How To File Bankruptcy in California
Bankruptcy law can be complicated and debtors should, if possible, obtain information/advice from a California bankruptcy attorney or a legal aid service experienced in California bankruptcy law. If you are representing yourself without the benefit of a California bankruptcy attorney, you are known as a “pro se” debtor. Bankruptcy laws are the same from state to state, although states may have different exemptions, such as assets you are allowed to keep when you file for bankruptcy.
Is Filing Bankruptcy Right For You?
California bankruptcy is a twofold legal process. It gives relief to a person who has debts and cannot pay them and it helps to pay back those who are owed the money. It does not, however, remove all debt. Since it is a serious decision, if you are considering filing bankruptcy in California, first consider whether the process is actually the solution for your particular problem. Can you lower your debts by other means, such as cutting expenses or selling some property? Can you get help from a credit counseling agency, which might set up a budget or a repayment plan? After considering alternatives, if filing bankruptcy in California seems to be your best option, you are well advised to contact a California bankruptcy lawyer.
Filing Bankruptcy in California: Mandatory Credit Counseling
Under the 2005 Bankruptcy Act, you will undergo credit counseling within six months before you file and you must complete a financial management course after filing. Credit counseling is conducted by a United States Trustee authorized credit counselor and must be completed before you file for bankruptcy. It is a requirement for ALL individual debtors. When you have received your credit counseling, the credit counselor will issue a certificate that must be filed with the bankruptcy court. If you are filing jointly with your spouse, both of you must complete credit counseling. The failure to timely file a properly issued credit counseling certificate will result in the dismissal of your bankruptcy case.
Filing Bankruptcy in California: Selecting The Type of Bankruptcy To File in California
There are four common types of cases named by the federal Bankruptcy Code, which your California bankruptcy attorney will discuss with you.
- Chapter 7, or liquidation bankruptcy, is the most common type. It means that the court takes your assets, sells them for cash, and pays your creditors. Some assets are exempt from sale under state and federal laws. Incomes and expenses will be determined against the median income in California to see if you qualify for Chapter 7. This is known as the means test; if your income is less than the median, you should qualify. All means testing data can be found on the website www.justice.gov website under “Bankruptcy Reform and Means Testing Information”.
- Chapter 11 can be filed by individuals but is usually filed by organizations. The assets are kept and the individual continues to operate the business while working out a plan to pay the debts.
- Chapter 12 is for family farmers. The property is kept while a repayment plan is worked out.
- Chapter 13 is for individuals who keep the property but pay off the debts within a period of three to five years.
Filing Bankruptcy in California: Where To File Your California Bankruptcy Case
Your California bankruptcy case can be filed in the Central, Eastern, Northern, or Southern federal judicial district in California. You can file either in the district in which you maintain your home, even if you live elsewhere on a temporary basis such as a military base, or you may file in the district where you lived for most of the 180-day period before you filed.
Filing Bankruptcy in California: What Happens After Filing The Required Bankruptcy Paperwork
After you begin the California bankruptcy process by filing paperwork with the California bankruptcy court, an automatic stay is immediate. No creditors can get to your property and no foreclosures can proceed. If you filed under Chapter 13, your payments will begin. The court now legally has control of your debts and of any property except those exempted by the state of California.
Filing Bankruptcy in California: Assignment of a Bankruptcy Trustee
The trustee appointed in your case will now work to make sure as many of your debts as possible are paid to creditors. The Office of the U.S. Trustee is an executive branch agency that is part of the Department of Justice. Its responsibilities include monitoring the administration of bankruptcy cases and detecting bankruptcy fraud. It is also responsible for appointing interim trustees to administer chapter 7 cases from a previously appointed panel of private individuals, lending support to and overseeing the debtor-in-possession in chapter 11 cases, and appointing and supervising standing trustee in chapter 13 cases.
The individuals appointed by the U.S. Trustee to serve as interim or standing trustees in individual bankruptcy cases changes over time.
Filing Bankruptcy in California: 341 Meeting of Creditors
The next step in the California bankruptcy process is known as the 341 meeting, referring to that section of the Bankruptcy Code. You, as the person owing the debts, must attend, as will your attorney. Creditors also attend but rarely at a Chapter 7 filing. Non-exempt property is turned over at this meeting, which the trustee will sell and give the proceeds to the creditors. A Chapter 13 filing will necessitate a hearing before a judge who will rule on the plan for repayment. If it is confirmed and you hold to the plan, any balance you owe at the end of the plan period will be erased.
Common Questions About Filing Bankruptcy in California
Are All Debts Discharged After Filing Bankruptcy in California? No.
Whichever type of bankruptcy option that you choose, remember that not all debts will be discharged. You will not be rid of child support debts, for instance, or student loans, or personal injury debts you caused in a DWI (driving while intoxicated) accident. Bankruptcy Code 523(a) lists all such debts.
Should I Use a Bankruptcy Attorney?
Bankruptcy is under any circumstances a trying period and the California bankruptcy process is no exception. In fact, the change in bankruptcy laws that took place in 2005 were introduced precisely to discourage people from filing. As a result, bankruptcy laws became more complicated. An experienced lawyer can help you through the process.