About California Bankruptcy Process & Costs

Chapter 7 Process

A Chapter 7 Bankruptcy case is typically discharged (completed) within four (4) months. Below is a brief summary of the process involved in filing Chapter 7 Bankruptcy:
1.     Schedule and come to an appointment at one of our offices to receive a complimentary consultation with one of our experienced bankruptcy attorneys. After determining the best solution to your situation, you can then retain our legal services. We will help guide you through the bankruptcy process and represent you under the federal bankruptcy laws.
2.     We will sign you up to participate in mandatory credit counseling that you can do over the phone or online. Any person who files for bankruptcy protection must go through credit counseling. Before filing a Chapter 7 case you must participate in a telephonic credit counseling session. You will also be required to complete another instructional course concerning personal financial management before the discharge of your debt.
3.     In order to complete the case you will have to provide us with:

  • A list of all creditors and the amount and nature of their claims
  • The source, amount, and frequency of you and your spouse’s income (6 months of paystubs)
  • Balance of pension, retirement, IRA, 401k, profit sharing
  • Copy of vehicle registration
  • Proof of auto insurance
  • A list of all of your personal property
  • Grant & Mortgage Deeds
  • A detailed list of your monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.
  • Bank statement(s) as of date as of Court filing date
  • Last two years of income tax returns

The filing of the petition will stop all collection efforts by creditors.
4.     It typically takes about one (1) week to prepare your case. In a last minute emergency - such as foreclosure sale, repossession or levie your case can be filed the same day!
5.     You must review and sign your case and we will file it on your behalf with the Bankruptcy Court.
6.     Between 20 to 40 days after the petition is filed, the trustee will hold a “Meeting of Creditors”. It is held in an informal setting and during this meeting you will be put under oath and both the trustee and creditors may ask questions. You must attend the meeting and answer questions regarding your financial circumstances and property. If a husband and wife have filed a joint petition, they both must attend the creditors' meeting and answer questions.
7.     Within 4 months of the date the case was filed, you will receive you discharge letter in the mail. This means that your case was successfully completed and you will be off to a fresh start!

 

Chapter 13 Process

A Chapter 13 Bankruptcy case is typically discharged (completed) within 3-5 years. Below is a brief summary of the process involved in filing Chapter 13 Bankruptcy:
1.     Schedule and come to an appointment at one of our offices to receive a complimentary consultation with one of our experienced bankruptcy attorneys. After determining the best solution to your situation, you can then retain our legal services, we will help guide you through the bankruptcy process and represent you under the federal bankruptcy laws.
2.     We will sign you up to participate in mandatory credit counseling that you can do over the phone or online. Any person who files for bankruptcy protection must go through credit counseling. Before filing a Chapter 13 case you must participate in a telephonic credit counseling session. You will also be required to complete another instructional course concerning personal financial managements before the discharge of your debt.
3.     In order to complete the case you will have to provide us with:

  • A list of all creditors and the amount and nature of their claims
  • The source, amount, and frequency of you and your spouse’s income (6 months of paystubs)
  • A list of all of the your personal property
  • Grant & Mortgage Deeds
  • A detailed list of your monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.
  • Last two years of income tax returns

The filing of the petition will stop all collection efforts by creditors.
4.     It typically takes about one (1) week to prepare your case. In a last minute emergency - such as foreclosure sale, repossession or levie your case can be filed the same day!
5.     You must review and sign your case and we will file it on your behalf with the Bankruptcy Court. When reviewing you case, we will come up with a budget and Chapter 13 Plan payment amount. The Plan payments start the following month of the date of filing. For example, if the case if filed on July 1st the first Plan payment is due on August 1st. Plan payments are due on the same date monthly until your case is discharged.
6.     Between 20 to 40 days after the petition is filed, the trustee will hold a “Meeting of Creditors”. It is held in an informal setting and during this meeting you will be put under oath and both the trustee and creditors may ask questions. You must attend the meeting and answer questions regarding your financial circumstances and property. If a husband and wife have filed a joint petition, they both must attend the creditors' meeting and answer questions.
7.     Within 2 to 3 months after the case is filed, there will be a Confirmation Hearing which you must attend and answer any necessary questions.
8.     Within 3-5 years of the date the case was filed, you will receive you discharge letter in the mail. This means that your case was successfully completed and you will be off to a fresh start!

 

Which chapter is best for me?

 

Qualifying/Means Testing

Since October 2005, if your income is above a certain amount you may not be qualified for Chapter 7. This is known as the “means test”. The means test determines if you are qualified for Chapter 7. This test is complicated and we do this test to make sure you are qualified for Chapter 7 before the case is filed with the Court. Current income does not exceed the amount dictated by the “means test” under the new bankruptcy law. For a single person the annual income cannot be more than $48,140; for a married couple of two people no more than $64,878; for a family of three no more than $70,890 and up to $79,477 for a family of four.

To qualify for Chapter 13 you must have enough income to pay the Chapter 13 Plan payment, mortgage payment(s), real estate taxes and typical household living expenses. Your total unsecured debt amount cannot exceed $336,900 and secured debts cannot exceed $1,010,650. You may be employed, self-employed, receiving disability, Social Security, unemployment benefits, collecting rent or possibly be receiving help from family. Small business owners may also qualify for Chapter 13 protection and are able to continue owning and operating their businesses.

If you are qualified, the Plan payment cannot be more than what you can afford. We calculate and prepare a realistic budget based on your income, family size, and living expenses. Everyone’s payment is different based on their circumstances. The Plan must be approved by the Court and this is our job to get it approved. Repayment of unsecured debt in Chapter 13 ranges from 0% to 100% depending on the debtor's income and the type of debt involved.   

Bankruptcy is Federal law not State law, which means that all creditors must obey these laws even if they are in another state. Bankruptcy law is complicated and changes frequently. That is why it is important to have an attorney who is extremely familiar with how the Bankruptcy courts operate in your particular area.

 

The Costs 

The Court filing fee for Chapter 13 is $274.00; the filing fee for Chapter 7 is $299.00. Both Chapter 7 and Chapter 13 attorney fees vary depending on the situation. There are no discounts on attorney fees unless you go to “Joe in the alley”, but then who knows what you get and you usually get what you pay for.

During your consultation we will give you a quote of attorney fees and how much it will cost to get your case filed.

All fees quoted by the attorney must be paid in full before the case is filed for Chapter 7 cases. We accept payments, so you won’t have to pay all of the fees up front and at once.
A portion of the fees for a Chapter 13 case must be paid before the case is filed and the remainder will be included in the monthly debt repayment plan payment.

Beware of “no money down” and “pay later” lawyers. Stay away from paralegals as they are not attorneys and cannot represent you in a Court of Law or against your creditors. Shoddy service and poor legal advice can harm you for years to come.