• I’m married and need to file bankruptcy. Does my spouse have to file, too?
  No. If only one spouse is liable for most or all of the debt, it may not make sense for the other spouse to file.
• I make “too much” money to qualify for bankruptcy.
  Due to changes to the Bankruptcy Code in 2005, it is more difficult for high-income people to qualify for Chapter 7 bankruptcy. But, there are many other factors that must be considered in the eligibility analysis. Most people, even those who are high-earning, still qualify for Chapter 7.
• Will I lose my job if I file bankruptcy?
  No. The Bankruptcy Code generally prohibits termination or discrimination with respect to employment due to a bankruptcy filing.
• Will my family, friends or employer be notified if I file bankruptcy?
  Bankruptcy filings are public records and anyone may search whether a person has filed bankruptcy and review court files. But, generally, only the creditors named in your bankruptcy case will know of the filing.
• What debts can be discharged in bankruptcy?
  The debt discharge is broad. That includes credit card debt, medical debt, loans and lines of credit, car loan deficiency, home loan deficiency, old income taxes, etc. But, some debts cannot be discharged. That includes recent income tax and years for which no tax return was filed, family support debts or debts created by divorce decree or marital settlement agreement, student loans unless you can prove “undue hardship”, debts arising from intoxication and criminal restitution. Finally, there are exceptions for certain types of debts based on “bad conduct”, if the creditor timely protests in the Bankruptcy Court and wins. That includes debts based on fraud or misrepresentation, embezzlement, and willful and malicious injury.
• What is a “secured” debt?
  Secured debt is a claim that is secured by some type of property, either by an agreement or involuntarily due to a court judgment or tax lien. Most commonly, secured debts are home and car loans. While a debtor’s personal liability will be discharged in bankruptcy, the lender’s lien on the collateral will remain. If the debtor wants to keep the asset, the regular monthly payments must be maintained or the lender may foreclose or repossess.
• What is an “unsecured” debt?
  An unsecured debt is not tied to any type of property as collateral. Credit card debt is usually unsecured debt.
• Will I lose my assets if I file?
  The majority of individuals do not lose any assets in Chapter 7 bankruptcy; however, that depends on asset equity and other factors. Each state has laws that allow a debtor to keep certain types of assets at certain equity values.

  In California, there are two exemption options:

  • California Code of Civil Procedure §704: The “homestead exemption” is the major feature. This was dramatically enhanced by the CA legislature in 2021. Now, you may protect as “exempt” equity in your residence in the amount of the countywide median sale price for a single-family home, up to a ceiling amount, which is currently $722,502. In addition, you are entitled to exempt certain types of personal property up to certain equity values. That includes household goods and furnishings, clothing, vehicles, jewelry, whole life insurance cash value, tools used for work, and other items. Retirement accounts, such as 401(k), 403(b), IRA, and pensions receive robust protection.
  • California Code of Civil Procedure §703: Currently, $38,700 of “wildcard” exemption may be applied to any type of property (amounts adjust every 3 years), plus certain types of personal property up to certain equity values. Retirement accounts are also protected.

  In each Chapter 7 case, a bankruptcy trustee is appointed to review the debtor’s financial affairs and assets and, if appropriate, to liquidate any property with value in excess of the exemption amount and sale costs. The proceeds in the case are distributed to creditors pro rata.

• My house is in foreclosure: will a bankruptcy stop it?
  Yes. But, if you are behind on your mortgage payments, a Chapter 7 will provide only temporary relief, possibly 3 months. The lender may apply to the court to begin or resume foreclosure while the case is pending. If your income is sufficient and you wish to keep your home, Chapter 13 may be a better option to allow a structured cure of the home loan default under a court-supervised repayment plan.
• Will I lose my house if I file bankruptcy?
  Probably not, but that depends on many factors and the type of bankruptcy. In Chapter 7, if you are current on your mortgage payments, you qualify for the homestead exemption, and your equity is within the statutory limit, then no. But, if the value is high enough to enable the bankruptcy trustee to sell the house and have funds left for creditors, then you could lose your house.

  In Chapter 13, the debtor’s assets are not liquidated. Chapter 13 allows retention of assets and repayment of debts under a court-supervised plan. If your household income is sufficient, Chapter 13 will allow you to cure and reinstate the loan through 36 to 60 months of payments.

• Will I lose my car if I file bankruptcy?
  Similar to above. Most vehicles can be protected using exemptions. If the car is financed, and you’re current, you may keep it. Otherwise, the lender may repossess it after or during the bankruptcy.

  In Chapter 13, car loans may be restructured with lower interest and manageable payments.

• Will I lose all of my credit cards if I file bankruptcy?
  Probably yes. Even if there is no balance, banks typically cancel them. You can get a new one after the case (often secured with a deposit), which helps rebuild credit.
• I filed a Chapter 7 bankruptcy 5 years ago and I’m in financial trouble again. Am I eligible to file another Chapter 7?
  No. You must wait 8 years between Chapter 7 filings to receive a second discharge. However, you are eligible to file under Chapter 13.
• I’m self-employed and my income fluctuates. Am I eligible for Chapter 13?
  Yes. So long as you have regular income, even if fluctuating, and meet debt limits. The plan payment can be based on average monthly earnings.
• When do creditor collection actions stop after filing a bankruptcy?
  Immediately. The “automatic stay” stops lawsuits, calls, letters, foreclosures, and repossessions once the case is filed.
• I co-signed a loan for a relative. Will my bankruptcy affect him?
  Probably not. Your filing does not discharge the co-signer’s liability, as long as they keep making payments.
• I owe my relatives/friends money. Do I have to include them in my bankruptcy?
  Yes. All creditors must be listed, even friends or family. But you can still choose to repay them voluntarily.
• May I choose which assets I want to include in my bankruptcy?
  No. All assets, even intangible or contingent ones (like lawsuits, insurance claims, inheritances), must be disclosed.
• Should I stop using my credit cards if I think I may file a bankruptcy case soon?
  Yes. Recent use could be deemed fraudulent. Avoid new charges or cash advances prior to filing.
• I’m afraid to file bankruptcy because my credit will be terrible for 10 years.
  While your credit will take a hit, it improves within 2–3 years if you manage finances well. Lenders often offer credit again quickly, but with higher rates initially. A secured card is a good way to rebuild.

General

• I’m married and need to file bankruptcy. Does my spouse have to file, too?
  No. If only one spouse is liable for most or all of the debt, it may not make sense for the other spouse to file.
• Will I lose my job if I file bankruptcy?
  No. The Bankruptcy Code generally prohibits termination or discrimination with respect to employment due to a bankruptcy filing.
• Will my family, friends or employer be notified if I file bankruptcy?
  Bankruptcy filings are public records, but generally only creditors listed in your case will be notified.
• When do creditor collection actions stop after filing a bankruptcy?
  Immediately. An “automatic stay” takes effect once your case is filed, stopping collection efforts, lawsuits, foreclosures, etc.

Debt

• I make “too much” money to qualify for bankruptcy.
  Even high-income individuals may qualify for Chapter 7 based on several factors besides income alone.
• What debts can be discharged in bankruptcy?
  Credit cards, medical bills, loans, deficiencies, and some taxes may be discharged. Others, like recent taxes, support obligations, and fraud-based debts, may not.
• What is a “secured” debt?
  Debt backed by property (e.g., home or car loans). You must continue payments to retain the collateral.
• What is an “unsecured” debt?
  Debt not backed by property—e.g., most credit cards or medical bills.
• My house is in foreclosure: will a bankruptcy stop it?
  Yes, but only temporarily in Chapter 7. Chapter 13 may help cure the default through a repayment plan.
• I filed a Chapter 7 bankruptcy 5 years ago and I’m in financial trouble again. Am I eligible to file another Chapter 7?
  No. You must wait 8 years between Chapter 7 filings, but Chapter 13 may still be an option.
• I’m self-employed and my income fluctuates. Am I eligible for Chapter 13?
  Yes, if you have regular income and meet the debt limits. Payments may be based on average income.
• I co-signed a loan for a relative. Will my bankruptcy affect him?
  Probably not. The co-signer remains liable for the loan if they keep up with the payments.

Assets

• Will I lose my assets if I file?
  Most people keep all their assets in Chapter 7, depending on exemptions. California has two exemption systems (704 and 703).
• Will I lose my house if I file bankruptcy?
  Usually not, if protected by exemptions and you’re current on payments. Chapter 13 may allow you to keep your home even with arrears.
• Will I lose my car if I file bankruptcy?
  Typically no, if the equity is exempt or you continue loan payments. Chapter 13 may offer better terms for repayment.
• May I choose which assets I want to include in my bankruptcy?
  No. You must list all assets, even if intangible, contingent, or of little value.

Filing Bankruptcy

• Should I stop using my credit cards if I think I may file a bankruptcy case soon?
  Yes. Recent charges could be considered fraudulent and may be challenged.
• I’m afraid to file bankruptcy because my credit will be terrible for 10 years.
  Your score will drop initially, but can improve significantly within 2–3 years post-bankruptcy with responsible financial behavior.

Relatives/Friends

• I owe my relatives/friends money. Do I have to include them in my bankruptcy?
  Yes. All creditors must be listed, but you may voluntarily repay them after the bankruptcy.

Credit/Credit Cards

• Will I lose all of my credit cards if I file bankruptcy?
  Most likely, yes. Even cards with no balance are usually closed by the banks. You can apply for a secured credit card post-bankruptcy to rebuild your credit.

• What debts can be discharged in bankruptcy?
• What is a “secured” debt?
• What is an “unsecured” debt?

• Will I lose my assets if I file?
• My house is in foreclosure: will bankruptcy stop it?
• Will I lose my house if I file for bankruptcy?
• Will I lose my car if I file for bankruptcy?
• May I choose which assets I want to include in my bankruptcy?

• I filed for Chapter 7 bankruptcy 5 years ago, and I’m in financial trouble again. Am I eligible to file another Chapter 7?
• When do creditor collection actions stop after filing a bankruptcy?
• Will I lose my job if I file for bankruptcy?
• I’m self-employed, and my income fluctuates. Am I eligible for Chapter 13?
• Will my family, friends, or employer be notified if I file bankruptcy?

• I co-signed a loan for a relative. Will my bankruptcy affect him?
• I owe my relatives/friends money. Do I have to include them in my bankruptcy?

• Should I stop using my credit cards if I think I may file a bankruptcy soon?
• I’m afraid to file bankruptcy because my credit will be terrible for 10 years.
• Will I lose all of my credit cards if I file for bankruptcy?

• I’m married and need to file for bankruptcy. Does my spouse have to file, too?
• I make “too much” money to qualify for bankruptcy.

• What debts can be discharged in bankruptcy?
• What is a “secured” debt?
• What is an “unsecured” debt?

• Will I lose my assets if I file?
• My house is in foreclosure: will bankruptcy stop it?
• Will I lose my house if I file for bankruptcy?
• Will I lose my car if I file for bankruptcy?
• May I choose which assets I want to include in my bankruptcy?

• I filed for Chapter 7 bankruptcy 5 years ago, and I’m in financial trouble again. Am I eligible to file another Chapter 7?
• When do creditor collection actions stop after filing a bankruptcy?
• Will I lose my job if I file for bankruptcy?
• I’m self-employed, and my income fluctuates. Am I eligible for Chapter 13?
• Will my family, friends, or employer be notified if I file bankruptcy?

• I co-signed a loan for a relative. Will my bankruptcy affect him?
• I owe my relatives/friends money. Do I have to include them in my bankruptcy?

• Should I stop using my credit cards if I think I may file a bankruptcy soon?
• I’m afraid to file bankruptcy because my credit will be terrible for 10 years.
• Will I lose all of my credit cards if I file for bankruptcy?