death recoveries for an individual you depend on

  • Public benefits including unemployment, social security, public assistance, veteran’s benefits, and crime victim’s compensation

  • Tools of trade

Chapter 11

Chapter 11 bankruptcy is another type of bankruptcy mostly used by businesses due to the complexity of the process. Chapter 11 bankruptcy is suitable when a business needs to reorganize the debts it has and restructure its finances in order to stay open. It is an alternative to Chapter 7, which would require a business to liquidate, whereas Chapter 11 allows a business to keep many of its assets.

When a company files for chapter 11 bankruptcy, all collections must stop and remain halted throughout the duration of the process.

The debtor(s) will propose a reorganization and repayment plan and the creditors may propose a plan as well. The plan must be approved by the creditors and if there are multiple plans, the creditor can vote on a plan to put into place. A trustee will be appointed to oversee the process. The trustee will make sure that the priority claims are paid and the process proceeds as it should.

Chapter 11 bankruptcy allows you to continue business operations, avoid foreclosure and protect your assets from being lost. If you are interested in filing Chapter 11, we can help you formulate a plan that will work for you.   

Chapter 13

Chapter 13 Bankruptcy is an option for those who are not eligible for Chapter 7 or those who want to keep their assets while regaining control of their debts. Chapter 13 bankruptcy does not liquidate debt like Chapter 7; instead it allows you to repay your debts over a three to five year period of time in exchange for keeping your assets.

Chapter 13 does not have a means test like Chapter 7 so more people are eligible to file and does not require you to sell all of your non-exempt assets.Filing for Chapter 13 bankruptcy you will need to make a list of the debts you owe. Then create a repayment plan that will have to be approved by the creditors. The amount that you will pay to creditors will be based on your income. You will need to fulfill the agreement and at the end of this period, remaining debts will be discharged. 

Chapter 13 Bankruptcy Timeline

Four Years Before Your Bankruptcy
You are not eligible for a discharge under Chapter 13 if you received a previous discharge under Chapter 7, 11 or 12 within the prior four-year period. If the prior case was a Chapter 13, you must wait two years before you are eligible for another Chapter 13 discharge.

180 Days Before Your Bankruptcy
If within 180 days before your bankruptcy you had a prior bankruptcy case that was dismissed because you failed to obey court orders or you voluntarily requested a dismissal, then, in some circumstances, you may not file your bankruptcy case until this 180-day period expires.

Also, within the 180-day period before your bankruptcy, you must receive a briefing from a certified credit counseling agency to explain financial management to you, alternatives to bankruptcy, and how to do a budget analysis.

90 Days Before Your Bankruptcy
You must be a resident of the state in which you intend to file your bankruptcy case for at least 90 days before the filing. If you have not lived in the state in which you intend to file your case for at least 90 days, you may only file your case in the state where you have resided, or which has been the location of your principal assets, for a majority of the prior 180 days.

Your Case is Filed!
Your case is formally commenced when you file your bankruptcy petition with the appropriate bankruptcy court. In most cases, as soon as you file your petition, the court will enter an Automatic Stay order prohibiting most of your creditors from taking or continuing any collection or legal action against you.This stops many of the harassing letters and phone calls while your case is in progress.

Next, the court will send a notice of your case to all of the creditors listed in your petition.

Additionally, the bankruptcy court will assign a bankruptcy trustee to oversee your case. The trustee is a federal employee appointed by the court to monitor your case and make sure you are eligible for bankruptcy. The trustee will review your petition, make sure that it is complete, and then schedule a meeting of your creditors.

15 Days After Your Case is Filed
You have a deadline of 15 days after you file your petition to file certain financial "schedules" with the court-documents stating your assets, liabilities, expenses, income, and a statement of your affairs. In most case, however, your attorney will file these schedules with your petition.
This 15-day deadline also applies to the filing of your repayment plan.

Approximately 15 Days After Your Case is Filed
Within approximately 15 days after you file your case, the court will mail the Notice of Commencement of Case to you and to all of the creditors listed in your petition. This notice will inform you of the date set by the court for the meeting of your creditors, and the deadlines for your creditors to object to your case and file their claims against you.

Approximately 30 Days After Your Chapter 13 Repayment Plan is Filed
You must make your first payment under your repayment plan within 30 days after the date that your plan was filed, otherwise your case can be dismissed.

Approximately 6 Weeks (45 days) After Your Case is Filed
The court will hold the Meeting of Your Creditors about six weeks after your bankruptcy case is filed.

The court-appointed trustee will preside over this meeting. At the meeting, which you are required to attend, you will be asked to testify under oath as to the accuracy of the statements in your petition. However, most creditors generally do not appear at the meeting, and you will not be before a judge. The meeting is very informal, and in most cases will last no more than 10 minutes. If you do not attend the meeting, your case will be dismissed.

30 Days After the Meeting of Your Creditors
The bankruptcy trustee and your creditors have 30 days after the conclusion of the meeting of your creditors to make objections.

45 Days After the Meeting of Your Creditors
The court will have a confirmation hearing during which the bankruptcy trustee will recommend to the judge whether or not your repayment plan should be approved by the court. Your creditors do have the right to object to confirmation of your case, but your attorney will likely have resolved any objections to confirmation before this date.

90 Days After the Meeting of Your Creditors
All of your creditors (except for government entities) must file their proofs of claim (these are documents your creditors submit to the court specifying how much you owe them) within 90 days after the first date set for your creditor meeting if they wish to share in the payments from your case.

180 Days After Your Case is Filed
Government entities that have claims against you (such as the IRS) have 180 days after the filing of your case to submit their proofs of claim.

3-5 Years From the Date of Your First Repayment
Upon your final payment under your Chapter 13 repayment plan, you will receive your formal discharge notice from the court.

Before you receive your discharge, however, you must complete an approved financial management course.

5 Years From the Date of Your First Repayment
Unless you have already completed your payments under your Chapter 13 repayment plan, your payments under your Chapter 13 plan must be complete within 5 years of the date of your first payment.

Should You Hire An Attorney?

It is absolutely essential to hire an attorney before diving into the paperwork that is required to file for Chapter 7 bankruptcy. An attorney can help you fill out the forms completely and accurately for filing and advise you on how to keep as many assets as possible that are exempt under state or federal exemption laws. This is important because courts will often throw out Chapter 7 bankruptcy petitions that are filed incorrectly and you may be at risk of perjury if you filled out your petition with incorrect information.