Are you struggling with huge piles of debt? You may consider filing for bankruptcy as the last resort to solve your debt problems. Bankruptcy is a legal process that can help you eliminate some or all of the amount that you owe to a creditor. When you declare bankruptcy, you will have the chance to reorganize your finances, pursue debt settlement, and pay off your outstanding debts. Bankruptcy can help you live a debt-free life and have a fresh start.
Bankruptcy laws may vary from one state to another. Although bankruptcy is generally governed by federal law, there are still some California state laws that you need to follow when you file for bankruptcy. This article will cover the important things that you need to know and understand before filing for bankruptcy in California. You’ll learn about the following information:
- Official Bankruptcy Forms
- California Bankruptcy Court Location
- Means Testing Information
- Credit Counseling and Debtor Education
- Bankruptcy Exemptions in California
- The Role of a Bankruptcy Lawyer
Official Bankruptcy Forms
One of the crucial steps in bankruptcy filing is the completion of paperwork. You may seek legal help from a credible Pasadena bankruptcy attorney to ensure the accuracy of the information and figures that you will declare.
You may start the bankruptcy process by accomplishing the official bankruptcy form that you can download from the United States bankruptcy court website. You need to fill out the form with the complete details of your current financial situation. You need to voluntarily declare all your assets, liabilities, living expenses, monthly income, bank account information, credit card debt, loan debt, and property transactions.
Once you complete all the paperwork and requirements, you may file the bankruptcy case in the local bankruptcy court in California and pay the processing fee.
Local Bankruptcy Courts in California
There are four bankruptcy courts in California located in the following districts:
Eastern District: Sacramento, Fresno, Modesto, and Bakersfield
Northern District: Oakland, San Jose, Santa Rosa, and San Francisco
Central District: Los Angeles, Riverside, Santa Ana, Santa Barbara, and the San Fernando Valley
Southern District: San Diego
Each bankruptcy court has a website where you can easily access the following information:
- Court’s timings, complete address, mailing address, and parking information
- Local Forms and fees required by the court
- Steps in filing complete paperwork with the bankruptcy court clerk
- Bankruptcy trustees
- Location of the 341 creditor’s meeting
Means Testing Information
When you decide to file for bankruptcy, you are required to pass the “bankruptcy means test”. A reliable Pasadena bankruptcy attorney can help you undergo the means-testing. This test will determine if you are qualified to file for bankruptcy Chapter 7 or Chapter 13. According to the Bankruptcy Code, if you want to file Chapter 7 bankruptcy, you must prove that you don’t have the means to repay your debts.
Your family income will be compared to the median income in California. If the income of your family falls below the median income, it means that you pass the means test. On the other hand, if your family’s income is greater than the median income, you may still be qualified to pass the means test after you deduct the allowable living expenses.
In contrast, if you choose to file Chapter 13 bankruptcy, you are not required to pass the “means test”, but a similar computation will be used to calculate your monthly payment and the length of the repayment plan. The means test will consider your income, assets, expenses, and unsecured debts. If you fail to pass the means test, your Chapter 7 bankruptcy may either be dismissed or converted into a Chapter 13 proceeding.
Credit Counseling and Debtor Education
As part of the bankruptcy process, you are required to complete financial courses and obtain a certificate from accredited credit counseling agencies. It is mandatory to undergo credit counseling sessions before bankruptcy filing and debt management courses after a bankruptcy filing. The counselor will assess your personal and financial situation, offer advice on budgeting and financial management, and discuss possible alternatives to bankruptcy.
Bankruptcy Exemptions in California
Bankruptcy doesn’t mean that you’ll lose everything that you have. Although both types of bankruptcy may require you to sell assets to help repay creditors, some types of property may be exempt from sale. In California, there are bankruptcy exemption laws that can help you protect your property from liquidation.
Exempt property can generally be called the “necessities of modern life.” This generally includes the sort of items that are necessary for living and working. It includes your vehicle, clothing, household goods, tools of your trade, pensions, and a portion of any equity you have in your home.
Some of your assets may not be protected with exemptions and these are categorized under non-exempt property. It refers to items that are not considered necessities for living and working. If you file a Chapter 7 bankruptcy, your appointed bankruptcy trustee will supervise the process of selling your non-exempt property, and the proceeds will be distributed to your creditors according to the priority payment plan. On the contrary, filing Chapter 13 bankruptcy will allow you to save your property; however, you need to pay back the equivalent non-exempt property value to your creditors under the debt repayment plan agreement.
The Role of a Bankruptcy Lawyer
Bankruptcy filing is a complex process that requires in-depth knowledge and understanding of the bankruptcy rules. It is important to know the dos and don’ts in a bankruptcy filing to avoid errors and conflicts. For legal help, do not hesitate to schedule a consultation with our competent Pasadena bankruptcy lawyers at Pasadena Bankruptcy Law (Daniela Romero Law). Our experienced bankruptcy lawyers can review your case details and evaluate your assets and debts to determine if bankruptcy is the best option to solve your financial problems. We’ll help you assess which exemption system you should use for the optimal protection of assets. We’ll provide legal assistance throughout the bankruptcy process including the preparation of necessary paperwork, attendance in bankruptcy court hearings, and negotiation of repayment plan agreement. We’ll be with you every step of the way until you succeed in your bankruptcy filing.