While there is an age requirement to vote, consume alcohol, or drive a car, the Bankruptcy Code does not require an individual to be a certain age to file for bankruptcy. However, even though there is no legal requirement under federal law, state laws make filing for bankruptcy at a young age impractical. In California, a minor lacks the legal authority to enter into a contractual agreement. Therefore, if you are under the age of eighteen, you have no debt – making filing for bankruptcy unnecessary.
Anyone of any age could legally file for bankruptcy. However, only about 2% of bankruptcy filers nationwide are under the age of twenty-five. The bankruptcy process can be intimidating if you do not understand its inner workings. At The Bankruptcy Group, our attorneys strive to make the process understandable – no matter how old you are.
Our Roseville, CA bankruptcy attorneys handle cases for individuals, couples, and businesses. If you have any questions or concerns about the bankruptcy process or its requirements, call our law office at 1-800-920-5351 to schedule a free consultation. Our goal is to improve our clients’ financial positions.
Age Requirements for Filing Bankruptcy in California
The Bankruptcy Code does not specify an age requirement. There is a sad story of a ten-year-old boy filing a Chapter 13 to save his family’s home after losing his mother and father. The filed bankruptcy documents listed his income as Social Security Survivors Benefits and toys as personal assets. The young child filed the case to stop foreclosure proceedings while waiting for insurance proceeds to cover the mortgage arrears.
Because minors are not legally permitted to enter contractual relationships, they are unable to accumulate debt, credit cards, or personal loans. Therefore, it is unlike anyone under the age of eighteen would require bankruptcy relief. Despite the sad tale above, most bankruptcy filings are filed by people who have obtained middle age and have accumulated a significant amount of debt or property. Approximately 2% of cases are filed by individuals under the age of twenty-five, while there has been an increase in filings of people over fifty-five. Every case and age present unique challenges that our experienced Folsom, CA bankruptcy lawyers are prepared to handle.
Requirements to File Bankruptcy in California
Just because there is no age requirement does not mean everyone is entitled to file for bankruptcy. Under the Bankruptcy Code and local California law, there are a number of requirements a filer must comply with if they wish to file for bankruptcy. Typically, most individuals, couples, or small business owners will file for Chapter 7 or Chapter 13.
Chapter 7 Requirements
Often referred to as “straight” or “liquidation,” Chapter 7 is available to individuals, couples, partnerships, and corporations who are struggling financially. In Chapter 7, a debtor’s bankruptcy estate is liquidated to pay their creditors. A bankruptcy estate consists of all a debtor’s property at the time of filing, including real estate, personal property, business assets, cash, and anything else of value. Fortunately, our California bankruptcy attorneys can protect most property through a wide range of state exemptions.
Before filing Chapter 7, a debtor must complete a certified credit counseling course. The certificate must be filed along with the voluntary petition. A debtor is permitted to request, in writing, a waiver from this requirement based on disability, incapacity, or active military service in a combat zone.
Additionally, there is a residency requirement. To file for bankruptcy in California, a debtor must have lived in the state for the majority of the 180 days before the filing date. However, there is an additional requirement to use California’s generous exemptions. Under the Bankruptcy Code, to use the state exemptions of your current residence, you must have lived in the state continuously for the last two years. If you moved into California less than two years ago, you would have to reach back to the 180 days before those two years to determine which state exemptions would apply in your case.
There are also income requirements for Chapter 7. Our Sacramento bankruptcy chapter 7 attorneys will have to determine if you pass a complicated means test. The means test looks at your total household income for the previous six months and compares it to the state median. If your monthly income is below the median, you are eligible to file Chapter 7.
Chapter 13 Requirements
While similar to the requirements for Chapter 7, there are some significant different requirements for someone who wants to file Chapter 13. The most drastic one is that Chapter 13 is only available for individuals and couples. Partnerships and corporations are not legally permitted to file Chapter 13.
Debtors wishing to file Chapter 13 must comply with the same residence requirements listed above and complete a certified credit counseling course.
The means test comes into play with a Chapter 13 case, but it does not determine eligibility. The means test dictates how much a Chapter 13 debtor will be required to pay to their unsecured creditors through their bankruptcy plan. Therefore, a Chapter 13 debtor will have to propose a feasible bankruptcy plan that addresses all valid claims filed by their creditors. To be feasible, a plan must pay the appropriate creditors and the debtor must have the disposable income to afford the monthly plan payment. Our Elk Grove Chapter 13 bankruptcy attorneys will work closely with you to draft a workable plan.
If You Have Questions Regarding Bankruptcy Requirements, Contact Our California Bankruptcy Lawyers
Deciding to file for bankruptcy is difficult. You should consult our experienced California bankruptcy lawyers to understand the requirements, nuances, and challenges associated with bankruptcy. While many individuals and couples find relief from debt through filing, bankruptcy is an intimidating process. One of the first steps is determining if you qualify for Chapter 7 or Chapter 13. Even though there is no age requirement, there are other requirements you must meet. To discuss the process in more detail, schedule a free consultation with The Bankruptcy Group at 1-800-920-5351.