How To File Bankruptcy – Chapter 7

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How To File Bankruptcy – Chapter 7 in California

There are five things I look at to determine whether someone should file Bankruptcy under Chapter 7.

  1. Assets: A review of whether any assets exist which exceeds an available exemption. Assets that cannot be protected can be taken away from them and sold for the benefit of creditors. California has two sets of exemptions. An exemption is like a “get out of jail free” card. As long as an asset can be protected by an exemption – it can be kept and will not be taken away and sold. A review of real and contingent assets is the first step of analysis.
  2. Debts: Who does the person owe? Filing Bankruptcy under Chapter 7 will eliminate most debt but not all. Certain tax liabilities, student loans and debts incurred by fraud and other certain types of liabilities will not be eliminated when filing Chapter 7. A detailed review of the benefits is necessary to make sure filing Bankruptcy under Chapter 7 will result in a positive financial outcome.
  3. Income / Expenses: A review of the family budget is also needed to make sure the person filing Chapter 7 Bankruptcy is eligible. The income cannot exceed the reasonable costs of living expenses.
  4. Means Test: To be eligible to file Bankruptcy – Chapter 7 in California – the individual or couple must make less than the average amount of income earned by an individual or couple with the same family size in the county in which they live.
  5. Prior Filings: A person can only file and get a Chapter 7 discharge in California once every eight (8) years. A review of prior filings is as important as making sure the client has health insurance and auto insurance moving forward. Unexpected future medical costs or liability caused by an auto accident without insurance may prompt the need to file Chapter 7 Bankruptcy in the future.

So the question becomes – should you file by yourself, with the help of a paralegal or use an attorney. My response is this: If you were sick and very ill – would you treat yourself, take the advise of a nurse or want to see a doctor and follow his or her recommendations to get better. I opt for seeing the doctor! Which is why people considering filing for bankruptcy should consult an attorney first. Most lawyers will offer a free initial consultation and do an in-depth review of your particular situation. Fees can vary so call a few different attorneys – make sure they offer free consultations and get an idea of their fees and years of experience.

 

The purpose of this post is to provide a very general overview of the process of filing for Bankruptcy – Chapter 7 in California. This post was not intended to provide legal advise to anyone’s particular situation. My office offers a free initial consultation. Please click to worksheet tab and complete our bankruptcy intake. Then use our pop-up appointment scheduler and talk to me today. I have offices throughout the State of California and have been practicing Bankruptcy Law for over 25 years. 

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