There are a number of important decisions you need to make if you are going to file for bankruptcy in California.Try to find an alternative way to pay off your debts.You will need to complete a required counseling class before you can file for bankruptcy.Most of your debts will be discharged once you file for bankruptcy.Some debts will stay with you.
Step 1: You don't need to file for bankruptcy on your own.
If you want to avoid the process altogether, try to take some steps.Reducing expenses, increasing your income, Negotiating lower interest rates, and selling your property are all ways to repair your financial situation.
Step 2: Contact the people you owe money to.
If you can't avoid bankruptcy without some help, contact your creditor to work out a payment plan.Hire a credit counseling agency or lawyer if you don't want to do this on your own.They can help you make a budget and negotiate repayment plans.Credit counseling agencies and lawyers can stop aggressive collection practices.If you are going to hire a credit counseling agency, be careful.Make sure the agency you hire is legit.
Step 3: A debt consolidation loan can be obtained.
While you are left to pay off the loan itself, your creditor will be paid off.If you have enough money, you can consolidate your debts with a second mortgage or a home equity line of credit.If you choose to take out a second mortgage or home equity loan, you will need to use your home as a security.You could lose your home if you don't make the required payments.
Step 4: You need to complete a credit counseling plan.
If you enroll in a credit counseling plan, your creditor will be more likely to reduce interest rates and accept lower payments because you will enter into a debt repayment plan.As part of your plan, you will deposit money each month with the credit counseling service and they will pay your debts according to the payment schedule you agree upon.It is important to look at the fees when choosing a credit counseling service.Some services will not charge a fee to manage the plan.Monthly fees will add up over time.
Step 5: Inquire for referrals.
An attorney should be hired whenever possible due to the complexity of the proceedings.Ask your friends and family if they have good referrals for you.Referrals are a good way to find attorneys.When you get the name of a lawyer from a friend or family, ask them why they think the person is right for the job.
Step 6: You can use your state's bar website.
You can use the lawyer search function on your state's bar website if you can't get a referral.Individualized assistance can be given to guide you through the referral process.After answering a few questions about your case, you will be referred to a number of qualified attorneys who are required to have malpractice insurance.
Step 7: Initial consultations should be conducted.
Set up an initial consultation after you have a list of three to five attorneys.The initial consultation gives you the chance to talk to each attorney.The consultation should include as many relevant documents as possible.Bank statements, credit reports, and collection letters are all important in these cases.How long have they been practicing bankruptcy law?How many similar cases have they had?What is the likely outcome of your case?Is there a good relationship with opposing counsel and likely judges?Do they have a history of discipline?
Step 8: Ask about fees.
Lawyer fees can vary based on where you live.You should get the agreement in writing when you agree on a fee with an attorney.Flat fees for certain services are one of the forms of attorneys' fees.The lawyer will charge a flat fee for certain services.You can pay one fee to have the attorney file your case, another fee for an attorney to represent you at hearings, and a third fee if you are filing with your spouse.There are hourly fees.A lot of lawyers charge by the hour for their work.You will be required to pay every two weeks or every month if you want a detailed accounting of the work the lawyer completes.
Step 9: Don't make a decision.
Pick the attorney that makes you feel comfortable and who can answer your questions in a way that you understand.Pick a lawyer who does a lot of practice in that area.
Step 10: Understand the purpose of the course.
You have to complete an approved credit counseling course before you can file for bankruptcy.The course is meant to determine if you could handle your debts without going through a bankruptcy.Even if it is obvious that you need to file for bankruptcy, counseling is required.The law only requires you to participate in counseling if you want to.Even if a repayment plan is doable, you can still file for bankruptcy.You will have to submit any recommendation you receive when you file.The court may try to push you out of Chapter 7 proceedings and into a Chapter 13 repayment plan.
Step 11: There is an approved counseling agency.
The U.S. approves the counseling agency that you choose.The Trustee Program is part of the DOJ.There is a list of approved California credit counseling agencies on the DOJ website.
Step 12: If you have to pay a fee, pay it.
The U.S. is located in the United States.The Trustee Program has determined that agencies can charge a fee ranging from free to $50 for their services.If you can't afford the fee, the agency can give you the services for free.
Step 13: The counseling should be completed.
The agency will prepare a budget based on your income and expenses and review your options for debt repayment during the counseling.You have 180 days to complete this counseling before you file your bankruptcy case.
Step 14: Obtain a certificate.
You will receive a certificate after completing the course.You will need a copy of this certificate to file for bankruptcy.
Step 15: Look at your options.
When you file for bankruptcy, there are four options.The federal bankruptcy code chapter describes them.Chapter 11 proceedings are used for corporations and Chapter 12 for family farmers.Chapters 7 and 13 are the focus unless you are in one of the other categories.
Step 16: You need to qualify for Chapter 7.
The proceeds from the sale of your assets will be used to pay your debts if you file for Chapter 7.Most of your debts will be wiped out, but some debts are not included in these proceedings.If you pass the Means Test you can file for Chapter 7.
Step 17: Do you need to take the Means Test?
Unless you are exempt, you must pass the Means Test to file for Chapter 7.If your income is below the California median for your household size, you are exempt from the test and may file for Chapter 7 bankruptcy.If your debts are not primarily consumer debts or if they were incurred while on active duty in the military, you are exempt from the test.The Means Test is used to determine if Chapter 13 is a viable option.
Step 18: Chapter 13 was selected.
If you file for Chapter 13 you will be able to pay off your debts over a three to five year period.You need a regular income that rises above a certain level to be eligible.You will keep your property during Chapter 13 proceedings.There are limits to how much debt you can have and still be eligible for these proceedings.
Step 19: Consider the debts that will be paid off.
The court will release you from personal liability when you file for bankruptcy.Chapter 13 can discharge more debts than Chapter 7.Credit card debt, Collection agency accounts, Medical bills, Personal loans, and Utility bills are some of the types of debts that can be discharged in Chapter 7.
Step 20: Understand that some debts are notdischarged.
Some debts can't be discharged through bankruptcy proceedings.Chapter 7 has more debts than Chapter 13.Certain types of tax claims, debt not included in your court filing, and debt for injuries caused by your operation of vehicle are some of the excepted debts.
Step 21: Some assets should be protected from the creditor.
Basic assets are necessary for your "fresh start" after you file for bankruptcy.This property is not subject to taxation.There are two sets of exemptions in California.There are two sets of exemptions in the California Code of Civil Procedure.Some of the exemptions include: homes and other dwellings, personal property, insurance, and pensions.
Step 22: The documents need to be obtained.
You will need to obtain a large number of documents after you determine that filing for bankruptcy is the right option.The federal courts in California have a packet on their website.The packet has all the required documents as well as directions for filling them out.
Step 23: Put together paperwork.
You need to gather paperwork in addition to the required court documents.Evidence of major financial transactions from the past two years, evidence of monthly living expenses, and lists of all the property you own are some of the things you should gather.
Step 24: All required Chapter 7 documents must be filled out.
For a Chapter 7 filing, you will need to fill out over 20 forms and schedules that will be filed with the court at various times.All of these documents, along with directions, can be found at http://www.cacb.uscourts.gov.If you are filing electronically, you will need to fill out a statement of your Social Security number, voluntary petition, master mailing list, and electronic filing declaration.Within 14 days of filing the voluntary petition, you will need to file a debt repayment plan, a statement of related cases and a summary of your assets and liabilities.You will need to certify your intention to file for Chapter 7 bankruptcy within 30 days of your initial filing.
Step 25: All required Chapter 13 documents need to be filled out.
You will need to fill out over 20 forms for a Chapter 13 filing.All of the documents, along with directions, can be found at http://www.cacb.uscourts.gov.If you are filing electronically, you will need to fill out a statement of your Social Security number, voluntary petition, master mailing list, and electronic filing declaration.Within 14 days of filing the voluntary petition, you will need to file a debt repayment plan, a statement of related cases, and a summary of your assets and liabilities.
Step 26: You should file your documents in the correct court.
There are four federal judicial districts in California.You can either file in the court where you have been living for the last 180 days or the district you are in.The federal court locator is offered by the federal government.The locator will give you information about the courts you can file in if you choose "bankruptcy" for the court type and then type in your zip code.
Step 27: You have to pay the fees.
You will have to pay $335 if you file for Chapter 7.Chapter 13 proceedings will require you to pay $310.
Step 28: Wait for the automatic stay to take effect.
Once you have filed all the required documents, the court will issue an automatic stay that stops listed creditor from pursuing you for any debts until the stay is lifted.If you don't have any equity in the property, the stay is unlikely to last long.If you rent property on a month-to-month basis, you don't have any property interest to protect for the benefit of the creditor and your landlord will likely get the stay lifted relatively quickly.
Step 29: A Trustee should be appointed.
The court will take control of your debts and property if you file for bankruptcy.The property will be handled by a Trustee.The Trustee's job is to make sure the debts are paid in full.The Trustee can challenge any part of your case.
Step 30: Meet with the people you owe money to.
After filing, the Trustee will call a meeting for all of the Creditors and you must attend.Only a few of them actually show up.
Step 31: If you have any challenges, respond to them.
Before, during, or after the meeting, a complaint can be filed in the bankruptcy court.The "adversary proceeding" is when this filing will start a lawsuit.The creditor has to explain why the debt shouldn't be discharged.Any challenge brought will be responded to by you and/or your attorney.
Step 32: Attend hearings.
You don't need to attend hearings if you file for Chapter 13 bankruptcy.You need to attend a hearing where the judge will either confirm or deny your Chapter 13 Repayment Plan.The payment period is up if your plan is confirmed.
Step 33: You must complete a financial management course.
You must complete a financial management course before you can be discharged.You will learn how to avoid the problems you got yourself into.The fee for the course should be based on your ability to pay.You will have to file a certificate with the court once you complete the course.