California Chapter 7 Bankruptcy

Chapter 7 Overview

A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor’s property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain “exempt” property; but a trustee will liquidate the debtor’s remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property. A qualified chapter 7 bankruptcy attorney can represent your interests in your local California bankruptcy court.

If you are considering filing Chapter 7 bankruptcy in California you should contact a local California bankruptcy attorney to discuss all the options available to you.  Use the form on this page to request a FREE California bankruptcy consultation or call our toll free number 855.700.0753 its available 24 hours a day, seven days a week.

One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a “fresh start.”  The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations.

Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.

A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets.  In addition to the petition, the debtor must also file with the court:

  1. Schedules of assets and liabilities;
  2. A schedule of current income and expenditures;
  3. A statement of financial affairs; and
  4. A schedule of executory contracts and unexpired leases.

Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case began).  Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts.

A husband and wife may file a joint petition or individual petitions.  Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors.   http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter7.aspx

Filing Chapter 7 Bankruptcy in California

You will need to file your bankruptcy case in the district in which you are currently residing.  Each of the California bankruptcy districts has websites where you can find out more information about how to file Chapter 7 bankruptcy in their district.   Filing chapter 7 bankruptcy in California is complicated and should be handled by a professional California bankruptcy attorney. Utilizing the services of an experienced chapter 7 bankruptcy attorney in California will ensure that your chapter 7 bankruptcy is handled in a professional and timely manner.

There are 4 bankruptcy districts in California: