Filing Chapter 7 bankruptcy may be an option for a debtor with just enough assets to live comfortably but not enough for the bankruptcy court to proclaim that the debtor must sell much of his property to repay his creditors. If you feel like Chapter 7 bankruptcy is the right choice for you, you should know the steps taken in the Chapter 7 process.
How to Claim Bankruptcy in California
Step 1:
Attend credit counseling with a credit counseling agency approved by the US Trustee's office. The counseling session should cost about $50, and you should receive a certificate of credit counseling at the end of the session. You must file this certificate with the bankruptcy court.
Step 2:
Take the means test. Compare your family income to the median family income for the state of California. As of 2010, the Census Bureau listed California's median incomes as $47,969 for a single earner; $64,647 for a family of two; $70,638 for a family of three; and $79,174 for a family of four. Add $7,500 for each family member in excess of four. If your family income is less than the state median, you can file for Chapter 7 and skip to Step Four.
Step 3:
Calculate monthly disposable income by deducting allowed monthly expenses from monthly income. If your monthly disposable income is less than $100, you can file for Chapter 7. If your monthly disposable income is more than $100, and that amount would not pay at least 25 percent of your debts over the next 60 months, you can file for Chapter 7. Otherwise, you may need to file for Chapter 13 bankruptcy and repay your debts for the next three to five years.
Step 4:
File the Chapter 7 bankruptcy petition in the bankruptcy court serving your district. You should pay a filing fee of $299, and you may file your schedules while filing the petition or within a few days of filing the petition. The schedules should list income and expenditures; assets and liabilities; unexpired leases and executory contracts. You must also file a statement of financial affairs.
Step 5:
Claim exempt property. After you have filed your petition, a bankruptcy trustee will be appointed to administer your case. The trustee will sell all non-exempt property and use the proceeds from the sale to pay your creditors. The state of California lists property that cannot be sold: homestead up to $50,000 if single, $75,000 if family, $150,000 if 65 or older or disabled; clothing; furniture; appliances; health aids; bank deposits from Social Security Administration; tools of the trade; burial plot; wages; insurance; public benefits; pensions; and business or professional licenses. Refer to California law for a complete list.
Contact Steven Peck's Premier Legal toll free ar 1.866.999.9085 to talk to an experienced California Bankruptcy Attorney and visit us online at www.premierlegal.org.
