Bankruptcy Filings Are Rising in Los Angeles:
What Pasadena Families Should Know in 2026
If it feels like more people are struggling with debt right now, you are not imagining it.
Bankruptcy filings in the Los Angeles Division of the U.S. Bankruptcy Court have increased significantly in 2026. Through August, total bankruptcy filings increased approximately 15.8% compared with the same period in 2025. Both Chapter 7 and Chapter 13 filings have increased.
For families in Pasadena, Altadena and the San Gabriel Valley, high credit-card balances, rising living expenses, mortgage payments, tax obligations and unexpected changes in income can quickly turn manageable debt into a financial emergency.
The important thing to know is that you do not necessarily have to wait until the situation becomes an emergency before exploring your options.
When Should You Consider Bankruptcy?
It may be time to speak with a bankruptcy attorney if:
- You are using one credit card to pay another.
- You are making minimum payments but your balances continue to grow.
- A credit-card company or debt buyer has sued you.
- Your wages are being garnished.
- A creditor is threatening to levy your bank account.
- You are behind on your mortgage and concerned about foreclosure.
- Your income has dropped and you can no longer keep up with your debts.
- Tax debt or other financial obligations are becoming unmanageable.
Talking with a bankruptcy attorney does not mean that you have decided to file bankruptcy. It allows you to understand your options before a lawsuit, garnishment, levy or foreclosure creates additional problems.
Chapter 7 Bankruptcy in California
Chapter 7 bankruptcy can eliminate many types of unsecured debt, including:
- Credit-card debt
- Personal loans
- Medical bills
- Certain lawsuit judgments
- Some older tax debts, if specific requirements are satisfied
Whether you qualify for Chapter 7 depends on several factors, including your income, household size, assets, expenses and the types of debt you owe.
California bankruptcy exemptions may also allow you to protect property while eliminating qualifying debt.
Chapter 13 Bankruptcy in California
Chapter 13 bankruptcy allows eligible individuals to reorganize their debts through a court-supervised repayment plan.
Chapter 13 may be particularly helpful for homeowners who have fallen behind on their mortgage because it may allow them to stop a foreclosure and repay mortgage arrears over time.
Chapter 13 may also be an option when a person earns too much to qualify for Chapter 7, has assets that need additional protection, or needs time to address certain tax or secured debts.
Can Bankruptcy Stop Collection Activity?
In most cases, filing bankruptcy creates an automatic stay.
The automatic stay generally requires creditors to stop most collection activity, including:
- Collection calls
- Credit-card lawsuits
- Wage garnishments
- Bank levies
- Certain foreclosure activity
There are exceptions, and timing can be extremely important. If a creditor has already filed a lawsuit, obtained a judgment or scheduled a foreclosure sale, it is important to seek legal advice promptly.
Frequently Asked Questions About Bankruptcy in California
How much debt do you need to file bankruptcy in California?
There is no minimum amount of debt required to file bankruptcy.
The more important question is whether the debt has become unmanageable compared with your income, expenses and available assets.
For one person, $25,000 of credit-card debt may be overwhelming. Someone else may have substantially more debt but enough income to manage the payments.
A bankruptcy analysis should consider the entire financial picture rather than simply the total amount owed.
Can bankruptcy stop a wage garnishment in California?
In many cases, yes.
Filing a bankruptcy case generally triggers the automatic stay, which requires most creditors to stop wage garnishments.
Timing matters. If your wages are already being garnished, you should speak with a bankruptcy attorney as soon as possible to determine whether bankruptcy can stop the garnishment and what happens to money that has already been withheld.
Can Chapter 13 stop foreclosure in California?
Chapter 13 can often stop a foreclosure if the bankruptcy case is filed before the foreclosure sale takes place.
Chapter 13 may allow a homeowner to resume regular mortgage payments while paying the past-due mortgage balance through a repayment plan.
Waiting until the day before a scheduled foreclosure can create unnecessary risks. Homeowners who are several months behind should consider obtaining legal advice well before a sale date is scheduled.
You May Have More Options Than You Think
One of the most common things I hear from clients is:
“I wish I had called sooner.”
People often spend months trying to keep up with minimum payments, borrowing from retirement accounts, taking cash advances or moving balances from one credit card to another before asking whether there is another solution.
Bankruptcy is not the right answer for everyone.
But understanding how Chapter 7, Chapter 13 and non-bankruptcy alternatives work can help you make an informed decision before your financial situation becomes more difficult.
If you live in Pasadena, Altadena, South Pasadena, San Marino, Arcadia, Monrovia, Sierra Madre, Glendale or elsewhere in the San Gabriel Valley and are struggling with debt, the Law Office of Daniela Romero can help you evaluate your options.
Call 626-296-6971 to schedule a bankruptcy consultation.
This article is provided for general informational purposes only and does not constitute legal advice. Bankruptcy law is highly fact-specific, and every financial situation is different.
Need More Information?
At the Law Office of Daniela Romero, we believe in relationships that are based on trust. Before we work together, we would like to get to know you and we would like you to get to know us. We want you to be sure you are the right fit for us and that we are the perfect fit for you. This will allow you to be completely comfortable sharing intimate and difficult details of your case, so we can offer you representation to the fullest extent of the law. Call us today to set up a free consultation.