Filing California Bankruptcy
How to go about filing California bankruptcy? Although federal statutes apply for California which is just about the same for any kind of state, its state laws give some different variations to some California bankruptcy code items. On the all important matter of what assets to exempt, the state offers bankruptcy filers two choices: they can choose between what is offered under state law exemptions found in the Code of Civil Procedures or the CCP 703 exemptions which are duplicates of federal law bankruptcy code exemptions. State law exemptions are most often chosen by homeowners to avail of course of exemptions on their residence while renters or those with no clear-cut home equity choose CCP 703.
Exemptions in general in California bankruptcy follow the same mechanism. California bankruptcy filing statistics show larger filings under Chapter 7 which basically means a no-asset case. Under this chapter, the debtor basically has nothing by virtue of personal assets to give up to creditors. Exemptions include of course, one's means of living day to day as well as personal household effects which have negligible resale value anyway. Be wary of creditors who might put a stake on pension or 401 K plans; these are not estate properties and are thus automatically exempted.
If you are married for example and file for California bankruptcy, be careful in choosing exemptions, as the courts offer different variations for each type of exemption and the rule is that you cannot for example, pick an exemption for jewelry in one system, and a different one for life insurance. The values vary of course for different systems with some offering more value for others and vice versa. You should be able to weigh everything in such a manner that is most beneficial for you. As a married couple filing a joint case means choosing a single set of exemptions for both husband and wife and not separately.
California of course is a community property estate which means that when you file for California bankruptcy, the property you acquired by marriage is automatically community property whose value is divided equally between you and your spouse. However, in filing for California bankruptcy, that community property becomes for the debts incurred during marriage and this is open to creditor claims. It is not true that even if only spouse files for bankruptcy, the other spouse's share of the property is exempt. Upon filing, the community property is estate property. One can file for exemption of course as long as requirements for such an exemption are duly satisfied and agreed upon by the court. However, if after the filing, one of the spouses gets to acquire new community property, that property cannot be claimed by the creditors as payment for debts as the law asserts that such properties are not liable for debts incurred by the non-filing spouse. This is a loophole that is sometimes exploited by spouses who would rather choose not to file jointly; this is because the spouse who did file for California bankruptcy is obligated by law to use property acquired after the resolution of his past bankruptcy to pay off still existing debts.
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