California Bankruptcy FAQs

You should consult a professional attorney for advice on the complicated topic of bankruptcy to ensure the best results. Our firm specializes in achieving excellent results in Orange and Riverside counties and has specifically designed this page to answer questions about California bankruptcy.

What debts can be discharged in a California Bankruptcy?
In California, you can discharge unsecured debts like credit card balances, overdue utility bills, and personal loans through bankruptcy. However, fraud-related debts, specific tax debts, student loans, and spousal/child support typically remain non-dischargeable.

What is the difference between secured and unsecured debt?
A secured debt is a physical asset the creditor can repossess if not paid in full. Homes and vehicles are the most typical forms of secured debt during bankruptcy. Unsecured debts are typically credit cards, loans, and other debts that cannot be resold for value by the trustee.

Can I still file for bankruptcy after being sued, and if a creditor has a default judgment against me?
You can almost always file bankruptcy, and a judgment creditor will often be in the same position as your other unsecured creditors. A bankruptcy will stop a wage garnishment, so if you are about to get garnished or a lien is about to get filed on your property, it may be an excellent time to consider bankruptcy.

What is an Automatic Stay?
Filing for bankruptcy automatically triggers a legal injunction known as an automatic stay, which halts creditors' actions against a debtor or their property, including stopping foreclosure, repossession, wage garnishment, and creditor harassment.

Where will my case be filed?
You file your case in the place where you have lived for the previous 90 days, which is your domicile. Depending on various factors, the exemptions you use vary, but typically, if you have lived in California for the past two years, you are entitled to use California exemptions. Sometimes, even if you file in California, you use another state's exemptions if you do not meet the residency requirements.

How Do I Choose Between Chapter 7 and Chapter 13 Bankruptcy?
The choice between Chapter 7 and Chapter 13 bankruptcy depends on individual financial circumstances, income, and specific debts. Most people file a Chapter 7 if they can pass the means test, which allows them to discharge all their unsecured debts, while if your salary makes you ineligible for a Chapter 7, a Chapter 13 will be used.

What is Chapter 7 Bankruptcy?
A Chapter 7 bankruptcy is a legal process for individuals overwhelmed with debt, offering a fresh start by allowing the discharge of most or all current unsecured debts while keeping assets that fall under the exemptions.

What are 'No-asset cases' in Chapter 7 Bankruptcy?
'No-asset cases' mean that the debtor has no assets to surrender that don't fall under California's list of exemptions.

What kinds of debts are discharged in Chapter 7 Bankruptcy?
Credit card debt and other unsecured debts are typically discharged, and as of 2023, student loans can also be discharged under certain conditions.

How long does the Chapter 7 process take?
The process usually takes about four months from the filing date and requires a court appearance. Court appearances are typically done telephonically or by Zoom in Orange and Riverside counties.

Is it advisable to file for Chapter 7 Bankruptcy without a lawyer?
While it is possible to file "pro se" (without a lawyer), a lawyer is recommended due to the complexity of the process and potential missed opportunities or mistakes.

What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a reorganization plan for individuals with significant income and assets who fail to pass the means test and struggle to meet debt payments. Depending on the debtor's disposable income, it involves a 36-to-60-month plan to repay some debts.

What Role Does Disposable Income Play in a Chapter 13 Bankruptcy?
Disposable income determines the repayment plan's amount and duration in Chapter 13 bankruptcy. It's calculated based on income, expenses, and IRS standards, ensuring debtors can maintain essential living costs while repaying debts.

How Does Chapter 13 Bankruptcy Address Mortgage Arrearages?
Chapter 13 usually allows individuals behind up to three months on mortgage payments to include arrearages in their repayment plan, enabling them to keep their home.

What is the difference between my case being discharged and dismissed?
The objective when filing bankruptcy is to get your debt discharged, wiping out your obligation to pay it back. The court may dismiss your case if something goes wrong during the bankruptcy or you fail to make payments according to your Chapter 13 plan.
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