What are the different types of bankruptcy available in California?
California, there are several types of bankruptcy available to individuals and businesses seeking relief from overwhelming debt. These types of bankruptcy are classified under different chapters of the United States Bankruptcy Code. The most common types of bankruptcy in California include Chapter 7, Chapter 13, and Chapter 1
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as liquidation bankruptcy, is the most common type of bankruptcy filed by individuals and businesses in California. It involves the liquidation of non-exempt assets to repay creditors. However, California has generous exemptions that allow debtors to protect a significant amount of their property. In most cases, individuals can keep their homes, vehicles, and personal belongings. Chapter 7 bankruptcy typically lasts for a few months and provides a fresh start by discharging most unsecured debts, such as credit card debt and medical bills.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as reorganization bankruptcy, is designed for individuals with a regular income who want to repay their debts over time. Under Chapter 13, debtors propose a repayment plan to the court, which lasts for three to five years. The plan outlines how the debtor will repay their debts, including mortgage arrears, car loans, and priority debts like taxes or child support. Chapter 13 allows debtors to catch up on missed payments while keeping their property. At the end of the repayment plan, any remaining eligible debts are discharged.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is primarily used by businesses, but individuals with substantial debts can also file under this chapter. It allows debtors to reorganize their finances while continuing their operations. Chapter 11 bankruptcy involves creating a plan to repay creditors over time, similar to Chapter 1