California Bankruptcy Laws
California is the only state to have four distinct bankruptcy districts. The Northern District is based in the San Francisco Bay Area and covers the northern coastal counties. The Central District covers the greater Los Angeles area and the Southern District is based in San Diego. The Eastern District is based in Sacramento and covers the Central Valley counties. Though the federal Bankruptcy Code applies to all bankruptcy districts, each district has its own local rules that controls filing, motions, the payment of fees and other matters. Each state also has its own system of exemptions, which can greatly influence the desirability of filing bankruptcy in California or another state.
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Residency
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Venue for bankruptcy is based on the 180-day period immediately preceding the initial filing. A debtor may file in the state where she had her domicile, residence, principal place of business or principal assets during this period. It's also possible to file in the federal district in which a pending debt-collection proceeding is underway. To some extent, therefore, there is the possibility of choosing a favorable bankruptcy venue based on the available exemptions, means test eligibility and other laws.
Exemptions
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California offers two lists of bankruptcy exemptions from which a debtor can choose one or the other. This is not unlike many other state systems, in which a debtor can choose between a state and a federal list of exemptions, because one of the California lists closely mirrors the federal exemptions. California allows exemption of up to $50,000 in home equity for a primary residence (higher for families and homeowners over 65) and all business partnership property.
Income
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The figures used to determine Chapter 7 eligibility are based on state median family income. The data is updated annually by the U.S. Census Bureau. In 2009, the median income for a single worker in California was $49,182. The median income for a family of two was $65,097. For a family of three it was $70,684, and for four $79,971. For larger households, add $6,900 for each additional member. Debtors who adjusted annual income is below the median income level for their household size are eligible for Chapter 7.
Forms
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The bankruptcy courts in California use the standard bankruptcy forms provided by the U.S. Courts and available online for download. The Eastern, Central and Northern Districts require electronic filing except for debtors filing on their own without an attorney (pro se). The Southern District requires two paper copies of the bankruptcy petition, statements or schedules.
Fees
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The bankruptcy filing fee is uniform throughout California. Filing a new Chapter 7 bankruptcy costs a total of $299, which includes a $245 filing fee, a $39 administrative fee and a $15 trustee surcharge. A new Chapter 13 is only $274 (the $15 trustee fee is not required). Additional motions, conversions to other chapters and appeals involve additional fees. As with in any state, a debtor in California can file to pay his filing fee in installments or have it waived entirely.
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