What happens when you file for bankruptcy in california?

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Filing for bankruptcy can be a daunting and overwhelming process, but it can also provide individuals and businesses with a fresh start and a chance to rebuild their financial lives. In the state of California, the bankruptcy process follows specific rules and regulations that are unique to the state. Understanding what happens when you file for bankruptcy in California is essential for anyone considering this option.

Types of Bankruptcy

In California, individuals and businesses typically file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves the sale of non-exempt assets to pay off debts. Chapter 13 bankruptcy, on the other hand, allows individuals to create a repayment plan to pay off their debts over a period of three to five years.

Filing Process

To file for bankruptcy in California, individuals must complete several steps. These include attending credit counseling, gathering financial documents, completing bankruptcy forms, and paying the required filing fees. It is crucial to ensure that all forms are completed accurately and honestly to avoid any potential legal issues.

Automatic Stay

Once the bankruptcy petition is filed, an automatic stay goes into effect. This means that creditors must immediately stop all collection efforts, including phone calls, letters, and lawsuits. The automatic stay provides individuals with temporary relief from their debts and allows them to focus on the bankruptcy process.

Meeting of Creditors

After filing for bankruptcy, individuals are required to attend a meeting of creditors, also known as a 341 meeting. During this meeting, the bankruptcy trustee and creditors have the opportunity to ask questions about the individual’s financial situation and the bankruptcy petition. It is essential to be prepared for this meeting and to provide accurate and honest answers.


California has specific bankruptcy exemptions that determine which assets individuals can keep during the bankruptcy process. These exemptions include a homestead exemption, which protects a certain amount of equity in a primary residence, as well as exemptions for vehicles, personal property, and retirement accounts. Understanding these exemptions is crucial to ensure that individuals can retain as many assets as possible.

Discharge of Debts

The ultimate goal of filing for bankruptcy is to obtain a discharge of debts. A discharge releases individuals from personal liability for certain debts and prohibits creditors from taking any further action to collect those debts. However, not all debts are dischargeable, such as child support, alimony, and certain tax debts. It is important to consult with a bankruptcy attorney to understand which debts can be discharged in your specific situation.

Rebuilding Credit

After filing for bankruptcy, individuals may be concerned about their ability to rebuild their credit. While bankruptcy does have a negative impact on credit scores, it is not permanent. By practicing responsible financial habits, such as paying bills on time and keeping credit card balances low, individuals can gradually rebuild their credit over time.


Filing for bankruptcy in California is a complex process that requires careful consideration and adherence to specific rules and regulations. Understanding the types of bankruptcy, the filing process, the automatic stay, the meeting of creditors, exemptions, the discharge of debts, and the process of rebuilding credit is crucial for anyone considering bankruptcy as a solution to their financial difficulties.


– California Courts: www.courts.ca.gov
– United States Courts: www.uscourts.gov
– Internal Revenue Service: www.irs.gov