The California Bankruptcy Filing Process for Individuals

The California Bankruptcy Filing Process for Individuals

The California bankruptcy filing process for individuals is designed to provide a fresh start for those overwhelmed by debt. Understanding the steps involved can make the journey smoother and more efficient.

Types of Bankruptcy Available for Individuals

In California, individuals typically file under Chapter 7 or Chapter 13 of the Bankruptcy Code.

  • Chapter 7 Bankruptcy: This is a liquidation bankruptcy that allows individuals to discharge most of their unsecured debts, such as credit card bills and medical expenses. However, certain assets may be sold to pay off creditors.
  • Chapter 13 Bankruptcy: This reorganizational bankruptcy enables individuals to create a repayment plan to pay back a portion of their debts over three to five years. It is ideal for those with a steady income who wish to keep their assets, such as a house or car.

The Filing Process

Filing for bankruptcy in California involves several essential steps:

  1. Credit Counseling: Before filing, individuals must complete a credit counseling course from an approved provider within 180 days prior to filing for bankruptcy.
  2. Determine Eligibility: For Chapter 7, individuals must meet the means test, which assesses their income against the median income for a household of their size in California. Chapter 13 requires that individuals have a regular income and debts within certain limits.
  3. Prepare Bankruptcy Forms: Gather required information and complete the necessary forms. These typically include schedules of assets and liabilities, current income and expenses, and a statement of financial affairs.
  4. File the Bankruptcy Petition: Submit the completed forms to the appropriate bankruptcy court. As of 2023, individuals can file online or in person, depending on local court rules.
  5. Pay Filing Fees: The filing fee for Chapter 7 is approximately $338, while Chapter 13 costs about $313. Fee waivers may be available for those who qualify.

The Automatic Stay

Once the petition is filed, an automatic stay is put in place. This legal provision halts most collection actions from creditors, providing individuals with relief from harassment during the bankruptcy process.

Meeting of Creditors

Approximately 30 days after filing, individuals must attend a Meeting of Creditors, also known as a 341 meeting. During this meeting, the bankruptcy trustee and creditors can ask questions about the individual's financial situation. It's important to be prepared and bring any necessary documentation.

Debt Discharge or Repayment Plan Confirmation

If filing Chapter 7, the case may be closed within a few months, and most qualifying debts will be discharged. For Chapter 13, after the repayment plan is approved by the court, individuals will make payments over the specified period, after which any remaining eligible debts may be discharged.

Post-Bankruptcy Considerations

After completing the bankruptcy process, individuals can begin rebuilding their credit. Establishing a budget, using secured credit cards, and making timely payments can help improve credit scores over time.

Legal Assistance

While it’s possible to file for bankruptcy without an attorney, consulting with a bankruptcy lawyer can help navigate the complexities of the process. An experienced attorney can provide crucial guidance and ensure compliance with legal requirements.

In conclusion, understanding the California bankruptcy filing process for individuals can empower those facing financial challenges. By being informed and prepared, individuals can take essential steps toward achieving a fresh start.