Filing for bankruptcy in California can be a complex process, but it can provide individuals and businesses with a fresh start when overwhelmed by debt. This article will guide you through the steps involved in filing for bankruptcy in California, ensuring you have a clear understanding of the process and the necessary requirements.
Types of Bankruptcy
Chapter 7 Bankruptcy: This is the most common form of bankruptcy and is available to individuals and businesses. It involves the liquidation of assets to repay creditors, and any remaining eligible debts are discharged.
Chapter 13 Bankruptcy: This type of bankruptcy is available to individuals with a regular income. It involves creating a repayment plan to pay off debts over a period of three to five years.
To file for bankruptcy in California, you must meet certain eligibility requirements. For Chapter 7 bankruptcy, you must pass the means test, which compares your income to the median income in California. If your income is below the median, you are eligible to file for Chapter 7. However, if your income is above the median, you may still qualify based on your expenses and other factors.
For Chapter 13 bankruptcy, you must have a regular income and your unsecured debts must be below a certain threshold. It is important to consult with a bankruptcy attorney to determine your eligibility and the best course of action for your specific situation.
1. Credit Counseling: Before filing for bankruptcy, you must complete a credit counseling course from an approved agency. This course can be taken online or over the phone and must be completed within 180 days prior to filing.
2. Prepare and File Bankruptcy Petition: The next step is to prepare the necessary documents for filing. This includes gathering information about your income, assets, debts, and expenses. It is highly recommended to seek the assistance of a bankruptcy attorney to ensure all necessary documents are prepared correctly.
Once the documents are prepared, they must be filed with the bankruptcy court. The filing fee for Chapter 7 bankruptcy is $335, while Chapter 13 bankruptcy has a filing fee of $310. If you cannot afford the filing fee, you may be eligible for a fee waiver.
3. Automatic Stay: Once your bankruptcy petition is filed, an automatic stay goes into effect. This means that creditors must immediately stop all collection efforts, including lawsuits, wage garnishments, and phone calls.
4. Meeting of Creditors: Approximately 30-45 days after filing, you will attend a meeting of creditors, also known as a 341 meeting. This meeting allows the bankruptcy trustee and creditors to ask you questions about your financial situation. Your bankruptcy attorney will guide you through this process.
5. Financial Management Course: After the meeting of creditors, you must complete a financial management course from an approved agency. This course must be completed within 60 days after the meeting.
6. Discharge of Debts: If you have filed for Chapter 7 bankruptcy, your eligible debts will be discharged approximately 60-90 days after the meeting of creditors. For Chapter 13 bankruptcy, you will continue making payments according to your repayment plan for the designated period, and any remaining eligible debts will be discharged at the end of the plan.
Filing for bankruptcy in California can be a complex process, but it offers individuals and businesses an opportunity to regain control of their finances. By understanding the types of bankruptcy, eligibility requirements, and the filing process, you can navigate through the process more confidently. It is crucial to consult with a bankruptcy attorney to ensure you meet all the necessary requirements and receive the best possible outcome for your situation.
– United States Courts: www.uscourts.gov
– California Courts: www.courts.ca.gov
– Legal Services Corporation: www.lsc.gov