A Guide to Filing for Bankruptcy in California

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Learn more about bankruptcy in California with Chang and Diamond, APC. Contact us for information about the process, types, and how we can help.

Everything To Know About Filing for Bankruptcy in California

California bankruptcy cases are filed in federal court. Learning the rules, process, and eligibility requirements can help you assess whether you should file for bankruptcy.

We have provided a comprehensive guide below breaking down bankruptcy in California. Our guide covers bankruptcy basics, types, the filing process, and California-specific regulations. We also explore life after filing and the most popular questions. 

Navigating bankruptcy law can be complex. A bankruptcy attorney can help you navigate the law and protect your interests. If you are considering bankruptcy in California, the lawyers at Chang & Diamond, APC, are here to help.

Understanding Bankruptcy in California

The Basics of Bankruptcy

Bankruptcy is the legal process providing individuals relief from debts they cannot pay. The bankruptcy process also helps creditors get payment from the debtor’s assets or debt reorganization.

The federal bankruptcy code provides various types of bankruptcies organized as “chapters.” Many individuals opt for Chapter 7 or 13, depending on their situation and eligibility for bankruptcy.

Additionally, California law dictates what property is exempt from bankruptcy. California is an opt-out state, meaning that filers must use California-specific exemptions.

Chapter 7 vs Chapter 13

Chapter 7 bankruptcy is the most common option for individuals. Courts can sell your non-exempt property according to federal and state law. The raised cash is then used to pay creditors. To file under Chapter 7 bankruptcy, your income should be below the state’s median. 

Chapter 13 bankruptcy offers a repayment plan for debtors with regular income, making it an ideal alternative to Chapter 7. You can make monthly payments to clear the debt and keep your property. Chapter 13 is a good option for individuals with a steady income. The fourth type of bankruptcy,

The Bankruptcy Filing Process

Learning ways to file for bankruptcy in California may seem overwhelming. The process involves federal law, state regulations, tedious bankruptcy documents, and a filing fee.

When filing for bankruptcy, the following will occur:

  1. Gather Documents: Gather pay stubs and bank account statements, asset information, credit report, and creditor names and addresses for the creditor matrix. These documents are required to file your bankruptcy petition.
  2. Complete Credit Counseling: California law requires debtors filing for bankruptcy to take a credit counseling course. You must complete the course before filing the bankruptcy petition.
  3. Complete Petitions and Schedules: Bankruptcy cases involve completing specific petitions and schedules. Ensure you fill out the information accurately and truthfully before submitting the petition to the bankruptcy court.
  4. Trustee Assignment: After the court approves your bankruptcy petition, the court will assign a bankruptcy trustee to handle the bankruptcy. The trustee will help develop a plan for repaying creditors, liquidating assets, or reorganizing your debts.
  5. Attend 341 Meeting of Creditors: The trustee will schedule a 341 meeting. During the meeting, the debtor will answer questions regarding their financial situation. Your lawyer can be present during the meeting.
  6. Develop and Complete Bankruptcy Plan: Depending on the type of bankruptcy, a plan will be developed to discharge the debts and complete the bankruptcy. For a Chapter 7 bankruptcy, any eligible assets will be quickly liquidated and debts discharged. For a Chapter 13 bankruptcy, repayment plans typically span three to five years.
  7. Complete Debtor Education: Following your bankruptcy filing, you must complete an approved debtor education course and file Form B 23 with the court to indicate that you have completed debtor education.

California-Specific Regulations

While bankruptcy is generally dictated by federal law, exemptions are determined by state law. California has two sets of exemptions that filers can choose from depending on their circumstances: 703 or 704 exemptions. Understanding the exemptions when filing for Chapter 7 bankruptcy is important because non-exempt assets can be liquidated to pay creditors.

California bankruptcy exemptions include homestead, personal property, insurance, pensions, public benefits, tools of trade, and wages. The amount of property exempt depends on the type of exemption chosen. 703 exemptions, also called “wildcard exemptions,” are typically chosen by individuals who do not own substantial real property. Filers with substantial home equity more often use 704 exemptions.

You can file for Chapter 7 bankruptcy in California if you earn below the median income. The median income amount depends on the year you are filing and your family size. The poverty guidelines also make provisions for a fee waiver. 

While Californians can file bankruptcy petitions without an attorney, legal counsel is helpful. Our San Diego attorneys can provide legal representation and experience in all aspects of the bankruptcy process. Let the Chang & Diamond, APC team answer your questions and assist you with your bankruptcy filing.

Preparing for Bankruptcy

What To Do Before Filing

Filing bankruptcy petitions requires adequate preparation and understanding of the legal processes involved. You will first need to know if you meet the bankruptcy qualifications, the process, and the potential risks and benefits of bankruptcy.

Before filing, you should:

  • Complete credit counseling within six months before filing for bankruptcy.
  • Make a financial inventory of your assets, debts, disposable income, and monthly living expenses.
  • Assess your financial situation to ponder alternatives to bankruptcy. Your attorney can help you understand different debt relief options.
  • Organize your financial documents and review all bankruptcy forms for accuracy.
  • Contact a bankruptcy lawyer to provide legal guidance through the process.

How Chang and Diamond, APC Can Help

Bankruptcy is complex, but an experienced lawyer can help simplify the process. At Chang and Diamond, APC, we provide our clients with personal attention, using our legal knowledge and over 25 years of experience to develop a strategy to help protect your assets.

The Role of a Bankruptcy Attorney

Why Legal Representation Matters

Legal counsel and representation can help you navigate bankruptcy laws. Attorneys can also help you choose an appropriate debt relief option. Working with professionals helps reduce errors and delays while protecting your rights and interests.

Chang and Diamond, APC’s Approach to Bankruptcy Cases

At Chang and Diamond, APC, we provide personalized legal services tailored to your situation. Our San Marcos bankruptcy attorneys follow a client-centric approach to protect your interests. Check out our track record to see how we have helped countless clients in Southern California.

Life After Bankruptcy

Filing for bankruptcy wipes some debts but can have long-term impacts on your credit. You may suffer higher interest rates on a car loan or credit card debt. Lenders may also limit your loans. However, through efficient financial management, you can rebuild your financial stability.

Consider taking a financial management course to learn credit-building strategies. Apply for new loans and make timely credit card payments. Develop a plan to pay off any debts exempt from bankruptcy to build and maintain your credit and financial situation.

Leveraging Experienced Bankruptcy Attorney Services in California

Bankruptcy cases require informed decision-making. The counsel of experienced attorneys can help. Your lawyer will explore options with you, represent your interests throughout the process, file local forms and petitions, and handle any creditor negotiations.

At Chang and Diamond, APC, we provide personalized legal counsel to assist you. Our team prioritizes protecting the rights and interests of all our clients. Contact us for a consultation and find out how we can help in your California bankruptcy case.

Frequently Asked Questions

Who Can File for Bankruptcy in California?

Requirements vary depending on the type of petition. If you file for Chapter 7 bankruptcy, you will must meet the income requirements. For Chapter 13 bankruptcy, you need a steady source of income, and your total debts must be less than $2,750,000.


How Can I Avoid Losing My Assets in a Bankruptcy Case?

Speak to a lawyer to help you understand the laws around exempt and non-exempt assets. You can also file petitions that offer a payment plan while letting you keep your assets.

Can Selling My Assets Help Me Avoid Bankruptcy?

If your case would involve disposing of assets to pay creditors, you can consider selling independently of a bankruptcy. Speaking to an attorney can help you understand the best option to manage your debts.

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