There are many causes that are affiliated with financial troubles. A few common reasons include unmanageable debt, divorce, illness, home foreclosure, or losing one’s job.

In fact, the average credit card debt in California is a whopping $5,563 per person. In addition, foreclosure rates are also as staggering, one out of every 2,370 CA homes is currently in foreclosure.

If you can relate to the scenarios above, then you are probably battling other personal problems that come with being in debt. The fear of losing your automobile, house or your money can drain a person physically and emotionally. You have probably even considered Claiming Bankruptcy .

If you are thinking “Is Bankruptcy Best For Me?” you are certainly not alone. Around a million people file bankruptcy each year in America. Bankruptcy is a device created by the US Government to help struggling Americans find relief from uncontrollable debt. You may want to consider filing bankruptcy if it’s best for you.

What Is Bankruptcy?

Bankruptcy offers people the time to get out from underneath considerable debt while still working with lenders in a legal capacity. It is started by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or married couples jointly. When the bankruptcy is complete, the filer will ‘exit’ and will have a chance for a fresh start on their finances.

During a bankruptcy, a trustee is appointed to oversee the particulars of the matter. His or her responsibilities will vary and depend on whether the person has filed for Chapter 7 or Chapter 13 bankruptcy.

Did you know that California ranks #26 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 275 out of every 100,000 residents.

What Is The Difference Between Chapter 7 And Chapter 13?

People in California, who claim bankruptcy, can choose to file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. What is the difference? Look below for more information

Chapter 7

The trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding, In exchange for dissolving all past due debts.

The proceeds collected during liquidation will be used to repay debtors that were listed on the bankruptcy filing.

Chapter 13

If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. You will be allowed to retain your valuable assets over a 3- to 5-year period.

In order to decide which chapter a person will file, he or she will have to determine their ability to repay using the Bankruptcy Means Test.

What Is A Bankruptcy Means Test?

The goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It considers your:

  • income and expenses
  • household size and composition
  • debt-to-income ratio

If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.

What Are Bankruptcy Exemptions?

Specific states have certain exclusions that are enacted by congress as federal bankruptcy exemptions for filers. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.


  • Real or personal property occupied at time of filing for bankruptcy, including mobile home, boat, stock cooperative, community apartment, planned development or condominium, up to the following limits: $75,000 if single and not disabled; $100,000 if family and no other member has homestead; $175,000 if 65 or older or if physically or mentally disabled; $175,000 if creditors are seeking to force sale of your home and you are either (a) 55 or older, single and earn under $25,000 per year, or (b) 55 or older, married and earn under $35,000 per year. Sale proceeds are exempt for up to 6 months after the sale.
  • Homestead declaration may be filed to protect the proceeds of a voluntary sale up to 6 months or to protect the exemption amount from a judicial lien.

Personal Property

  • Motor vehicle or auto insurance if vehicle lost, destroyed or damaged up to $3,050 (spouses may not double).
  • Food, clothing, appliances and furnishings.
  • Building materials to repair or improve home up to $3,200 (spouses may not double).
  • Jewelry, heirlooms and art up to $8,000 total (spouses may not double).
  • Health aids.
  • Bank deposits from Social Security Administration up to $3,200 for a single payee ($4,800 for husband and wife payees) and unlimited if funds are not commingled; Bank deposits from other public benefits up to $1,600 ($2,375 for husband and wife).
  • Personal injury causes of action and wrongful death causes of action. Wrongful death and personal injury recoveries that are needed for support.
  • Burial plot.
  • Funds held in escrow.


  • 75% of wages paid within 30 days prior to filing bankruptcy.


  • Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
  • IRAS and Roth IRAs to $1,283, 025.
  • Public retirement benefits.
  • Private retirements benefits, including IRA and Keogh.
  • Public employees.
  • County employees.
  • County peace officers.
  • County fire fighters.

Public Benefits

  •  Unemployment benefits and union benefits due to a labor dispute.
  • Workers’ compensation.
  • Aid to blind, aged and disabled or other public assistance.
  • Relocation benefits.
  • Financial aid to students.

Tools of Trade

  • Tools, implements, materials, books, uniforms, instruments, one commercial vehicle, equipment, and furnishings up to $8,000 total, or up to $15,975 if used by both spouses in the same occupation.


  • Matured life insurance benefits needed for support of unlimited value, or un-matured life insurance policy up to $12,800 in value.
  • Fraternal unemployment benefits.
  • Disability or health benefits.
  • Fraternal benefit society benefits.


  • Business or professional licenses.
  • Trust funds of inmates up to $1,600 (spouses may not double).
  • Business partnership property

Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.

Filing Bankruptcy Alone vs. Filing With An Attorney

Current bankruptcy laws do not require filers to hire a lawyer to declare bankruptcy relief. Individuals are permitted to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Going it alone is not an easy task.

Filing Bankruptcy without an Attorney

A simple Chapter 7 case that doesn’t have a lot of debtors or assets may be easy to manage on your own.

A basic bankruptcy that doesn’t involve an attorney might look like:.

  • Your income is below the state median;
  • You have no property;
  • Your debts will be considered dis-chargeable.

Working With An Attorney

Most of the time, it is usually in one’s best interest to work with a bankruptcy lawyer. A bankruptcy attorney is there to represent you and not the creditors.

An attorney is also accustomed with exemption laws. In addition, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.

While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.

What Does Bankruptcy Include?

Once you file for bankruptcy in CA, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.

In any event, Bankruptcy will be able to include:

  • credit card debt
  • protection from eviction
  • avoidance of foreclosure
  • utility bills
  • medical expenses

Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.

Final Thoughts And Considerations On Filing For Bankruptcy In California

As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.

Bankruptcy Courts In California

Oakland City Center
1300 Clay Street
Oakland,CA 94612
California Northern Bankruptcy Court

Robert T. Matsui United States Courthouse
501 I Street
Sacramento,CA 95814
California Eastern Bankruptcy Court

I Street
1200 I Street
Modesto,CA 95354
California Eastern Bankruptcy Court

Robert E. Coyle United States Courthouse
2500 Tulare Street
Fresno,CA 93721
California Eastern Bankruptcy Court


Additional California Resources

Foreclosure Help Program

Disability SSDI Benefits