With this article we will explain the application of the
California bankruptcy laws and its exemptions; laws and how they work.
These California bankruptcy laws are taken from federal bankruptcy laws,
title 11 of the United States Code.

Melisa Jackson is a former
client of Personal Bankruptcy Avoidance, and she was wondering about
some issues with the California bankruptcy laws, thus Martin Rogers, our
specialist in bankruptcy will help her with this interesting topic.

Melisa Jackson:

How are the California bankruptcy laws organized?

Martin Rogers:

The California State is divided into four (4) bankruptcy districts
with four (4) bankruptcy courts named after each district. These courts
are:

- California Eastern bankruptcy court

- California Northern bankruptcy court

- California Southern bankruptcy court

- California Central bankruptcy court

Melisa Jackson:

How does the state of California deal with bankruptcy?

Martin Rogers:

California
bankruptcy laws allow people to pay secured loans; letting the owners
of the property recover and sell it at the normal market price after
paying the whole debt. People can find the California bankruptcy laws
exemptions in the exemptions chart.

California bankruptcy laws accept different kinds of exemptions.
There are two systems, 1 and 2. Every costumer has the right to choose
which one suits them best.

Melisa Jackson:

How do California bankruptcy exemptions help people?

Martin Rogers:

As
I mentioned before, California bankruptcy laws accept different kinds
of exemptions; system 1 and system 2. By using system 1, people receive
exemptions in homestead as follows amounts:

- From around $45,000 to 49,000 if the person is single and is not disable in any way

- From around $72,000 to 74,000 for families, and

- From around $122,000 to 124,000 for senior citizens

people also receive exemptions in personal properties as follows

- Bank deposits up to $1,900

- Buildings materials up to $1,900

- Motor vehicles up to $1,900

And
other belongings that go up to $4,800. System 1 also covers all types
of insurances, pension plans and official benefits such as health aid
and compensations. System 1 also covers wages of a minimum of 75%.

California
bankruptcy law System 2 is more different than System 1 because it
differs in some exemptions: homestead to $17,500 for all classes, motor
vehicle to $2,800, personal benefits to $17,500 and pension benefits
(only the ones qualified by ERISA) and this one goes up to $915.

Melisa Jackson:

Anybody living in the State of California can make use of the California bankruptcy laws?

Martin Rogers:

According
to the new California bankruptcy law that has taken effect on October
2005, anybody who wants to take advantage or make use of the California
bankruptcy exemptions, must prove to the state that he or she has lived
for as long as two years as a permanent resident in the state of
California. The person must have resided for that period before filing
for bankruptcy. Otherwise the person has to spend the 180 days prior to
the two year period.

The 2005 Bankruptcy Act within the
California bankruptcy laws states that it is required that all
individual debtors who file bankruptcy on or after October 17, 2005,
undergo credit counseling within six months before filing for bankruptcy
relief and complete a financial management instructional course after
filing bankruptcy.

Melisa Jackson:

Martin, what are the mandatory conditions to file for bankruptcy based on the California bankruptcy laws?

Martin Rogers:

On
a previous article of mine titled “Bankruptcy, Way Out or Deep
Problem”, a previous client of mine asked the same question in order to
know if he should consider filing for bankruptcy as a solution to his
financial situation, this is what I answered him:

“When you start thinking about filing for personal bankruptcy you
should live in a state for 90 days preceding the filing and you should
have less than $ 290,000 on total unsecured debt or less than $ 860,000
on secured debt. In October 2005 the new bankruptcy law went into
effect and established that consumers who earn less than the minimum
wage could still file for Chapter 7 personal bankruptcy. But people, who
earn more than that, need to apply for Chapter 13 bankruptcy type. This
one requires a repayment plan.”

Remember that bankruptcy as a
last resort tool can bring very unpleasant after effects. That is why
people must be certain of their decision and they should look for
professional advice.

Check these links to learn more:

http://www.personal-bankruptcy-avoidance.com/Bankruptcy/CA-California/Bankruptcy-CA-California.shtml

http://www.personal-bankruptcy-avoidance.com/Loans/CA-California/Loans-CA-California.shtml