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Excessive debt can take a heavy toll on a person, and if you’re no longer able to pay your debts, bankruptcy law allows you to seek relief. In many cases, Chapter 7 is the best option. Chapter 7 bankruptcy discharges all applicable debts while liquidating non-exempt assets. Chapter 13 is another common option for consumers. In a Chapter 13 bankruptcy, debts are restructured to make payments more affordable for debtors. For three to five years, the debtor will make payments through their repayment plan, and when the plan concludes, the debts are discharged.

Bankruptcy petitions are filed in federal U.S. Bankruptcy Courts, and federal laws pertaining to bankruptcy are established by Congress. State bankruptcy laws supplement and clarify federal bankruptcy law. State laws are especially important when it comes to exemptions and claims. Regardless of the bankruptcy chapter under which you are filing, your state laws can play a major role in your bankruptcy case.

You will be able to exempt some of your property during the proceedings. Federal bankruptcy exemptions are eligible to all filers, including the federal homestead exemption that can protect many filers from foreclosure. However, state exemptions tend to be more generous in some areas. For example, they tend to offer more substantial homestead exemptions. Some states require that you choose state exemptions while others allow you to choose either state or federal exemptions. California offers two sets of exemptions from which to choose. While you can often choose between state or federal exemptions, you cannot combine them or mix and match exemptions.

As soon as you file your petition, your bankruptcy case begins. Along with your petition, you will include a list of assets, income, debts, liabilities and the names of all creditors and the nature and amount of their claims. During your bankruptcy, you will be protected from collection activities by an automatic stay, which prevents your creditors from taking legal action against you or your property throughout the duration of your case. Your creditors will not be able to initiate or continue lawsuits, garnish wages or contact you to demand payment.

First America Law is experienced in all aspects of state and federal bankruptcy law and fight for the best outcomes for our clients. We can help you decide which exemptions will protect you the most and determine whether Chapter 7 or Chapter 13 would be more appropriate for you. Call us at 1-800-695-7674 to schedule a free case evaluation.