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How to File Bankruptcy in California

In California, you can apply for both Chapter 7 and Chapter 13 Bankruptcy as an individual.

Bankruptcy in California does not discharge some debts, including child support alimony, most back taxes, most student loans, purchases greater than 0 made within 90 days of filing bankruptcy, penalties or fines, or cash advances greater than 5 made within 70 days of filing bankruptcy.

To file for Chapter 7 bankruptcy in California and have your debts erased, you must pass a means test. Under the test, if you make less than the median income for a California family, you may file under Chapter 7. For singles, the median income in California is ,814. ,742 is the median income for a family of two, ,611 for three persons, and ,931 for four persons. If there are more than four members of your family, add ,900 for each additional person.

Before you file Chapter 7 bankruptcy in California, you will need to undergo credit counseling approved by the state.
Once you meet the minimum requirements, your attorney will need to file a Statement of Financial Affairs with the Court. Your Statement of Financial Affairs will include a list of all your debts, both secured (such as mortgages or car loans) and unsecured (such as credit cards and medical bills). You will also need to include names and contact information for all your creditors and an itemized list of your personal property and assets.

Under California law, you have two options for how to take exemptions in a bankruptcy proceeding. If you own a home or property and file bankruptcy in California, you will most likely be able to keep it regardless of which exemption scheme you choose. The qualifications for keeping your home depend on the amount of equity in your property, whether you are single or married, and whether you are elderly or have a disability.

Under both California exemption schemes, you are able to keep your vehicle if you meet certain requirements. Under the first exemption scheme, you cannot have more than ,900 equity in your vehicle. Under the second scheme, you must have less than ,950 in equity. If you still owe money on your car, you will need to reaffirm your auto loan after filing bankruptcy.

Using the first California exemption scheme, you can also keep: Necessary food, clothing, appliances, and furniture; family heirlooms, jewelry, and art valued up to ,000; burial plots; disability, social security, veterans’, and unemployment benefits.
Under the second California exemption scheme, you can keep: Your furniture and appliances; books and musical instruments worth up to 5 per item; alimony, retirement plans , disability, social security, veterans’, and unemployment benefits; and 5 in miscellaneous exemptions that you can use for whatever you choose.

Regardless of how you choose to exempt your assets, educational savings made with IRAs or 529s are not factored into your California bankruptcy proceeding.

If you have extra income that would allow you to repay your debts, you may want to file Chapter 13 bankruptcy. Under Chapter 13, you will establish a payment plan with the approval of the court.

Written by goodlife