Process of Filing Bankruptcy in California
Who needs to file for bankruptcy?
A bankruptcy petitioner is typically an individual who has exhausted all his resources to take care of his unpaid debts and other expenses. When a person decides to take the final plunge and files for bankruptcy, it suggests that he is in no sustainable income to repay his credit card debts or similar unsecured debts. Under these circumstances, filing bankruptcy in California can mean as a petitioner you can protect your assets from getting forcibly taken away by your creditors.
Once you file the petition, automatic stay comes into effect immediately and your creditors can no longer conduct any settlement related dealing with you directly. Whether or not, filing bankruptcy is the most prudent option in your current situation can be determined only after thorough consultation with a reputable agency or an experienced credit counselor. An attorney/counselor can help you identify most relevant factors of your present financial position and only then can he guide you through the filing process. California bankruptcy law is complete and can be used only once in 7 years to wipe out all unsecured debts like credit card bills, and medical debts.
Eligibility for filing bankruptcy in California
If your annual income is a lesser than the suggested California middle income for the household size, you qualify for bankruptcy law. However if your annual income is higher than that, you have to follow a long process, which involves step by step expense deduction to calculate your ‘disposable income’ over the next few years. The outcome of this calculation will determine if you qualify for the threshold requirement needed for filing Chapter 7. If you fail to qualify then Chapter 13 is the only viable option for you. Once you are through with most of the preliminary paperwork, you, with the help of your attorney you can file a two page petition along with few forms, collectively called schedules in the California District Bankruptcy Court. You have to pay nominal fees for filing bankruptcy in California, and in most cases the fees amount can be paid in installments.
Is Exemption Law good enough?
Though, Exemption Law of California can provide some amount of protection to your assets, in the face of a financial emergency. But it fails to protect your possessions from all kinds of debts from all types of creditors. Whereas, bankruptcy law in California makes you ‘judgment proof’ and keeping in mind your inability to repay your credit arrangements are made so that you can start afresh. Upon filing for bankruptcy you still have to arrange for ”nondischargeable” debts that include child support, majority tax debts, and most student loans. Most of the dischargeable debts are taken care of by bankruptcy trustees through negotiation with the creditors and your counselor.
Sonali is a regular writer and she writes freely on any topic. She has done an in-depth research while writing this post filing bankruptcy in California.