California Bankruptcy Procedures
The general steps in a California bankruptcy are similar to those in other states, as all bankruptcies are covered by the federal rules of bankruptcy procedure. However, in terms of qualifying for bankruptcy and protecting your assets you must use information specific to California if you are a resident of the state.
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California Bankruptcy Qualification
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The first step in filing a bankruptcy petition in California is determining which chapter you want to file, Chapter 7 or Chapter 13. As Chapter 7 is a much faster process and often involves no remuneration of any kind for creditors, you must qualify if you want to file Chapter 7. To qualify in California, your household income must fall below the median California income for households of your size. The U.S. Trustee Program regularly publishes updates of the median income table, and you must use the most recent data. If your income is too high, you may qualify through the means test, which lets you subtract regionally appropriate expenses from your income to determine how much disposable income you have left every month. If you have too much available income, the court will not allow your Chapter 7 petition. You may be able to file a Chapter 13 bankruptcy in which you make regular payments to the court on behalf of your creditors.
California Bankruptcy Exemptions
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If you file Chapter 13 in California, all of your assets are protected, and you do not need to exempt them. For Chapter 7 cases, the state of California allows you to keep a limited amount of assets to help rebuild your financial life after you emerge from bankruptcy. Known as exemptions, these protections span across eight categories ranging from homestead and insurance to tools of trade and public benefits. Unlike most states, California has two systems of exemptions, and you must choose one system only when you file your petition. Generally speaking, system one is more beneficial if you own a homestead, while system two has a larger miscellaneous category and a small homestead exemption.
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California Bankruptcy Districts
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California has four bankruptcy districts, and you must file your petition in the correct district based on your county of residence. The Northern Bankruptcy District has six courthouses and covers counties such as San Francisco, Monterey, Napa and Santa Cruz. The Southern Bankruptcy District has jurisdiction over the Imperial and San Diego counties and has a single courthouse in San Diego. The Central Bankruptcy District covers Los Angeles, Orange, Riverside and four additional counties with courthouses in five cities. The Eastern Bankruptcy District covers many counties in the Central Valley area and has courthouses in Sacramento, Fresno, Modesto and Bakersfield.
California Bankruptcy Process
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As in other states, the California bankruptcy process involves attending pre-petition credit counseling, choosing a chapter and then filing your petition in the correct bankruptcy district. After attending a mandatory meeting with the trustee, you must attend a financial management class and submit evidence to the court. With no objections to your case you may receive a discharge 60 days after your meeting with the bankruptcy trustee.
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