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Chapter 7 San Diego Bankruptcy Lawyers

A Chapter 7 bankruptcy in California is the simplest and quickest way to discharge your debt entirely, but it is not available to everyone. This is the “traditional” bankruptcy where with a few exceptions-taxes, student loans, and domestic support obligations (alimony and child support)- all of your debt disappears and you can start over with a clean slate.

You must, however, qualify for a Chapter 7 by a means test, which will determine whether

  1. You are in a position that allows you to file for bankruptcy at all; and
  2. Whether you have sufficient income to pay part of your debt over a three to five year period with a Chapter 13 bankruptcy instead, meaning that if you have enough income the court prefers you at least pay some of your debt off before obtaining a discharge.

IS CHAPTER 7 RIGHT FOR YOU?

You should discuss your situation with a San Diego bankruptcy lawyer who can advise you on whether you are likely to qualify for Chapter 7 or whether it is the best choice for you given your current situation and your assets. If you’re behind on your mortgage and want to keep your home, Chapter 7 will probably not work for you. You can get the answers you’re looking for by contacting the bankruptcy lawyers at the Contreras Law Firm in San Diego.

Many people fear Chapter 7 because they have heard that it requires the sale of all your assets to at least partially satisfy creditors. While in theory that is essentially correct, the truth is that many types of assets are exempt-so many that people filing Chapter 7 often do not have to liquidate anything. Again, this is something to discuss with your San Diego bankruptcy attorney.

CHAPTER 7 BANKRUPTCY EXEMPTIONS: WHAT YOU CAN KEEP

California has two different exemption systems, the California one or the Federal one. You cannot mix and match. Bankruptcy exemptions are what allow you to protect your property or assets during a bankruptcy proceeding. The laws on exemptions are complex and an experienced bankruptcy attorney can help determine which exemption is right for you. However, here is an example of some of the exemptions under each exemption statue:

Option One:  California Code of Civil Procedure § 703

This option can be a good choice if you do not own a home or if your home has very little equity.

Item Amount Protected What it means?
Homestead $29,275 You can protect up to this amount of equity in the home where you live.
Vehicle $5,850 You can protect up to this amount in vehicles you own.
Household Items $725 per item These are all the items in your house, valued at garage sale value not the price you paid for it. Examples are: clothing, appliances, furniture, etc.
Jewelry $1,750 This is the value of jewelry you own.
Wildcard $1,550 plus any unused portion of the Homestead Exemption above Wildcard is just that, you can use this to protect anything (i.e. cars, bank accounts, collections, etc.). The limit is $1,550, however, if you do not own a home or your home has no equity, you can use the $29,275 from the homestead above to protect any asset or property you own. So your total wildcard can equal $30,825 when there is no equity, little equity or you do not own a home.
Tools of Trade $8,725 These are items the person uses for work that is essential to their small business such as power tools, computers, paint brushes, etc.

Option Two:  California Code of Civil Procedure § 704

This option can be a good choice if you own a home with equity.

Item Amount Protected What it means?
Homestead $75,000 – $175,000 The amount of equity you can protect in your home varies as follows:

·       Single and not disabled:  $75,000

·       Families or head of household:  $100,000

·       65 or older or physically/mentally disabled:  $175,000

Vehicle $3,325 You can protect up to this amount in your vehicle.
Household Items All that are reasonably necessary These are all the items in your house, valued at garage sale value not the price you paid for it. Examples are: clothing, appliances, furniture, etc.
Jewelry $8,725 This is the value of jewelry you own.
Tools of Trade $8,725 or up to $17,450 if both spouses in the same occupation These are items the person uses for work that is essential to their small business such as power tools, computers, commercial vehicle, paint brushes, etc.

As you can see, the Chapter 7 Bankruptcy Statute does not strip you of all your possessions and leave you in the street, a common misconception. You are allowed to keep enough to support a reasonable lifestyle while getting a fresh start, free from the specter of overwhelming debt.

HOW TO GET THE INFORMATION AND GUIDANCE YOU NEED TO MAKE AN INFORMED DECISION

When your efforts to pull yourself out of debt have been unsuccessful, and your creditors are hounding you without mercy, it may be time to talk to a San Diego bankruptcy lawyer about your bankruptcy options.

The Contreras Law Firm in San Diego offers a consultation with an experienced and successful bankruptcy attorney at no charge, where you can learn from our experienced and knowledgeable attorney about the choices available and whether Chapter 7 is right for you.

Don’t allow your life to be ruined by debt collector harassment. All collection efforts, and the stress they are causing you, will end when you file for bankruptcy under Chapter 7 or Chapter 13. If you qualify, you can lift the burden by filing now. Call Contreras Law Firm today.

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