Bankruptcy is a legal proceeding for people who cannot pay their debts and are looking for a new start. Filing a bankruptcy petition immediately stops all of your creditors from seeking to collect debts until your debts are sorted out by the bankruptcy process. All bankruptcy cases are handled in federal bankruptcy court.
Chapter 7 Bankruptcy is often referred to as liquidated bankruptcy. In Chapter 7 bankruptcy, most unsecured debt is eliminated and an individual can retain their exempt assets. Exempt assets are determined by California law. Property which is non-exempt is sold by the bankruptcy trustee and the money is paid to creditors. It is important to use all available exemptions to protect as much property as possible.
A person must qualify for Chapter 7 bankruptcy by passing the "means test." The means test is based on the debtor's monthly earned income. If the debtor makes less than the median income for the State of California, they qualify for Chapter 7 Bankruptcy and do not need to complete a full means test. However, if the debtor's income is over the median income for the State of California, they must complete and pass a full means test in order to qualify for Chapter 7.
If you have any questions about bankruptcy, please call 1st California Law at (949) 735-8499 for a free attorney consultation.