You may be wondering whether you should file a bankruptcy in California whether that is a Chapter 7 or Chapter 13 bankruptcy. For many individuals, bankruptcy may be a good way way to get out of debt and recover from a financial problem. However, filing Chapter 13 is a big decision. You are committing to a bankruptcy repayment plan that could last for up to five years.
Before you decide whether Chapter 13 makes sense for you, let Ascend help you explore all your debt relief options. In this article, we discuss Chapter 13 cases in California.
What to Know About Chapter 13 Bankruptcy in California
- Chapter 13 vs. Chapter 7 in California
- California Chapter 13 Means Test
- Chapter 13 Plan Payments in California
- California Bankruptcy Exemptions
- Where are California Bankruptcy Courts Located?
- Who are the California Chapter 13 Trustees?
- Do I Have Alternatives to Filing Chapter 13?
Chapter 13 Bankruptcy vs. Chapter 7 Bankruptcy California
A Chapter 7 bankruptcy case is generally referred to as “straight bankruptcy” or “liquidation bankruptcy“. In this bankruptcy, you would not have a repayment plan. However, your assets could be sold to repay your unsecured debts. These assets could be sold if you have substantial equity in the assets above the allowed bankruptcy exemptions. A bankruptcy exemption protects a certain amount of equity in an asset.
A California Chapter 13 bankruptcy case is a repayment plan. You repay a portion of your unsecured debts over a three to five-year bankruptcy plan. You can keep your assets and get rid of debts that would not go away in a Chapter 7 case by filing under Chapter 13.
However, you must have a steady source of income to qualify for a bankruptcy discharge (forgiveness of debt) under Chapter 13. You are also subject to the bankruptcy court during the bankruptcy plan, so you cannot sell assets or incur debt without court approval. Let’s look a little more closely at Chapter 13 bankruptcy in California.
California Means Test
The bankruptcy Means Test measures your income against the income of other families living in California. If your average income is lower than the California median income level, you may qualify for a bankruptcy discharge in Chapter 7.
If your income is above the median income in California, you might need to file a Chapter 13 case. However, some individuals can qualify for Chapter 7 even if their income exceeds the median income level for their household.
Certain living expenses can be deducted from gross income to determine disposable income (income after allowed required withholding and living expenses). If the disposable income exceeds a certain amount, you do not qualify for a discharge under Chapter 7.
The data for the Means Test changes periodically. You must make sure that the figures you use to calculate the Means Test are the most current figures available.
Currently, the data used to calculate California income for bankruptcy cases applies to cases filed on or after May 1, 2020. The California median income is based on the number of people in your household. For each family member after 9 individuals in your household, add $9,000 per family member.
|# of People||Annual Income|
Chapter 13 Plan Payments in California
Chapter 13 plan payments in California are calculated based on a variety of factors. Your disposable income, assets, debts, and recent financial transactions can all impact the amount of your California Chapter 13 plan payment. A Chapter 13 plan can catch up back mortgage payments, lower car payments, pay domestic support arrearage (back child support and alimony payments), and resolve tax debt.
Calculating a Chapter 13 plan can be complicated. Ascend can help. You may consider taking a Chapter 13 repayment calculator that estimates your Chapter 13 plan payment. You can take the rough version below, but for a more precise version, please consider the more precise version.
California Bankruptcy Exemptions
Bankruptcy exemptions allow debtors to keep their property when filing for bankruptcy relief. The exemptions protect net equity (value of assets after deducting liens) in property from the court and your creditors.
Some states allow debtors to choose between federal and state bankruptcy exemptions. Debtors in California must use California bankruptcy exemptions. However, there are two sets of California bankruptcy exemptions to choose from when filing Chapter 13. You must choose one or the other. A careful analysis of each set of exemptions is required to determine which set offers the best protection for property in bankruptcy.
Furthermore, California’s bankruptcy exemptions can be found in California’s Code of Civil Procedure §703 and §704. The bankruptcy exemptions in California are adjusted periodically. You should check with the bankruptcy court or a bankruptcy attorney for the most recent figures.
In a Chapter 13 bankruptcy case, net equity in property can impact your bankruptcy plan payment. Therefore, claiming the correct bankruptcy exemptions helps reduce the amount of your California Chapter 13 plan payment.
Where are California Bankruptcy Courts Located?
California is a large state, so it has four bankruptcy districts. The Bankruptcy Districts for California are:
- Central District of California (Divisions – Los Angeles, Santa Ana, San Fernando Valley, Riverside, & Northern)
- Eastern District of California (Divisions – Modesto, Fresno, and Sacramento)
- Northern District of California (Santa Rosa, Oakland, San Jose, and San Francisco)
- Southern District of California (no separate divisions)
For example, within each district, you may have multiple divisions. The divisions are listed beside each of the above districts. Each division serves various counties within that division. The county in which you reside when you file a Chapter 13 case determines the district and division that handles your case.
Who are the California Chapter 13 Trustees?
California has 13 standing Chapter 13 trustees. Each trustee is assigned to cases based on the district and division for the case.
A Chapter 13 trustee administers your Chapter 13 case. The trustee reviews your bankruptcy forms and bankruptcy plan. The Chapter 13 trustee is responsible for receiving your bankruptcy payments and paying your creditors according to the terms in your confirmed Chapter 13 plan.
The current list of Chapter 13 trustees in California can be found on the United States Trustee website. We have also added the table below.
|Central||Amrane Cohen||(714) 621-0200|
|Central||Nancy K. Curry||(213) 689-3014|
|Central||Rodney A. Danielson||(951) 826-8000|
|Central||Kathy Anderson Dockery||(213) 996-4400|
|Central||Elizabeth F. Rojas||(818) 933-5700|
|Eastern||David P. Cusick||(916) 856-8000|
|Eastern||Russell D. Greer||(209) 576-1954|
|Eastern||Michael Meyer||(559) 275-9512|
|Northern||Martha G. Bronitsky||(510) 266-5580|
|Northern||David E. Burchard||(650) 345-7801|
|Northern||Devin Derham-Burk||(408) 354-4413|
|Southern||Thomas H. Billingslea, Jr.||(619) 233-7525|
|Southern||David L. Skelton||(619) 338-4006|
Do I Have Alternatives to Filing Chapter 13 in California?
Yes, you could have several alternatives to filing Chapter 13 in California. You might be eligible for a bankruptcy discharge in Chapter 7, if you meet the income requirements. You might also want to consider a debt consolidation loan or other debt settlement options. The key is to explore all debt-relief options, weigh the pros and cons of each option, and choose an option that works best for you.
Ascend helps you explore ways to get out of debt. Our Debt Settlement Guide and Debt Consolidation Comparison allows you to explore various debt-relief options, including filing for bankruptcy relief. We have also created the video below to summarize a Chapter 13 bankruptcy in California.
Finally, you can also find more information about Chapter 13 bankruptcies in our blog.If you are ready to get out of debt and begin rebuilding your finances, click here to begin the Ascend process. We have also created this video to help summarize a Chapter 13 bankruptcy in California.