If you are overwhelmed by your debt and unable to afford your monthly payments, consider filing for bankruptcy. Depending on your financial situation and the kind of debt you possess, bankruptcy may eliminate the majority of your debt, and give you a fresh start. For consumers in the United States, there are two types of bankruptcy available: Chapter 7 bankruptcy and Chapter 13 bankruptcy. However, before filing for bankruptcy in California, discuss your options with an experienced California bankruptcy attorney. For example, a California bankruptcy attorney will review your financial information and recommend one type of bankruptcy for you.
 
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most common form of bankruptcy filed in the United States. In a Chapter 7 bankruptcy, otherwise known as a straight bankruptcy, your non-exempt assets are seized by the Chapter 7 bankruptcy trustee and sold to fund your bankruptcy estate. The Bankruptcy Code and California both have a list of property that is recognized as being exempt from seizure. During the bankruptcy, the funds will be used to repay your creditors in their order of priority, as designated by the Bankruptcy Code.
 
However, after recent changes to the Bankruptcy Code, you must now determine your Chapter 7 eligibility before filing for bankruptcy in California. For example, to be eligible for Chapter 7 bankruptcy, you must earn less than the median income for the state of California, which is $43,107
for a single individual or $70,172 for a family of four. If you earn more than the median income, you still may be eligible to file for Chapter 7 bankruptcy in California if you have little disposable income remaining after you pay your necessary expenses each month. 
 
Chapter 13 Bankruptcy
If you are not eligible to file for Chapter 7 bankruptcy in California, or you would like to file for bankruptcy and keep all of your assets, you should consider filing for Chapter 13 bankruptcy. After you file for Chapter 13 bankruptcy, you will create a repayment plan to repay your debts over a 3 to 5 year period. Chapter 13 bankruptcy allows you to keep your assets while being able to catch up on your debts. Throughout the life of the repayment plan you will make a lump sum monthly payment to your Chapter 13 bankruptcy trustee. Your bankruptcy trustee will then disburse the funds to your creditors. However, to be eligible to file for Chapter 13 bankruptcy in California, you must have regular income for at least 6 months prior to filing for bankruptcy. Regular income is necessary to show the court that you will be able to make your Chapter 13 monthly payments due to the regularity of your income.
 
If you are considering filing bankruptcy without the assistance of a California bankruptcy attorney, you should carefully read http://www.canb.uscourts.gov/court-information/filing-bankruptcy-case-without-attorney. If you have questions regarding how to file for bankruptcy in California, you can contact the bankruptcy court in your area. For example, if you live in the Northern District of California, visit the United States Bankruptcy Court, Northern District of California’s website, http://www.canb.uscourts.gov/faqs/faq-general-bankruptcy to obtain additional information.