People in California can discharge their debt by consumer bankruptcy protection law under chapter 7 and chapter 13 Bankruptcy. Debt settlement and debt consolidation methods are also there for debtors who want to get rid of their debt by negotiation. There are many non profit debt settlement companies who can help you with proper debt relief solutions. This procedure can put less pressure on your credit score. The time may take a bit longer with these debt settlement and consolidation processes. However, if anyone is bent on discharging his debt right away, he can best resort to chapter 7 Bankruptcy. Once a borrower files Chapter 7 Bankruptcy, the court seizes his asset to liquidate it to reimburse the compensation of his creditors. With Chapter 13, the court arranges a repayment plan for the borrower and helps him to pay off his debt through long term installments. Now, it is your responsibility to assess what chapter would best serve your purpose.
In California, one needs to go through a means test before getting eligible for filing bankruptcy. This means test will determine which Chapter of Bankruptcy you should file. Depending on your median income and family size, it will take decision. Even the length of the Chapter 13 repayment plan is decided on the basis of means test.
The California state law mandates that one must go through financial management courses before and after filing bankruptcy. One course is supposed to be taken before filing bankruptcy. Another course is carried along 45 days right after filing bankruptcy. In the first course, the debtor is given credit counseling for 6 months. Any reputed government approved agency must be chosen for taking up such course.
Filing chapter 7 you can totally discharge some type of your debt liabilities. In return, you need to give up certain portion of your asset to the court. Certain exemptions can be achieved under California state bankruptcy law and federal law. In 2010, one was eligible to get exemption up to $150,000 in home equity, $2,550 for vehicle and $6750 for jewelry.
When you surrender your property, the court will assess the nature of your asset. Non-exempt assets can be liquidated to produce liquid money to compensate the loss of your creditor. If the asset proves to be essential, it could get exemption.
Bankruptcy should always be looked upon as a last ditch option for any debtor.