Bankruptcy Law in California
CENTRAL DISTRICT OF CALIFORNIA
Filing a Bankruptcy in the Los Angeles area can be overwhelming if you don’t know how to go about it! To begin with, the Bankruptcy Court in Southern California is by far the largest bankruptcy court district in the country, based upon the number of cases filed here. It is so large that the district (called the CDC - Central District of California) is broken up into 5 divisions: Los Angeles proper, Santa Ana, Riverside, San Fernando Valley and Santa Barbara. So it is not enough to meet the jurisdictional requirements for filing in the CDC - you must also determine which Division within the district to file in. For more information on the CDC, you can visit the court website at http://www.cacb.uscourts.gov/ .
To make matters worse, it seems that with each day that passes the Court accepts fewer and fewer “paper“ filings. The filing of most documents in the CDC must now be done electronically. This is one reason why the help of a qualified attorney can be very important —although the CDC does have a self help desk available if you choose to try to do–it–yourself.
FILING BANKRUPTCY
In bankruptcy, TIMING IS EVERYTHING. You should not rush into filing, but rather consult with a competent attorney to determine when is the best time for you to file. If you have ever heard a horror story of a bankruptcy case going bad, you can rest assured that the case most likely filed prematurely!
If you are married and decide to file bankruptcy, you have the option of filing separately or jointly with your spouse. Filing without your spouse, however, raises a number of serious issues that you absolutely must discuss with an attorney.
To file, you will be required to list all of your debts, your assets, your income and expenses, and a history of your past financial dealings going back about two years. Each of these bits of information provided can have a substantial effect on your case. Prior to filing the paperwork with the court, each debtor must complete and pay for a credit counseling class. In addition, after filing the bankruptcy, each debtor must take a 2nd debtor education class. The classes are relatively short and are available on line or over the phone.. The decision as to whether to file a chapter for 7, 11 or 13 is complicated. Chapter 7 is a straight bankruptcy. You must qualify for chapter 7, and care must be taken so as to make sure that your assets will not be seized by the Chapter 7 bankruptcy trustee. Chapter 13 is a reorganization for individuals, couples and sole proprietorships. Not everyone qualifies for chapter 13, but if you do, you can expect to make some payment towards your debt for the next 3 -5 years. Chapter 11 is a reorganization for larger business entities and some individuals. Please see our tabs for more information on these topics.
AFTER FILING
Once your paperwork and the counseling certificates are filed electronically with the court (with the required filing fee), a number is assigned to your case, a judge is appointed to your case and a trustee is also appointed. The trustee is the person assigned to oversee your case through the court system. The trustee’s main job is to look out for the interests of your creditors.
Once any type bankruptcy is filed, an “automatic stay” is put into place. This is a provision in the bankruptcy code that prohibits most creditors from taking legal action against you. Under the automatic stay, lawsuits, garnishments, repossessions, foreclosures and the like must be halted —at least until a Bankruptcy Judge has had a chance to review your case.
In all types of bankruptcy the debtor is required to attend one hearing, called the meeting of creditors (or 341 hearing). The hearing is conducted by your trustee, and your creditors are invited to attend. The meeting of creditors takes place about one month after filing and is usually the only court appearance that you will make. It is best to have an attorney with you at the 341 hearing!
DISCHARGE OF DEBTS
The goal of bankruptcy is to obtain a discharge of your debts. Discharge means that you are no longer obligated to pay your debts. It is against the law for a creditor to ever attempt to collect on your discharged debt.
Things like child support, alimony, intentional injuries, fraud and criminal fines (including traffic citations) are not dischargeable under bankruptcy laws. Most student loans are non-dischargeable except for a rare debtor that qualifies for a hardship discharge. The rules on taxes are also very complicated, but contrary to popular belief some taxes are dischargeable. Generally speaking however, most people in financial trouble will be able to discharge all or a significant portion of their honest debts, through the bankruptcy process.
CASE CLOSING
After your case is discharged, it must be closed. Closing means that the trustee has decided that there are no assets to distribute to your creditors —or that any assets that were available to pay creditors have already been distributed and accounted for. It is not uncommom for a creditor (such as a car lender of mortgage company) to refuse to send you a monthly statement, speak to you or otherwise work with you until your case is actually closed. However, you do not receive any written notification of the closing. If you need to know if your case is closed, you should contact your attorney or log on to the docket in your case on-line.
Thinking of filing Bankruptcy in the Los Angeles California area? Call or fill out our form for a free consultation. Let our expert bankruptcy attorneys guide you with each step.
Please contact us with any questions you have, we are here to help.
Contact Alisa for a Consultation
Call or use the form below to contact Alisa. If have difficulty getting to Alisa's office during normal business hours, she may be able to arrange after hours or Saturday appointments. Call or submit below to learn more.