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Corporate and Real Estate Law

Business and Civil Litigation

Debt Restructuring and Settlement

Bankruptcy

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Bankruptcy

In its most basic form, California bankruptcy law is a consumer protection law. It is a federal process which allows consumers to have their qualifying debts forgiven. The law recognizes that bad things sometimes happen to good people, and consumers sometimes simply do not have the ability to comply with creditor's repayment demands. California bankruptcy laws are based on forgiveness rather than punishment. Bankruptcy does not seek to deter or regulate certain behavior as other laws do; it simply recognizes that there are sometimes circumstances beyond the consumer's control which can only be addressed through the cancellation of debt.

Filing for bankruptcy puts into effect an automatic stay, which stops creditors from trying to collect any debt from you. The automatic stay immediately stops creditor phone calls, collection letters, wage garnishments, lawsuits, bank levies, and all other types of harassment, intimidation and scare tactics by creditors.
Once a bankruptcy case is successfully completed, the consumer receives discharge information from the Bankruptcy Court. A Discharge is a legal release from debts. Creditors are left with no legal cause to contact you or pursue debts listed in the bankruptcy documents.

There are two common ways for the typical consumer to file for bankruptcy, Chapter 7 and Chapter 13 .

Chapter 7 Bankruptcy

Chapter 7 refers to the chapter of the Bankruptcy Code under which most bankruptcies are filed, and is therefore the most common bankruptcy filed. A Chapter 7 bankruptcy is often called “straight bankruptcy,” “fresh-start bankruptcy,” or “liquidation.” Bankruptcies filed under Chapter 7 allow for the discharge of nearly all debts, so that the debtor is freed from the obligation to pay those debts. Determining whether a client qualifies for a Chapter 7 bankruptcy may be straightforward and simple, or it may require in-depth analysis, depending on the complexity of the client’s specific situation.

Chapter 13 Bankruptcy

Unlike Chapter 7 of the Bankruptcy Code, a Chapter 13 bankruptcy refers to the chapter of the Bankruptcy Code under which a minority of debtors file. The debtors that file for bankruptcy under Chapter 13 tend to have high incomes, combined with small amounts of debt. Most debtors are able to file for Chapter 7 bankruptcy instead of Chapter 13. Only those debtors who do not pass the “Means” test do not qualify to file for bankruptcy under Chapter 7.