It is very common for our clients to be concerned about how their current assets would be affected by filing for bankruptcy. This may be the number one reason for hesitation towards filing for bankruptcy. It is important to know, when considering bankruptcy, that bankruptcy has exemptions that will protect assets you currently own. If you will be inheriting assets in the future or earning funds through any other event in the future (ie. a sum of money from a judgement or a sum of money from a settlement resulting from a law suit), future earnings will not be affected. The bankruptcy court can only deal with assets that they know you have. They cannot speculate on what you will have or what you will be making in the future. In fact, the best way to protect your assets from your creditors in the future is to utilize bankruptcy protection. Let’s illustrate with a simple example.
Let’s say that you have $10,000 of cash in your checking account, and you have been unemployed for 6 months, but recently found a job 2 weeks ago where you are being paid $2500 gross every two weeks, or $5,000 per month. Life is getting better and you see opportunities in your new job for higher earning potential. Since you have been working for 2 weeks, you are about to receive your first paycheck for $2500 at your new job. While you were unemployed over the last 6 months, you had to use your credit cards and some savings in order to keep up with your bills, but you didn’t want to tap into your last $10,000 of cash in your checking account to pay those credit card bills. So, you stopped paying your credit card bills 4 months ago. A month ago, you received a court summons from one of your credit cards to let you know that there is a lawsuit filed against you due to outstanding, unpaid debt. You owe $15,000 on a credit card and you were not paying the minimum payments. Recently, you received a notice from court saying a judgement was ruled in favor of your creditor. They will be initiating a bank account levy to repay them for the outstanding debt. At this point in our example, the $10,000 of cash in the checking account is in danger of being levied. A creditor can enforce a post-judgement bank account levy against you with the help of authorities.
Another creditor from another credit card has also received a judgement from a court, but this one is pursuing a wage garnishment. You owe this creditor $3,000 and also have not paid them in 5 months. They have obtained a judgement against you and are now contacting your work to enforce a wage garnishment of 25% of your paycheck or $625. They will keep taking this amount until they recover all $3,000 back. So, now, after taxes and wage garnishments, you are taking home about $1,000 every two weeks.
RESULT: Altogether, your wage garnishment is wiping out pay and your money in your checking account is going to be levied from another creditor’s judgement. Now, instead of being happy about making $5,000 per month, you are taking home $2,000 per month and losing more money out of your checking account.
Now let’s look at the situation and apply bankruptcy protection as a tool to help protect assets.
We can go back to the scenario of having $10,000 in a checking account and earning $2500 in wages every two weeks, and you are about to receive your first paycheck from your new job after being unemployed for 6 months. Instead of planning to spend your money on frivolous items, you decide to file for bankruptcy with Bankruptcy Law Professionals. We are able to file your petition within a few days after you visit us for a consultation. After your petition is filed, all activity regarding judgements from your credit card companies that you have not been paying are stopped in their tracks. They will not be able to instate any wage garnishment or bank account levy. Also, the $10,000 in your checking account is protected under an exemption allowed in California bankruptcy code. We can also protect automobiles, real estate equity, retirement funds, and many other assets you do not need to lose. Asset protection is a feature of bankruptcy that will prevent you from losing assets that you need to live. So, with bankruptcy, you spend around $1000 for our services at Bankruptcy Law Pros, but you save all of your assets from being plundered by your creditors over and over again. Your bankruptcy is complete within a few months and you never have to deal with the past unsecured debts ever again. Now, you can save money and live your normal life without further legal hassle and financial surprises.
If you have a similar situation to our example, contact Bankruptcy Law Professionals at (855) 257-7671 to see how we can help you. We have the best bankruptcy attorney in Riverside to attend to your needs. We also have attorneys in our La Mirada and Tustin offices to serve Orange County and Los Angeles.
