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Essential 11 Steps to Filing Bankruptcy in California
Step-by-Step Guide for filing bankruptcy in California, from a trusted Los Angeles bankruptcy lawyer
Here are 11 steps to filing bankruptcy in California. I’m Hale Andrew Antico, an established Los Angeles bankruptcy attorney, and I have helped thousands of people in Southern California get a fresh start by filing bankruptcy for the past twenty years. You really should at least meet with an attorney for a once-in-a-lifetime process with serious consequences. As an introduction to how all this works, here is a step-by-step guide to file bankruptcy in California in 2023, with 11 steps from filing to discharge.
A quick note and disclaimer: This isn’t intended to be complete, as there are unexpected twists and turns in every case. As much as I like helping people (which is why I share all this info with the public), this creates no attorney-client relationship, and there will be no response to questions. That’s like calling and asking a mechanic how to change a transmission.
People think bankruptcy is “just forms” but how to complete them, or even whether to do this at all, is an art. That’s where all the magic is. Our wisdom, knowledge, and experience is why you’d hire a bankruptcy attorney. Information and knowledge is our service, and our value.
Bad things can happen in a bankruptcy, and once a 7 is filed, there’s no backing out. If you’re going to start down this road of doing it yourself, I’m afraid you’re doing it yourself. Before you do anything, meet with an attorney, and let one of us be your guide.
Now, with that out of the way, let’s get to the good stuff!
1. Understand why you are filing bankruptcy
Why are you doing this? The answer may seem apparent: “I can’t afford my debt, Captain Obvious.” But why can’t you afford your debt?
Is it because you have no income and can’t afford rent or to eat? If so, you have bigger problems than credit card bills.
Is the reason you’re in debt because you spend more for basic living expenses than money that is coming in each month, using credit cards to cover the shortfall? Maybe it’s due to lavishing goodies and toys on the grandchildren? Or financing that vehicle or luxury that you really want but don’t need?
If the issue that got you here is ongoing, removing the debt is just treating the symptom. You need to attack the cause of spending more than the income provides. Otherwise, after bankruptcy, you’ll just be in debt again, this time unable to file again for a while.
Or is it because there was an unexpected hardship (divorce, job loss, illness, etc), and this caused you to fall behind. The event is behind you now, and you’re trying to pick up the pieces and fix the mess now?
You can’t fix a problem unless you understand what is causing it. It’s really important to understand what the real problem is, and address that squarely. It’s quite possible that debt isn’t the true issue, and removing the debt would be like bailing water out of a sinking boat. Step one: plug the leak and fix the problem. Step two: then… ditch the water (or debt).
2. Review your options and bankruptcy alternatives to avoid bankruptcy, and risks of filing
The next step is deciding, “should I file bankruptcy?” Of course, people want to avoid bankruptcy, which is understandable. It should really be a last resort. As a bankruptcy lawyer, I’m always looking for bankruptcy alternatives, solutions and options for my potential clients to help them avoid filing bankruptcy.
You can consider many of these options on your own (negotiate and settle debts, make payments, etc). This is where it helps to have an outside opinion from a trusted professional. First, you are swirling in the middle of the situation, and don’t see it objectively as a professional would, detached and with perspective from the 10,000-foot view.
Second, understandably, there are emotions involved, be they guilt, anger, avoidance, sadness, or something else, and this can affect judgment and decision-making.
Third, a professional who focuses on this specialty can help you review options, knowledgeably with experience, and in an objective and compassionate manner.
At the very least, consider your options, and pros and cons of each one. Bankruptcy isn’t perfect, and has risks, dangers, and downsides. Sure, a good knowledge of exemptions can allow you to keep things (and I’ve written many articles about California exemptions).
It really does make sense to go over your options with a trusted professional (and if you’re in Los Angeles county or the surrounding areas, schedule time with me). We can see issues you may not have even thought about. Can you make the decision on your own? Of course. Like surgery, just because you can do something yourself, doesn’t mean that you should.
3. Once decided, prepare, download software, gather documents
Once you’ve decided you’re going to file bankruptcy, you’re going to need to get your ducks in a row. Before you do anything, look at my list of 12 crucial tips for people preparing to file bankruptcy. These are the things that bankruptcy attorneys wish their clients did or knew beforehand (like avoiding transfers), and I’m sharing them with you.
Next, you’re going to need a couple of tools and documents ready and at your disposal.
Download a PDF app for your phone or scanning app for your computer. There are a million of them, and they mostly do the same thing. But you will need to learn how to create PDFs; in 2023 PDF is the standard for sending a document. And if filing bankruptcy, you will be sending documents, either to your bankruptcy lawyer (which you should totally have), or to the bankruptcy trustee.
Also go to your bank and download your most recent six months of bank statements. These will typically already be in PDF format.
Get your most recent 6 or 7 months of paystubs or proof of other income. Make sure the pay stubs show all your deductions and how much is going to taxes, Social Security, retirement loans, and so on.
Download a credit report or three. You can get a free credit report yourself, and again, it should save as a PDF (see a trend yet?).
Get ready your last two years of tax returns in PDF format, both state and federal. Didn’t file because you’ll owe? File your tax returns anyway so you can say you’ve filed for at least the last four years, and learn what the tax debt is. Taxes generally aren’t dischargeable, but the tax debt can be dealt with in a Chapter 13.
There are other things that will likely crop up, but this is a good start.
4. Download the bankruptcy forms from the California bankruptcy court website and complete the Chapter 7 means test
The bankruptcy means test tells whether you can file Chapter 7 bankruptcy or Chapter 13. After you’ve downloaded the form for the Chapter 7 means test, with median income numbers, and you’ll find out if it would be a presumption of abuse to file as a 7. As with the disclaimer above, it’s beyond the scope of this article to explain how to complete this form, or any other bankruptcy-related document.
You’ve got the supporting documents ready, so now it’s time to get the forms. Go to your local bankruptcy court website for your state, and download the bankruptcy forms for the appropriate chapter you’re filing (this link is for the Central District of California, where we mostly practice).
Bankruptcy is a federal system, which stems from the Constitution, so bankruptcy forms are generally uniform across the nation. However, each area is allowed to add a form requirement, or make small tweaks to an existing one. This is a local bankruptcy form, and of course, they’re different all over. For example, the Los Angeles-area list of local bankruptcy forms is quite long. The good news is most of the local forms aren’t required for filing a bankruptcy case. They may be different where you are, whether you’re filing bankruptcy in California, or somewhere else.
5. Complete the bankruptcy forms, petition, schedules and Statement of Financial Affairs
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Like the disclaimer above says, how to complete the forms is beyond the scope of this article, and is the practice of law. If you’re doing this yourself, you are your own attorney. In law school, a professor told the class, “Do you know how to pass any test in law school? Easy, three simple words:
“Know the law.”
Those three little words meant a whole lot of work. Know the law. That meant reading, analyzing, studying, memorizing, outlining, researching, and memorizing some more.
Similarly, filing bankruptcy is “complete the forms.” Three little words, but within them there are a lot of decisions to make, a lot of work, questions, research, and judgment calls. Consult with a bankruptcy attorney in your federal district, and consider hiring them. I say this not because I’m a bankruptcy lawyer, but because I’ve seen people get in trouble and lose their house or car because they cut corners. And make no mistake: it looks deceivingly simple, but this process has no backing out, and can result in losing assets, having friends or family sued, or jail for bankruptcy crimes.
As there is no attorney-client relationship between you and the author, or this law firm, I cannot advise you how to complete the forms. The good news is most forms have instructions which hopefully are self-explanatory.
There is value in hiring an attorney. There are no guarantees in law, but if you could make an investment which had a likelihood of a return 20-50 times its value in return, would you do it? If you could work with an expert, affordably, in a way that would save you a ton of time and headaches, save your assets, and save you sleep, would you find a way to do it?
Bankruptcy lawyers do this for our clients, after we’re given the necessary info and documents in step 3.
6. Finish the prefiling credit counseling course
Congress has required not one but two courses be completed for every person filing bankruptcy. The first is called credit counseling, the other debtor education.
There is a list of approved providers you can choose from, and they often bundle the two courses. Cheapest isn’t always best.
You need to complete the first course before filing, and have the certificate. It can’t be older than 180 days before filing.
Bankruptcy lawyers normally submit the certificate to the court.
7. File the bankruptcy petition papers with the bankruptcy court
It’s time to actually, literally, file the bankruptcy case. This will require driving to bankruptcy court and
court clerk, paying for parking, standing in line and then paying the filing fee (it’s over $300) as you hand in your papers.
Where is your nearest bankruptcy court? In the Central District of California, here is a list of the bankruptcy courts. If you’re anywhere else, research your local bankruptcy court in your judicial district.
Bankruptcy attorneys routinely do this for our clients.
8. Complete the second postfiling debtor education course
Remember step 6? There are two courses. Once you’ve filed, it’s time to do the second course, called debtor education. Make sure you or the provider files the required form and/or certificate with the court. If you don’t do complete this or it’s not filed, your case will close without discharge, costing you a few hundred dollars more to reopen the case. Make sure the second course is done, and the necessary documents filed.
Bankruptcy lawyers file the certificate and related form with the court for our clients.
You may need to reaffirm your vehicle loan.
9. Attend the 341a Meeting of Creditors on Zoom
The 341(a) Meeting of Creditors is where the rubber meets the road. You’ll be under oath, and testifying about the papers you signed under penalty of perjury. The good news is that these days, the 341a meetings are all done remotely by Zoom. That means you need to get the trustee your tax returns and valid identification using those PDF apps. Read my article about what to expect at the remote Zoom 341a Meeting of Creditors.
From consultation to signing appointment, every question I ask my clients is preparing for this day, as if I were the trustee. I’m looking for problems, probing for issues, assessing any risk areas. I share this and then we try to resolve it together so you’re not blindsided at the hearing when it’s too late.
Bankruptcy attorneys prepare their clients for the Zoom 341a meeting and attend with them.
10. Wait 3-6 months for your bankruptcy discharge
Assuming no issues at the 341a, now comes the waiting. All the heavy lifting was done in the preparation of the papers, due diligence, timing, and research. The arrow has been aimed, and is now in flight. Don’t call the trustee or court. The discharge will come when it comes.
If you filed Chapter 13 bankruptcy, it’s time to take care of a punch list so the trustee can recommend confirmation and the judge orders it confirmed. Then you just make your payments until the term is complete, and then you get your discharge. Bankruptcy lawyers work very hard to do all they can to get the case confirmed.
11. Rebuild your credit after bankruptcy
Lastly, you’re done, you got a bankruptcy discharge. Congratulations! Now it’s time to rebuild your credit after the bankruptcy discharge.
Thanks for reading. I hope this was helpful. If you have already filed your case, or are committed to doing this yourself, thanks for your time reading this, and I wish you the best in your future.
However, if you are still unsure and want to have a case evaluation with a qualified professional, let’s work on that, the most important step: finding a bankruptcy attorney (not a bankruptcy paralegal) to walk you through this process.
If you’re outside of Southern California, here’s a good place to find a qualified local bankruptcy attorney near you.
If you haven’t yet filed and are in the Los Angeles County, Ventura County, Orange County areas, contact me with the quick form below to arrange for a consultation, or book your own appointment now. I would be honored to help you. Thank you again.