California Bankruptcy Overview


San Jose Bankruptcy Lawyer - Serving Santa Clara and surrounding counties

California bankruptcy law is written to protect (not convict) the consumer. It is a federal guided procedure that permits consumers to have their qualifying debts forgiven.  Bad things can happen to any one of us, and people often simply do not have the ability to meet the terms of creditor's repayment demands.  Bankruptcy does not seek to deter or regulate certain behavior as other laws do; it rather allow that there are some circumstances beyond an individual’s control which can only be solved by canceling the debt.

How do I decide if bankruptcy is right for me?

Things you should consider to determine if bankruptcy is the best solution: the interest charges on debts are so large that the monthly payments you can make cover only the interest; there are unpaid bills that will be difficult or impossible to pay off in the foreseeable future; there is a threat of a lawsuit, repossession of a car or foreclosure of your house; you are receiving frequent calls from creditors, or you have already been sued and the creditor is trying to take all your cash.

Ask yourself this: "Am I able to pay all of my obligations to creditors as they come due (i.e. on time)?" If your answer is that you cannot pay all of your bills on time, then you should consider bankruptcy further. Part of the analysis in deciding if bankruptcy is right for you is to ask, "How much debt was I in at this time last year?" If you are in less debt this year than last year, then you are making headway on reducing your debt, and bankruptcy may not be the best decision for you. On the other hand, if your current debt is the same or more than it was last year, then this is one indication that you should consider the pros and cons of bankruptcy. 

Automatic Stay

An automatic stay is an order or injunction from the bankruptcy court once the bankruptcy petition is filed which automatically stops all collection actions, temporarily stops foreclosures, stops garnishments, stops attachments, stops lawsuits, stops collection calls and letters against you.

Filing for bankruptcy puts into effect an automatic stay.  Once this happens, all debt collection stops.  It stops creditors’ harassing phone calls and letters.  The automatic stay will also stop wage garnishments, lawsuits, bank levies, and all other types collection intimidation and scare tactics by creditors.

Types of Bankruptcy

There are two common ways for the typical consumer to file for bankruptcy under the law, Chapter 7 and Chapter 13.  Either type of case may be filed individually or by a married couple filing jointly.

Chapter 7 is the form of bankruptcy in which the case is only open for 90 days after the case is filed in bankruptcy court, and there are NO payments made to a trustee on a monthly basis. The reason why there are no payments made to trustee is because the person filing bankruptcy has no money to pay creditors, except the secured debts the person wants to keep paying, which are typically the house and the car. Chapter 7 is also known as "straight" bankruptcy or "liquidation." (There is never a liquidation because if I determine that a client has property that he wants to keep and that is not exempt and would be liquidated in Chapter 7 bankruptcy, the client always chooses to file a Chapter 13 bankruptcy to protect the non-exempt property .) Chapter 7 is typically not advisable for those people that want to keep a home or a car and they are behind on the payments on the house or car. There are several reasons why Chapter 7 is not advisable in those situations, but for now, please note that you have to be current on the house and car as of the date of the filing and during the 90 days that the case is pending. If you are behind on house or car payments and are considering a Chapter 7, then you have to add the cost of getting current on the house and car to the other costs of a Chapter 7 bankruptcy to determine the total cost of a Chapter 7 bankruptcy.

Chapter 13 is the form of bankruptcy where the person filing bankruptcy makes a payment to the Chapter 13 Trustee for 3 to 5 years to repay creditors. The main reason that someone would have to file a Chapter 13 over a Chapter 7 is that they have over $100 left over after they have covered their living expenses, house payment and car payment. Chapter 13 bankruptcy is also called "debt adjustment" or "Debt Consolidation."  In a Chapter 13 case, you are required to make a monthly payment to the Chapter 13 Trustee, to repay some portion of the debt you have. You file a "plan" showing how you will pay off some of your past-due and current debts over three to five years.

What is a Discharge?

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.

California Bankruptcy attorney Geoffrey Nwosu handles both chapter 7 and chapter 13 bankruptcy cases in the Bay Area.. Don't wait - start rebuilding your credit for a better future. Contact Geoffrey Nwosu today for a free and absolutely confidential consultation at 408-912-5983

Law Offices of Geoffrey C. Nwosu

1710 Hamilton Ave.
San Jose, CA 95125

(408) 912-5983
(408) 375-7703



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