Bankruptcy
A federal process with California consequences.
Bankruptcy is a court procedure that can discharge qualifying debt or reorganize what you repay. Chapter 7 and Chapter 13 are the tools most individuals use. They are not interchangeable, and some debts survive either one.
Chapter 7 is a liquidation process. Some property may be sold to pay creditors; many household items are exempt. Unsecured debts such as credit cards can often be discharged. Child support, many taxes, and alimony generally are not. Eligibility depends in part on income and on whether a Chapter 13 plan would be feasible.
Chapter 13 is a reorganization for people with regular income. You propose a three-to-five-year plan based on income, debt, and what unsecured creditors would have received in a Chapter 7. It can be a way to catch up secured debts — a house or a car — without losing the collateral, if the numbers work and the debt is under the statutory caps.
Chapter 11 is typically for businesses or individuals who cannot use Chapter 13 or who hold substantial non-exempt property. It is more expensive and slower. Chapter 12 is limited to family farmers and fishers. We will tell you which chapter, if any, fits, and what a filing will not fix.
The automatic stay can stop collections, wage garnishments, and many foreclosure actions while the case is pending. Timing still matters. If a sale date is on the calendar, call before you assume a last-minute petition will solve it.