Help for Bankruptcy in California
To file Chapter 7 bankruptcy, you must pass certain income-related tests. If you fail, you may have to file Chapter 13, which requires a three- to five-year repayment plan to creditors. In California, you must follow federal bankruptcy procedures, but you must use qualification figures unique to California. You may qualify in one county in California but not in another. You can get information on your California bankruptcy at one of the California state bankruptcy offices.
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Median Income Test
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The median income test is the first process by which you can determine if you qualify to file Chapter 7 bankruptcy. Essentially, if you have a lower income than the state median you can file Chapter 7. In the State of California, median income for a one-person household is $47,969, while for a two-person household the median is $64,647. The three-person median income is $70,638 and the four-person household median income is $79,194. If your income is higher than the corresponding California income, you may still qualify for Chapter 7 by passing the means test.
Means Test
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The purpose of the means test is to determine if you have enough disposable income to pay back some of your creditors. Created by bankruptcy legislation introduced in 2005, the means test requires you to back out Internal Revenue Services-approved expenses from your income to arrive at a monthly disposable income figure. The allowable expenses are adjusted not only by state but by individual county. For example, if you are a two-person household in Alameda County, California, the IRS allows a mortgage or rent expense of $1,713 per month. If you live in Modoc County, California, you are only permitted $534 per month for mortgage or rent. If at the end of the means test you are determined to have too large of a monthly disposable income, you cannot file Chapter 7 and must instead file Chapter 13.
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Courthouse Locations
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California is divided into four bankruptcy districts, the Northern, Southern, Central and Eastern Bankruptcy Districts. Within these districts there are a total of 13 bankruptcy court offices. In the Central District, you can find bankruptcy court offices in Los Angeles, Riverside, Santa Ana, Santa Barbara and Woodland Hills. Offices in Fresno, Modesto and Sacramento serve the Eastern District. Northern District offices are in Oakland, San Francisco, San Jose and Santa Rosa. The sole Southern District office is in San Diego.
Bankruptcy Process
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You must file your California bankruptcy in the district you live in, based on the divisions outlined by the U. S. courts. After determining the correct chapter of bankruptcy to file for using the median income and means tests, you must collect your financial information and prepare your petition. Within 180 days before you file, you must complete credit counseling. After you pay your fee and submit your petition, you must appear before a bankruptcy trustee at a Section 341 meeting. After answering questions at the meeting, you have 45 days to complete a financial management course and submit proof of attendance to the court. You are entitled to a bankruptcy discharge 60 days after this meeting, if there are no objections to your case.
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References
- U.S. Trustee Program: Census Bureau Median Family Income By Family Size (PDF)
- U.S. Trustee Program: Bankruptcy Allowable Living Expenses (PDF)
- United States Courts: Bankruptcy Form 22A (PDF)
- U.S. Trustee: Means Testing
- United States Courts: Chapter 7 Bankruptcy
- United States Courts: Chapter 13 Bankruptcy
