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Declaring bankruptcy in California can give you a fresh start and wipe out debt. If you've reached the point where your bills are overwhelming you may be considering declaring bankruptcy. This page will show you how to file for bankruptcy in California.
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Introduction
- Bankruptcy is governed by federal law, so the procedures are basically the same no matter where you live. If you want to pursue Chapter 7 bankruptcy, however, you'll need to meet an income test that is specific to California. If you qualify, how much of your assets you get to keep will also be determined by California statute.
Step 1: What is Chapter 7 Bankruptcy?
- There are two different types of bankruptcy that consumers can avail themselves of. While Chapter 13 restructures payments and terms but keeps the debt intact, Chapter 7 sells off a bankrupt's assets, gives the proceeds to creditors, and eliminates the remaining debt (with a few exceptions.) Whether or not you can qualify for Chapter 7, and how much of your assets you can keep, is governed by California law.
Step 2: Chapter 7 California Income Test
- In order to use Chapter 7, also called liquidation, your income must be below the Census Bureau determined median for similarly sized families in California.
Step 3: Chapter 7 California Exemptions
- Which assets you can keep, and which must be sold, are governed by state, not federal, law. In California, if declaring bankruptcy under Chapter 7, you have a choice of exemption alternatives that permit you to keep your house, if your equity is below a minimum threshold, as well as a mix of personal items. Your bankruptcy attorney can advise you as to which exemption alternative best meets your needs.Lawyers.com: Bankruptcy in California
Step 4: What Debts Are Not Covered by California Bankruptcy?
- Not all debts will be eliminated by declaring bankruptcy. Depending on your personal circumstances, the following debts may not come under the jurisdiction of the bankruptcy judgment:
- AlimonyThe Bankruptcy Site: Filing Bankruptcy in California
- Child supportThe Bankruptcy Site: Filing Bankruptcy in California
- TaxesThe Bankruptcy Site: Filing Bankruptcy in California
- Student loansThe Bankruptcy Site: Filing Bankruptcy in California
- Purchases of luxury items that were made within 90 days of filing for bankruptcyThe Bankruptcy Site: Filing Bankruptcy in California
- Cash advances that were taken within 70 days of filing for bankruptcyLawyers.com: Bankruptcy in California
- Fines owed to either U.S. or California government agenciesThe Bankruptcy Site: Filing Bankruptcy in California
- Debts accrued as a result of fraudulent or illegal activityThe Bankruptcy Site: Filing Bankruptcy in California
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