Due to the economic consequences of the Covid-19 pandemic, I have been getting more inquiries lately about how to file for bankruptcy in California. People are wondering what kind of debt relief will be available to them given the extreme loss of income of so many Californians. Debt settlement and bankruptcy are the primary options for those who find themselves in overwhelming debt. I will explain each of these options more in depth and take you through the process for filing bankruptcy in California. Keep in mind that during the Coronavirus outbreak, the bankruptcy courts in California are open – but all hearings are telephonic until further notice.
How to File Bankruptcy in California
One of the main questions I have been hearing is, “how much debt do you have to have to file Chapter 7 bankruptcy in California?” The simple answer is that there is no minimum amount necessary, but that isn’t taking into consideration the big picture. You need to make sure it’s worth filing for bankruptcy in California if you have unsecured debts that you absolutely cannot afford to pay back. If you have lower debts, then a debt settlement might be a better option. A debt settlement is a negotiation made between your creditor and you that you will pay back a (usually significantly) reduced amount of the debt owed over a period of time or in a lump sum. Lenders like this option because they would rather receive some of their debt paid back, than have you declare bankruptcy and receive nothing.
A Chapter 7 bankruptcy is a liquidation bankruptcy. You file a petition asking the court to wipe out (or discharge) your debts – and in return, you give up your property that is not “exempt”. This non-exempt property is sold by the courts and used to pay off your creditors. Chapter 7 bankruptcy California exemptions gives debtors a choice between the state law exemptions in Code of Civil Procedure section 704 and bankruptcy exemptions in Code of Civil Procedure section 703.140, which reflect the exemptions that were federal law when the California law was adopted. Unless you own assets with significant value, you should be able to exempt many assets from a forced sale. Finally, if you own a car, but you still owe money on your loan, you can usually file an agreement that’s called a “reaffirmation agreement” that will permit you to keep your car and continue to make payments.
When people ask me how often can you file a bankruptcy in California, the answer depends on the last time you filed. You have to wait 8 years between bankruptcies, and you can file for a total of three times in your life.
The basic process for filing a Chapter 7 bankruptcy in California involves calculating your income with paystubs from the last 6 months, compiling a list of your creditors, and filing your bankruptcy petition with the courts. You will be required to take credit counseling and you will need to pay the $335 filing fee with the courts.
Pros and Cons of Filling Bankruptcy in California
The biggest and most obvious pro of filing for bankruptcy in California is that most of your debt is wiped out and you have a clean slate. Debts that may not be wiped out include your most recent back taxes, most student loans, alimony, child support and fines owed to government agencies. But the stressful calls from creditors will stop with an “automatic stay” that bars your creditors from contacting you. Also, you cannot be discriminated against by your employer for filing bankruptcy under the law.
The cons are that, depending on your individual situation, you could lose non-exempt property such as cars, house, bonds and stocks. Your credit score will also suffer for the next 6-10 years. Although you will most likely be able to apply for a credit card in the future, your interest rate could be higher than it previously was. There are also costs associated with bankruptcy including fees for filing credit counseling, and attorney fees.
If you need help filing for bankruptcy in California, then you should speak with a bankruptcy attorney who offers a free consultation. Never pay up-front fees just for advice. Find a bankruptcy lawyer in California who will listen to your whole story and offer more than one solution to your debt problems based on your particular situation. Our offices are open during the Covid-19 outbreak for a free consultation over your debt issues. Contact me at 858-217-5051 to go over debt issues and we will map out a plan to get you out of debt and on with your life.
Daniel R. Gamez is a debt attorney serving clients nationwide and focuses exclusively in debt relief. He is licensed to practice in all state and federal courts in California and Texas. Mr. Gamez owns and operates the Gamez Law Firm in San Diego and Los Angeles, and helps people with debt problems all over the country. For more information, please contact Daniel Gamez at 858-217-5051, daniel@gamezl