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Chapter 7 - This is "regular" Bankruptcy case where an individual or
business (called the Debtor) can file a bankruptcy petition to eliminate their debt obligations. Debtors can file for Chapter 7 bankruptcy no matter how small or how large their debt obligations are.
New Laws Regarding Chapter 7: The major important changes are as follows:
- Determine if a debtor’s family income is within the allowable median gross income
for their state.
Debtors must take a Means Test to determine if they qualify to file a Chapter 7 bankruptcy or must participate a Chapter 13 repayment program. If a debtor’s income is below the Median Gross income, they may be eligible to file a chapter 7 bankruptcy. To access more specific information regarding the income requirements and Median Income for California and other individual states, click here.
If the debtor’s family income is higher than
the median income shown above, they may be required to file Chapter 13 if they can pay $100 or more per month to their creditors. There is a formula that is used to determine a debtor’s excess income
which is based upon use of allowed standard expenses set by the IRS and actual expenses for certain categories such as child expenses and secured debt.
This "Means" test is on a form adopted by rules committee based upon the new law.
- Debtors must participate in pre-petition counseling before filing bankruptcy and a financial management class after filing bankruptcy.
- New Chapter 7 cases cannot obtain a discharge again under Chapter 7 for eight years.
- Redemption of vehicles are now limited to replacement value.
- New requirements to file proof of income. Debtors must provide the court with copies of their pay stubs for the previous six months and a copy
of their last filed tax return. Failure to file these documents will cause the case to be dismissed.
- The protection in Bankruptcy on secured debts is more limited, especially where debtor does not perform stated intentions such as reaffirmation
or redemption.
Protecting Debtor Property: As outlined in the Court’s informational book entitled “Bankruptcy Basics”, the individual debtor is permitted to select specific laws to protect property they own.  These laws are called exemptions and normally protect basic living and work-related necessities including a house, car, retirement
investments, clothing and other personal property up to a certain limit. Remaining, unprotected assets are subject to being sold by a trustee to pay creditors. Most debtors are able to retain
their “paid for” household furniture, clothing, jewelry, tools of the trade and homes; however the value that can be retained is limited to a certain dollar amount. Statistically, most consumer
debtors are able to protect and keep all of their personal property. California also offers the flexibility of two different sets of laws for people filing bankruptcy - the state law exemptions found in CCP §704 and a set of bankruptcy-only exemptions in CCP §703.140. To view a general comparison of these two sets of exemptions, click here.
 Maintaining Payments on Cars or Furniture:
If a person filing wants to keep a car or furniture and they can afford the payments, a debtor can negotiate with that creditor to allow them
to to keep these items by agreeing to continue to make the loan payments. This is known as a “Reaffirmation” of the debt. A debtor will have to agree to keep the contractual payments current,
and the court will have to approve the agreement. If the debtor later fails to make the payments, then the creditor can repossess the item and the debtor may be responsible to pay for the
remaining unpaid loan amount (loan deficiency). Another alternative to keeping furniture and cars that have secured loans is through “Redemption.” In order to "redeem" the property and keep the
item, a debtor can pay the creditor a lump sum during the case based on the replacement value (rather than the loan
balance) of the item. With some exceptions, household goods that a debtor has pledged as security for a loan can be
retained and the lien avoided without any payment. Speak to an attorney if you have questions concerning the best options in your particular situation.
 Discharge and the Road to Financial Freedom:
The purpose of filing bankruptcy is to give an individual a fresh start. In most instances, the court will
grant the debtor a discharge, however there are some exceptions. (See 11 USC Section 727(a)(1).). Courts generally issue a formal "discharge" of debt and close the
bankruptcy case three to four months after the filing of the case. Corporations,
partnerships or LLCs do not receive a discharge. Debts that individuals cannot discharge include child support, alimony,
student loans, debts from intentional injury, drunken driving and some taxes. Other debts may not be discharged if the
Debtor committed fraud, embezzlement or obtained credit with a false written statement. Although a few other
miscellaneous types also are not discharged, most common debts such as credit card, medical bills, personal and
check cashing loans, repossession deficiencies and money judgments are normally discharged in Chapter 7 cases. You
should seek legal advice if you have any questions about whether or not your debts are dischargeable. To access our online bankruptcy law library, click here.
 Bankruptcy Paperwork: The bankruptcy documentation required to be filed by a debtor is
extensive. Our office can prepare all of the required documentation for a very low fee. Our flat fee includes document preparation and a FREE informational booklet regarding the bankruptcy process.
Individuals can elect to meet with a legal document assistant in person or use our on-line service from the convenience of their own home or office. Currently the Bankruptcy Court filing fee for
Chapter 7 cases is $299.00 which is payable directly to the Court at the time your bankruptcy papers are filed. To start preparation of your bankruptcy documents immediately, click here.
Choosing our office to prepare your bankruptcy documents is a simple way to have your bankruptcy documentation
prepared. Keep in mind, however, that our office is a Self-Help Service, which makes yourself responsible for the outcome of your legal paperwork and most importantly, we cannot provide legal advice.
Please refer to the Guidelines for Bankruptcy Petition Preparers to understand the types of services we can and cannot provide. It is equally important that
you, as a debtor, understand the bankruptcy process. To assist you, we offer a very informative booklet written and
published by an attorney that reviews the entire bankruptcy process and will answer many questions you may have. You
will be provided a free copy of this booklet at the time you retain our services. There are several other sources to obtain legal information. To access our online bankruptcy law library, click here. We also offer for sale a variety of other self-help tools including the latest self-help publications by Nolo Press.
Chapter 13 -  Chapter 13 is frequently referred to as a “wage earner" chapter, although it actually applies to
individuals with regular income from any source, not just wages. It is designed for individuals who desire to pay their debts but are currently unable to do so. Chapter 13 is often filed by
individuals facing foreclosure on their home as it stops the foreclosure and allows an individual to pay the delinquent mortgage payments over an extended period of time. The purpose of
Chapter 13 is to enable financially distressed individual debtors, under court supervision and protection, to create and carry out a repayment plan to pay their creditors. . Under this chapter,
debtors are permitted to repay creditors, in full or in part, in installments over a three to five year period. 11 USC Section 1322(d). During the Chapter 13 proceeding, creditors are prohibited from
starting or continuing collection efforts. Any individual, even if self-employed or operating an unincorporated business, is
eligible for Chapter 13 relief as long as the individual’s unsecured debts are less than $336,900 and secured debts are
less than $1,010,650 (effective 4/1/07). (Note: these amounts are adjusted periodically to reflect changes in the consumer price index.) 11 USC Section 109(e). A corporation or partnership may not be a Chapter 13 debtor. A husband
and wife may file a joint petition or individual petition. 11 USC Section 302(a). To access our online bankruptcy law library, click here.
New Laws Regarding Chapter 13: The major new changes will still allow you to file but with new rules:
- Car loans must be paid the full debt over the Plan if the loan was made to purchase in the past 30 months.
Personal property loans obtained within one year must also be paid in full;
- No automatic protection for cases refiled if two prior cases were dismissed and only 30 days if the debtor had one
prior dismissal within one year;
- New priority for domestic support obligations;
- Plans can now repay retirement loans such as 401k and not pay unsecured creditors in full; and
- Payments are set at a minimum based upon the "Means test" and some plans may require 60 months rather the
basic 36 month repayment plan if a debtor can pay more than $167 per month.
Our office can prepare your Chapter 13 documentation for a low flat fee, however by law, we cannot calculate your
Chapter 13 Plan. You have several options available to assist you in the calculation of your Chapter 13 Plan. Our office
offers for sale a Chapter 13 manual published by Nolo Press which provides all the plain-English information and
instructions to aid you in preparing a Chapter 13 Plan. Alternatively, Plan Calculating Software formulated by a
bankruptcy attorney can be purchased to assist you in calculating your Chapter 13 Plan. Finally, you can seek the
personal guidance and assistance of a bankruptcy attorney to aid you in the calculation of your Chapter 13 Plan. The
Bankruptcy Court filing fee for Chapter 13 cases is $274.00 which is payable directly to the Court at the time your papers are filed.
Chapter 11- Chapter 11 is one of four sections of the Federal Bankruptcy Code. Chapter 11 was designed to help
businesses in financial trouble restructure their organization and finances so they may continue to operate, rather than
be liquidated. It also provides for the adoption of extended time payment plans (beyond five years) for individual debtors
who otherwise would qualify to file a Chapter 13 reorganization and have unsecured debts of less than $307,675 and
secured debts of less than $922,975. Individuals, partnerships, and corporations may be reorganized, rather than have
their assets liquidated. In a Chapter 11 proceeding, a reorganization plan is filed, either by the debtor, the creditors, or
both. After the plan is submitted, it must be approved, or "confirmed" by the court. Once that occurs, the debtor and
creditors must go by the terms spelled out in the plan. During the bankruptcy proceedings, the individual or business
may continue doing business as usual, as long as regular operating reports are provided. For more information about
filing Chapter 11 for a business or an individual, call us for a referral to an experienced bankruptcy attorney. To access our online bankruptcy law library, click here.
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Tired of creditor calls? Buried in debt that you are unable to pay? In today’s economic crisis,
you are not alone. Bankruptcy is the court method of eliminating debt and provides a way for people to obtain a "new beginning". The bankruptcy process eliminates an individual’s
responsibility to pay a debt or claim that can be eliminated under current bankruptcy laws. Bankruptcy relief is available to both individuals, businesses and corporate debtors. Most
consumer bankruptcies are filed under chapter 7 or chapter 13. Despite the major changes to the bankruptcy laws that became effective in 2005, many individuals are still able to file
bankruptcy, with a few extra steps along the way. 
