California Bankruptcy Process
If you are considering filing for bankruptcy, you likely have a lot of questions and concerns. As with anything new, it can be a great help and comfort to know what steps are involved, what you can expect to happen, and what is expected of you. The Law Office of Charles A. May is here to guide you through the bankruptcy process step by step. While bankruptcy is sometimes viewed skeptically by people unfamiliar with the process, it can actually be an effective and affordable way to gain a fresh financial start or get your financial house in order. See below for a brief overview of the steps involved in bankruptcy from start to finish.
For a free consultation to find out if bankruptcy is right for you and get you started on the right foot, contact The Law Office of Charles A. May to speak with a skilled and knowledgeable Southern California bankruptcy lawyer.
Step 1: Consult With an Experienced Bankruptcy Attorney
First and foremost, it is crucial to consult with a qualified bankruptcy attorney to discuss your financial situation and evaluate your options. At The Law Office of Charles A. May, we will help you decide whether Chapter 7 or Chapter 13 bankruptcy is the right fit for your circumstances.
Step 2: Gather Financial Documents
You will need to compile all of your financial records, such as income statements, debt summaries, and asset valuations. This information is vital for completing the necessary forms and making informed decisions throughout the bankruptcy process.
Step 3: Complete the Means Test
If you are pursuing Chapter 7 bankruptcy, you need to take the means test to determine your eligibility. This test assesses whether your income is below a certain threshold, allowing you to proceed with Chapter 7 filing. If your income is below the state median for your household, you can qualify for Chapter 7 without taking the full means test. If it is higher, you will need to go through a more detailed process of gathering and reporting income and expenses to determine whether your level of disposable income qualifies you for Chapter 7.
If you do not qualify for Chapter 7 based on your income, Chapter 13 may still be a good option for you. In Chapter 13, the means test will be used to calculate your disposable income and determine whether you should pursue a three-year or five-year repayment plan.
Step 4: Credit Counseling
Before you can file for bankruptcy, you will need to complete a credit counseling course from an approved agency. The course aims to educate you about the different financial options available, ensuring that bankruptcy is the appropriate solution.
Step 5: Filing the Petition
Once you have met the prerequisites, you will file a petition with the bankruptcy court. For Chapter 7, this includes filing schedules that list your assets, liabilities, income, and expenses. For Chapter 13, you will also submit a proposed payment plan that outlines how you intend to repay your debts over a three or five-year period.
Step 6: The Automatic Stay
Filing your petition triggers an “automatic stay,” which temporarily halts all collection actions against you. This provides a much-needed reprieve, giving you the time to work through the bankruptcy process without additional financial stress.
Step 7: Meeting of Creditors
Within a few weeks of filing, you attend a Meeting of Creditors. Do not let the name intimidate you; this is usually a brief and straightforward meeting where you answer questions about your financial situation and the petition you filed. This meeting with the bankruptcy trustee assigned to your case might only last about five minutes, and it’s rare that any creditors actually show up.
Step 8: Debt Discharge or Repayment Plan (Chapter 7 vs. Chapter 13)
- Chapter 7: After your assets are liquidated and the proceeds are distributed among your creditors, your remaining unsecured debts are discharged, and you are no longer obligated to pay them. Your bankruptcy lawyer will work through the California exemptions beforehand to provide the best opportunity for you to receive your discharge without having any of your property “liquidated.”
- Chapter 13: Generally, upon successful completion of your payment plan (three or five years), your remaining unsecured debts are discharged.
Step 9: Financial Education Course
Before the bankruptcy process is complete, you will need to take a debtor education course which equips you with the financial skills needed to avoid future debt problems.
Step 10: Receiving Your Discharge
Once the court approves the discharge of your debts, you are officially released from your obligations, marking the end of your bankruptcy journey.
Start the Bankruptcy Process Today With a Free Consultation at The Law Office of Charles A. May in Irvine
Bankruptcy can be a complex and emotionally draining process, but you do not have to go through it alone. The Law Office of Charles A. May is committed to making this challenging time as smooth as possible. For help in Orange County, Los Angeles, or throughout Southern California, reach out to The Law Office of Charles A. May in Irvine today for compassionate and skilled guidance through your bankruptcy journey.
