Having to file for bankruptcy can seem like an overwhelming process, especially if you are living in California. However, understanding the steps involved in filing for bankruptcy can make the process easier and less stressful. So, if you are considering filing for bankruptcy in California, this guide will provide you with a basic understanding of the process and the potential costs involved.
Remember, filing for bankruptcy is not the end of your financial journey – it can give you a fresh start to rebuild your finances and move towards a better future. As always, it is recommended to consult with an experienced bankruptcy attorney like those at Joshi Law Group in San Diego for personalized guidance on your specific situation.
What is Bankruptcy?
Firstly, let’s understand what bankruptcy actually means. Bankruptcy is a legal process that allows individuals or businesses who are unable to repay their debts to get a fresh start financially. It provides relief from overwhelming debt by either reorganizing finances or liquidating assets to pay off creditors.
Two main types of bankruptcies can be filed in California:
- Chapter 7: Also known as “liquidation” bankruptcy, this involves selling off non-exempt assets to pay off creditors and discharge remaining debts.
- Chapter 13: Also known as “reorganization” bankruptcy, this involves creating a repayment plan to pay off creditors over 3-5 years.
Chapter 7 Bankruptcy
Also known as liquidation bankruptcy, Chapter 7 bankruptcy is the most common type of bankruptcy filed in California. In this type, a trustee appointed by the court will sell your non-exempt assets to pay off creditors. This usually includes items such as expensive jewelry, second homes or cars that exceed certain value limits.
However, some exemptions can protect certain assets from being sold. Once your eligible debts have been discharged through the sale of assets, you will no longer be responsible for paying them back. This type of bankruptcy is often preferred by low-income individuals.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy involves creating a repayment plan to pay off creditors over three to five years. Under this type of bankruptcy, you get to keep your assets while making monthly payments to a trustee who distributes the funds among your creditors.
Your repayment plan will be based on your disposable income – the amount left after necessary expenses have been paid. This option is usually chosen by those with a steady income and higher-value assets they wish to protect. To be eligible, your unsecured debt must be less than $394,725 and secured debts must be less than $1,184,200.
Filing for Bankruptcy in California
Now that you have a basic understanding of what bankruptcy is, let’s look at the steps involved in filing for bankruptcy in California:
- Credit counseling
- Determine your eligibility
- Collect necessary documents
- Complete required forms
- File with the bankruptcy court
- Attend a meeting of creditors
- Complete any additional requirements
- Receive discharge of debts
Determine Your Eligibility
To file for bankruptcy in California, you must meet certain eligibility requirements such as completing credit counseling and passing the means test. The means test compares your income to the median income in California and determines if you are eligible to file for Chapter 7 bankruptcy.
Collect Necessary Documents
Before filing for bankruptcy, you will need to gather all necessary documents such as tax returns, pay stubs, bank statements, and any other financial information. These documents will be used to complete the required forms and determine your eligibility.
Complete Required Forms
Filing for bankruptcy involves filling out several forms, including a petition, schedules of assets and liabilities, and a statement of financial affairs. These forms provide detailed information about your financial situation and must be completed accurately.
File With The Bankruptcy Court
Once all necessary forms are completed, they must be filed with the bankruptcy court in your district. You must also pay a filing fee, which can be waived if you meet certain income requirements.
Attend A Meeting Of Creditors
After filing for bankruptcy, you will be required to attend a meeting of creditors where you will be questioned by a bankruptcy trustee about your financial situation. This meeting is typically held within 60 days of filing.
Complete Any Additional Requirements
Depending on the type of bankruptcy you file for, there may be additional requirements such as attending financial management courses or making payments under a repayment plan.
Receive Discharge of Debts
If everything goes smoothly and no objections are raised, you will receive a discharge order from the court. This means that you are no longer responsible for paying off the debts included in your bankruptcy.
How Much Does It Cost To File Bankruptcy in California?
The cost of filing for bankruptcy in California varies depending on the type of bankruptcy you file for. For Chapter 7 bankruptcy, the filing fee is $335 and for Chapter 13, it is $310. Additional fees may also apply, such as attorney fees and credit counseling costs.
Credit Counseling Fees
Credit counseling fees are a part of the bankruptcy filing process. Before the bankruptcy filing, a debtor is required to complete mandatory credit counseling. These credit counseling courses are designed to help individuals better understand their financial situation and explore possibilities for repaying their debt.
The cost of these courses can vary, but fees are typically low. In some cases, fee waivers or reductions may be available based on income levels. It’s important to note that these courses must be taken from a credit counseling agency that has received court approval. This ensures that the counseling provided meets the standards set by the bankruptcy court and that the completion of the course will be recognized in the bankruptcy process.
Bankruptcy Filing Fees Waiver
If you are unable to afford the filing fee, you may be eligible for a waiver. To request a waiver, you will need to fill out and submit an application form along with supporting documentation that proves your inability to pay the fee. The court may approve or deny your request based on your financial situation. If your request is denied, you may be able to pay the fee in installments.
Although it is not required by law to hire an attorney when filing for bankruptcy, it is highly recommended. Bankruptcy laws can be complex and having a knowledgeable attorney on your side can greatly increase the chances of a successful outcome. The fees charged by attorneys vary but are typically between $1,000-$3,500 for Chapter 7 bankruptcy and $3,000-$6,000 for Chapter 13 bankruptcies.
Bankruptcy Attorney Fees
While it is not required to hire an attorney to file for bankruptcy, it is highly recommended. The complex nature of bankruptcy laws and procedures can make it difficult to navigate without the help of a legal professional.
Filing for bankruptcy in California requires careful consideration and understanding of the process involved. It’s always best to consult a reputable attorney like those at Joshi Law Group in San Diego who can guide you through the process and help minimize any potential costs. Reach out today by dialing 619-822-7566.
How To Minimize Bankruptcy Costs
Some ways to minimize the costs of filing a bankruptcy petition include:
- Seeking financial counseling before filing to explore other options
- Completing required forms accurately and on time to avoid additional fees
- Negotiating payment plans with attorneys or seeking pro bono legal aid
- Be honest and transparent with your attorney to avoid any surprises that may lead to additional fees.
Filing for bankruptcy may seem like an exhausting and overwhelming event, but understanding the steps involved in the bankruptcy process and seeking professional help from a bankruptcy lawyer can make it easier. It is important to carefully consider all options before deciding to file for bankruptcy and to follow all necessary steps accurately and on time.
To discuss your options with a qualified bankruptcy lawyer at Joshi Law Group, call 619-822-7566 today. They can provide you with a free consultation and guide you through the process of filing for bankruptcy in California. Don’t let the fear of costs hold you back from seeking the financial relief you deserve. Take the first step towards financial freedom and contact Joshi Law Group now.
How Long Will Bankruptcy Stay on My Credit Report?
Bankruptcy will stay on your credit report for 7-10 years depending on the type of bankruptcy filed. However, it does not mean that you cannot rebuild your credit during this time. By making timely payments and being responsible with credit, you can improve your score over time. It’s important to remember that bankruptcy is not the end of your financial journey, but rather a tool to help you get back on track.
Are You Considering Filing Personal Bankruptcy?
Filing for bankruptcy in California can be a complex process, but understanding the steps involved in the bankruptcy process can help alleviate some of the stress. It is important to seek professional guidance from a bankruptcy attorney to ensure that your case is handled correctly and to improve your chances of a successful outcome.
Remember, filing for bankruptcy does not mean the end of your financial future – it can provide you with a fresh start and an opportunity to rebuild your finances. So don’t hesitate to take this step towards financial freedom if you are struggling with overwhelming debt in California. Call the experienced bankruptcy attorneys at Joshi Law Group today at 619-822-7566.
Frequently Asked Questions
What are the court filing fees when filing for bankruptcy in California?
How much do bankruptcy attorneys charge for their services in California?
Bankruptcy attorneys’ fees can vary, but for Chapter 7 bankruptcy it is typically between $1,000-$3,500 and for Chapter 13 bankruptcy it is usually between $3,000-$6,000. It is important to discuss fees with your chosen attorney before proceeding with your case.
In which bankruptcy district will my case be handled in California?
California has four bankruptcy districts: Northern, Eastern, Central, and Southern. The district in which your case will be handled depends on where you reside or have a principal place of business. Consult with an attorney to determine which district applies to your case.
What role does the bankruptcy judge play in my bankruptcy case?
The bankruptcy judge’s role is to oversee your case and make decisions based on the facts presented. They are responsible for ensuring that the bankruptcy process is followed correctly and fairly. It is important to comply with any orders or instructions given by the bankruptcy judge.
Why do most bankruptcy attorneys recommend hiring legal representation for the bankruptcy process?
Bankruptcy law can be complex and the consequences of making a mistake can be significant. An experienced bankruptcy attorney can guide you through the process, ensure that all necessary steps are followed correctly, and improve your chances of a successful outcome. They can also help negotiate with creditors and handle any legal issues that may arise during the bankruptcy process. Overall, hiring a reputable attorney can minimize potential costs and provide peace of mind during this difficult time. So don’t hesitate to reach out to Joshi Law Group for expert legal guidance on filing for bankruptcy in California today.
Have more questions about filing for bankruptcy in California? Contact Joshi Law Group today at 619-822-7566 for a free consultation. Their experienced bankruptcy attorneys can provide you with the information and guidance you need to make the best decisions for your financial future. Don’t let overwhelming debt hold you back any longer – take the first step towards a fresh start today. Remember, there is light at the end of the tunnel and Joshi Law Group is here to help guide you towards it.