How to File for Bankruptcy in California

California residents know how hard America’s economic woes can influence a state.  Their unemployment rate has more than doubled in the last two years, and they had over 200,000 bankruptcy filings in 2009 alone.  More are sure to come, and it is vital for those contemplating bankruptcy to know their options.

Finding a Bankruptcy Attorney

Without meeting with a bankruptcy attorney, a debtor may not know all the elements to consider gaining the greatest benefit from filing a bankruptcy petition.  However, finding a qualified attorney is an important step that requires research and an understanding of the methods, standards, and success rate of any potential lawyer.

Bankruptcy Options

As in most states, the majority of bankruptcy filings are under the Chapter 7 process.  This is a good choice for someone who has few assets, which can be liquidated to pay creditors and are anxious to clear the slate and start fresh.

However, for those with significant property assets who want to protect them, and who have enough monthly disposable income to make small payments to creditors, Chapter 13 may be the right choice.  It protects their property and generally allows them between three and five years to pay all debts.

California Exemptions

Federal regulations provide property exemptions from liquidation; however, in California, only state exemptions apply.  Those exemptions include:

Filing the Petition

There are many options to consider before filing the petition for bankruptcy in California.  That means that the debtor and their attorney lay the majority of the groundwork and the debtor fulfills the requirement for credit counselling in advance. 

However, once a petition is filed, the debtor is subject to the decisions of the bankruptcy trustee, who may liquidate non-exempt property for those filing Chapter 7, and who establishes the repayment plan for those filing Chapter 13.  Debtors, their attorneys, and the bankruptcy trustee must meet with creditors once to allow them to ask any pertinent questions about the final disposition of the petition.