Many people are confused and perhaps intimidated by the bankruptcy process. After all, it is only human to fear the things with which we are not yet familiar. This fear is often amplified in the context of bankruptcy because people incorrectly believe that they will lose everything if they file. This post sets out to dispel the anxiety that surrounds bankruptcy by debunking myths–the first being that you will lose everything. We will also analyze the process and educational elements of bankruptcy to help educate the filer so that (s)he can achieve a fresh financial start.
An experienced and dedicated Sacramento bankruptcy attorney of The Bankruptcy Group can provide on-point guidance for an array of bankruptcy and financial questions. To schedule a free and confidential consultation, call 888-710-4334 or contact us online today.
You Will Not Lose Everything by Filing for Bankruptcy
The first thing you should expect, or perhaps more accurately, not expect from the bankruptcy process is to lose everything that you own. To put it simply, the state and federal governments recognize that putting people out on the street without any worldly possessions does not provide for a fresh start. Rather, such action is more likely to create a cycle of dependency. If the bankruptcy laws didn’t provide at least some protection for property, few people would make use of the process. Thus, the bankruptcy code and state laws provide exemptions for property you keep.
In some states, people can choose to use either the state or federal bankruptcy exemptions. California does not permits this and requires people to make use of the state exemptions. Luckily, the state offers two sets of exemptions. The first is typically more favorable for home owners or property owners with equity in the dwelling where they live. The second system typically provides protection more suited for individuals with savings or other liquid assets. While there are many details and particularities involved in the exemptions and amounts provided for each category, the important thing is to remember that you will not lose everything if you need to make use of the bankruptcy process under Chapter 7 or Chapter 13 to eliminate debt.
Individuals Who File Bankruptcy in California Must Engage in Pre-Bankruptcy Credit Counseling & Debtor Education
People who choose to file for bankruptcy under Chapter 7 or Chapter 13 in California are required to engage in pre-bankruptcy credit counseling before filing. Individuals must also make use of a credit counseling course provided through an agency approved by the U.S. Trustee in California. The course must be completed no more than six months prior to the filing. The credit counseling course will help you analyze whether you would be able to get your finances in order without engaging in the bankruptcy process.
Filers must also engage in a debtor education course. However, they do not engage in this process until the bankruptcy is filed. The course is a prerequisite to receiving a bankruptcy discharge – a wiping away of your debt.
Complete Bankruptcy Forms and File in the Correct Court
The individual seeking a fresh start must also file a bankruptcy petition. This includes determining whether they would qualify for Chapter 7. Qualifying for Chapter 7 requires a person to determine whether they can satisfy the means test. Some people may not qualify for Chapter 7 and must file for Chapter 13. Others may prefer Chapter 13 due to large amounts of secured debt or for other reasons.
Once the petition is completed, the individual must be sure to file in the correct court. The easiest way to make sure that you file is to simply file in the federal judicial district where you maintain your home. Alternatively, you can also choose to file in the district where you have lived for the majority or greater portion of the 180 days prior to your filing.
Rely on the Experience of a Sacramento Bankruptcy Attorney
If you are considering Chapter 7 or Chapter 13 bankruptcy in California, the experienced lawyers of The Bankruptcy Group can provide on-point guidance regarding various questions and concerns. We will make sure that you fully understand your options before we take any action. To schedule a free and confidential consultation, call us at 888-710-4334 or contact us online today.