California Bankruptcy FAQs
This page offers answers to frequently asked questions related to the bankruptcy process. If you would like to discuss your specific situation or would like additional bankruptcy related information, contact The Gorski Firm, APC for a Free Consultation. Please select from the following list of Questions:
Why should I hire an attorney? Can’t I file for bankruptcy on my own?
While it is true that you can represent yourself in a bankruptcy, it is to your advantage to hire an experienced bankruptcy attorney to help you. Bankruptcy can be an incredibly complex process. If you select The Gorski Firm, APC to assist you with your bankruptcy, you can ensure that you're taking the right steps. If you hire a bankruptcy attorney, all of your questions and concerns will be answered by skilled and knowledgeable bankruptcy professionals. Additionally, an attorney can represent you at hearings before the bankruptcy trustee, or before a judge if needed. A bankruptcy lawyer can also help end creditor harassment being committed against you. Most importantly, The Gorski Firm, APC will be there to look out for your best interests.
Contact The Gorski Firm, APC to schedule a Free Consultation to discuss how we can help you. Please [Click Here] to read the Federal Judiciary's comments regarding representing yourself in bankruptcy court.
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What is the difference between the services of an attorney and a petition preparer?
Be cautious of bankruptcy petition preparers who do not comply with legal requirements. The services of non-attorney petition preparers is limited to the type of information on the Bankruptcy Corms. Petition preparers are not permitted from providing legal advice (e.g. they cannot explain how to answer legal questions or assist in bankruptcy court).
If you have questions regarding bankruptcy and your particular situation, contact The Gorski Firm, APC to schedule a Free Consultation to discuss how we can help you.
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Will I lose all of my assets and property?
Most likely you will not lose your home, car, or other assets and property during the bankruptcy process. Bankruptcy was designed to help people who have fallen behind financially or who are struggling with insurmountable debt. In the majority of the bankruptcy cases handled by our attorneys, we are able to keep our clients' homes, cars, and other assets.
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What exactly is an "exemption"?
Exemptions are "protections" for the value of certain assets that you own or have an interest. Generally, if a particular asset is exempt or if a certain value in the asset is exempt, then your creditors cannot take the asset unless it is worth more than the exemption. Exceptions to this general rule may exist for some creditors such as the Internal Revenue Service.
Exemptions are created by State Law. There are also federal bankruptcy exemptions, but California has opted out of the federal exemptions. Instead, California bankruptcy courts allow you to use the exemptions found in the California Code of Civil Procedure, provided that you have lived in California for the 730 day period preceding the filing of the bankruptcy. If you have not lived in California for the last 730 days preceding the filing, then the test to see if California exemptions apply is whether you lived the majority of the 180 days preceding that 730 day period in California.
Depending on which state's exemption laws apply when your case is filed, you may or may not be able to use the federal exemptions.
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How long will a bankruptcy appear on my credit report?
A bankruptcy will appear on your credit report for 10 years. However, just because you have a bankruptcy discharge on your credit report does not mean that you can’t obtain credit or purchase a large item like a home or car. Assuming that you have income after receiving a discharge, you should be more credit worthy than before the bankruptcy, since your old debts no longer have a claim against future income.
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What is the difference between Chapter 7, Chapter 11, and Chapter 13?
While there are many differences between Chapter 7 and Chapter 13, generally speaking, Chapter 7 involves liquidating non-exempt property in exchange for the discharge and Chapter 13 involves repaying a portion of your debts over 3 to 5 years in exchange for the discharge. In other words, Chapter 7 erases all of an individuals debt, or liquidates a business, whereas Chapter 13 consolidates all of an individual's debt and restructures it into monthly payments.
Chapter 11 bankruptcy is available to individuals who are ineligible to file under Chapter 13 because their secured debts or unsecured debts exceed certain thresholds. Chapter 11 is also used by a businesses that wants to reorganize its finances while continuing to operate. Chapter 11 bankruptcy is very advantageous to businesses in that it provides protection from creditors and an opportunity to organize its finances.
Please [Click Here] to view a chart we prepared to illustrate many of the differences between Chapters 7 and Chapter 13. If you would like information specific to your particular situation, contact The Gorski Firm, APC for a Free Consultation.
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What is a discharge in bankruptcy?
A bankruptcy discharge releases personal liability from certain debts. In other words, after the discharge is entered, there is no legal obligation to repay the discharged debts. A discharge is a permanent order and it prohibits creditors from taking collection actions against the discharged party, including communications (letters, telephone calls, and personal contacts), and legal action.
A secured creditor's rights to their collateral (security interest) generally continues even though a discharge is received. For example, absent some type of arrangement to surrender or "reaffirm" a car loan, the creditor with a valid lien on the car may repossess the vehicle even if the debt to the creditor is discharged unless the lien is avoided (i.e., determined to be unenforceable) in the bankruptcy case. If you would like information specific to your particular situation, contact The Gorski Firm, APC for a Free Consultation.
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When will I receive my Discharge?
Timing of the discharge varies depending on the chapter of the bankruptcy code under which the case is filed. In a Chapter 7 ("liquidation"), the discharge is usually granted shortly after 60 days following the first date set for the 341 meeting of creditors (see below for explanation of the 341 meeting). The reason for this 60 day period is that it permits the expiration of time for filing a complaint objecting to discharge or a motion to dismiss the case for abuse. In most circumstances, this results in the discharge being granted approximately four months after the case was filed with the bankruptcy court.
In individual Chapter 11 ("reorganization") and Chapter 13 ("reorganization") cases, the court ordinarily grants the discharge within a reasonable amount of time after you complete all payments under the plan.
It is important to note that the court may deny an individual his or her discharge if they fail to complete "an instructional course concerning financial management." There are limited exceptions to the "financial management" course requirement for situations involving disability, incapacity, or active military duty in a combat zone.
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What types of debts can be discharged in Chapter 7?
The Bankruptcy Code permits only certain types of debts to be discharged (eliminated) through a Chapter 7 bankruptcy. These debts are referred to as "unsecured debts" or dischargeable debts," and include debts from:
- Credit cards
- Certain Consumer debts
- Medical bills
- Repossessions
- Certain types of loans
- Judgments
- Unpaid rent or utilities
- Collections
Debts that cannot be discharged through Chapter 7 include debts to the government, tax debts, child support, alimony or spousal support, restitution or damages to personal injury victims, and court fines or penalty fees.
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What is the 341 Meeting?
Usually within 30 days after filing, the court schedules a meeting of creditors (the "341 Meeting"), named after Section 341 of the Bankruptcy Code, the section requiring it. The trustee assigned to the case presides over the meeting and will ask questions about your bankruptcy schedules. You must appear at the 341 Meeting and answer the trustee's and creditors' questions regarding your assets and liabilities under oath.
At the 341 Meeting, the trustee may inquire as to how you determined the values of your assets or may seek more information about unusual assets and business interests. If the trustee needs more information or documents that aren't available at the meeting, he or she may continue it to another date at which time you will be expected to produced the needed information.
If you have assets in excess of the available exemptions, the trustee will try to gather information to assist in the liquidation of the property for the benefit of creditors. For example, the trustee may ask that you produce business records or other documents relating to the asset or your financial history.
At the 341 Meeting, the trustee and creditors are on a fact finding mission. While neither the trustee nor creditors can take any action at the meeting that has a dispositive outcome on an issue in your case, if new or troubling information is discovered, the trustee, a creditor or both may file a motion or an adversary proceeding in the underlying matter for the judge to decide the issue.
If you decide to file for bankruptcy and you retain The Gorski Firm, APC to assist with the process, we will attend all 341 Meetings with you to ensure that you and your case are properly presented to the trustee and creditors.
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Will my creditors be at the 341 meeting?
It depends. Creditors are permitted to attend the 341 meeting, however, frequently they do not attend. In many circumstances, the creditors who attend are usually those holding a security interest in assets or those who believe they have been defrauded.
Creditors that attend the 341 meeting are permitted to ask you questions under oath. If the creditor requires more time than that permitted in the 341 meeting to conduct its investigation, it can ask the court or an order requiring you to appear for a further examination, similar to a deposition.
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