Bankruptcy
Chapter 7 Bankruptcy in San Francisco
For those who qualify, Chapter 7 discharges most unsecured debt in a matter of months.
What Chapter 7 does
Chapter 7 is a liquidation bankruptcy, though for most individuals very little is actually liquidated. A trustee is appointed to review your assets, exempt property is protected, and at the end of the process most remaining unsecured debt — credit cards, medical bills, personal loans — is discharged.
The automatic stay begins on filing. Most collection activity has to stop while the case proceeds, including calls, letters and, in many circumstances, more serious enforcement.
For someone whose income is modest relative to what they owe, and whose property falls within California’s exemptions, it is usually the shorter and simpler route.
Whether you qualify
Eligibility turns on a means test comparing household income against California figures for a household of your size. Below the threshold, qualification is generally straightforward. Above it, a more detailed analysis of expenses and debts follows, and the answer is genuinely uncertain until that work is done.
Where Chapter 7 is not available, or is not the better option, Chapter 13 reorganises debt into a court-approved repayment plan instead.
What you keep
California offers two alternative exemption systems, and you must choose between them. One is generally more favourable to people with meaningful equity in a home; the other offers a flexible allowance that can be applied more broadly.
The choice is made once, it applies to the whole case, and it can materially change what is protected. It is worth working through carefully rather than by default.
Questions
Common questions
- Will I lose my home or my car?
- Not necessarily. California provides exemptions that protect defined categories and amounts of property, and there are two alternative exemption systems to choose between. Which one serves you better depends on what you own — particularly whether you have equity in a home. This is one of the first things to work through, because it can determine whether Chapter 7 is the right chapter at all.
- Do I qualify for Chapter 7?
- Eligibility involves a means test that compares your household income against California figures for a household of your size, with adjustments for certain expenses and debts. Income above the threshold does not automatically disqualify you, but it makes the analysis more involved.
- What debts are not discharged?
- Chapter 7 does not generally discharge child and spousal support, most student loans, most recent tax debts, or debts arising from fraud or from injuries caused by drunk driving. Secured debts are treated differently again — a discharge addresses your personal liability, not a lender’s security over property.
- How long does it take?
- A straightforward Chapter 7 case is typically concluded within a few months of filing. The automatic stay, which halts most collection activity, takes effect on filing rather than at the end.
Consultation
Talk to Susan about Chapter 7
Every matter begins with a conversation about what happened and what your options are. You will speak with Susan F. Reyes directly.