If you are buried in debt and are considering declaring bankruptcy, Chapter 7 is one of your options. Obviously, you should talk with a competent California bankruptcy attorney; but here’s a brief description of what happens with your debts and your property under Chapter 7.
Chapter 7 is the more drastic of your bankruptcy options. It is also known as “fresh start bankruptcy,” “straight bankruptcy,” or “liquidation.” All of your debts are cancelled, but you forfeit any nonexempt property to the trustee to pay your creditors.
Under California bankruptcy law, we have a choice of using the list of state law exemptions (System 1) or the list of bankruptcy-only exemptions (System 2). The most notable difference between the two is the “doubling” allowed by System 1—each spouse is allowed to claim the full amount of each exemption.
The homestead exemption in California allows people who file for bankruptcy to keep their home up to a certain dollar amount. You may also keep personal property, such as your car, furnishings, clothing, and jewelry—again, within limits; an antique car or a mink coat is probably not exempt. Burial plots are exempt, too.
Also exempt are the tools you need to perform your job, pensions and retirement accounts, insurance benefits, and wages.
Bankruptcy is a serious step to take, and you need a skilled Chula Vista bankruptcy lawyer. Schedule a FREE, no-obligation consultation with Kerry Denton at Southbay Bankruptcy by calling (619) 421-1000 or toll free at (888) 421-1000, or by filling out the electronic contact form on this page.