Bankruptcy in California: Chapter 7 and Chapter 13

If you find yourself wondering if bankruptcy is right for you, contact an attorney who focuses on bankruptcy law in California. Filing for bankruptcy is not as straightforward as you may think, and there are several factors of your financial profile that will dictate the path you should take. To begin, you can file under Chapter 7 and Chapter 13, two options that offer different types of protection from creditors and different advantages. Let’s take a closer look at both options side by side. 



















There are two important clarifications to make. The first concerns secure vs. unsecure debt. Secure debt is debt you owe that is backed by collateral that can be seized as a method of repayment. Home mortgages and motor vehicle loans are examples of secure debt. Unsecure debt is not guaranteed with collateral, therefore, there is nothing a creditor can take away from you to cover their cost of your non-payment. Credit cards and medical bills are example of unsecure debt.

The second clarification regards the protection of your assets in Chapter 7, specifically within the state of California. Federal and state exemptions are not discussed in the table above, however, if used wisely, they act as shields in bankruptcy court to help you protect your assets. In California, debtors have the choice between two tracks, exemptions provided by the state or federal exemptions, and you must choice one and only one track. This decision warrants the support of a lawyer who can take a close look at your assets to determine which exemptions, federal or state, offer you the best protection.

There are some finer points regarding exemptions, including a law stipulating that you may have to use exemptions in your former state of residence if you’ve moved to California within the last two years.  There are different categories of exemptions, exemption limits and requirements. As a result, allow a knowledgeable lawyer to step in and help you sort through the legal ramifications of this decision. McFarlin LLP has a comprehensive understanding of Chapter 7 and Chapter 13 bankruptcy in the state of California. Let us help you so you can focus on the implications of bankruptcy outside of the court.