These questions and answers are specific to California Law. If you do not reside in California please consult with an attorney in your area

The filing of a bankruptcy case invokes the automatic stay which is a Federal Injunction that prevents creditors from taking any action to collect a debt.  No further actions or hearings are required to obtain this protection. Rather the burden is on the clients creditors to undo or "lift the stay", or on the bankruptcy court to dismiss clients case if the bankruptcy debtor is not acting in good faith with respect to secured creditors or the court. With a few exceptions the "stay" enjoins almost all acts against a debtor to collect a money obligation.

Acts Enjoined:

The commencement or continuation of a judicial, administrative or other action against the bankruptcy debtor if the action is intended to recover a pre-petition claim against the debtor. Any act to obtain possession of the bankruptcy debtors property, or to exert control over this property. Any act to create, perfect of enforce a lien against the bankruptcy debtors property is enjoined. Any act to collect, recover or assess a claim against the bankruptcy debtor that arose proper to the filing of the bankruptcy if forbidden. Thus, creditors may not bother or intimidate the debtor about the repayment of pre-filing money obligations. The commencement or continuation of a case in the United States Tax Court concerning the bankruptcy debtor is specifically stayed since the jurisdiction of the bankruptcy court includes the power to adjudicate relevant tax liability issues.

What are Exemptions?

An exemption exonerates certain property from the creditors in the bankruptcy case.  For example, an exemption in a motor vehicle protects the car from the bankruptcy  creditors and exonerates it from the liquidation process up to a certain amount in value.  The bankruptcy code allows States to "opt out" of the Federal Bankruptcy exemptions and apply their own state law exemption in the Federal Bankruptcy Case. Where a state has "opted out" of the Federal Bankruptcy exemptions, the laws will vary considerably from state to state. You need to check with a bankruptcy attorney at the Pacific Bankruptcy Center regarding what exemptions you are entitled to when you file your case. Which State's laws you use depends on where your domicile was located for the 2 years prior to commencing your bankruptcy case. California is an example of a State that applies it's own bankruptcy exemptions rather than those available under section 522(f) of the bankruptcy code.

Which State's bankruptcy exemptions apply

For cases filed after 10/17/05: The exemption laws of whatever State you were domiciled in for the last 2 years.  If you lived in more than one State in the past 2 years, then it will be the exemption laws of whatever State you lived in for the 180 day period prior to the start of the last 2 years. Some states have laws which state that state law exemptions are only available to residents of the state. In a situation such as this many bankruptcy court's are holding that Federal bankruptcy exemptions are applicable by default.

Will Bankruptcy affect my credit?

Anyone with perfect credit probably should not be considering filing for bankruptcy. Perfect credit generally means that all or your debts are being paid on time, in full and in the correct amount. Perfect credit also means that your income to debt ratio is not "maxed out".

Bankruptcy can be reported on a credit report for as long as ten years. Once your credit rating is less than perfect however, bankruptcy may in fact help your credit and enable you to regain credit in a relatively short period of time. There are two basic reasons for this: First, good credit is primarily an income to debt ratio consideration. Bankruptcy dramatically changes your income to debt ratio in a favorable way in a very short period of time. Second, any lender with a potential borrower who has a bad credit report and no bankruptcy, will know that their loan could be subject to a proceeding in bankruptcy. Once you have a bankruptcy discharge you can't obtain another one for 8 years, so the creditor is in effect protected from bankruptcy by the fact that you've filed for bankruptcy.

Are there debts that can't be discharged?

The bankruptcy code creates numerous categories of debts that are designated as non-dischargeable. The following eleven categories summarize the non-dischargeable debts in bankruptcy.

1. Debts incurred by fraud or false pretenses;
2. Debts incurred by a false statement in writing (such as false credit application)
3. Debts incurred by embezzlement or larceny;
4. Spousal support or child support obligations
5. Debts incurred by willful AND malicious injury
6. Debts resulting from death or personal injury by debtor operating a motor vehicle while intoxicated.
7. Criminal fines and restitution.
8. Marital Equalization obligations (Ch. 7 only--these may be discharged in a Ch. 13 bankruptcy).
9. Income taxes for tax years less than 3 years ago.
10.  Fines and penalties owed to a governmental unit.
11.  Student Loans (unless you can prove "undue hardship).

Can I remove liens on my property?

Yes, under certain circumstances, judicial liens on real property and other non-possessory non-purchase money liens on household goods and furnishings may be removed as liens impairing a bankruptcy debtors exemptions if based on the value of the asset and the amount of senior liens encumbering it on the date your bankruptcy case is filed, the fixing of the lien causes it to impair an exemption that the debtor is entitled to under either state or federal law.

Can I be fired or denied employment because of bankruptcy?

No. Section 525 of the bankruptcy code specifically prohibits any discrimination in employment because of the exercise of an option to file under the bankruptcy code.

Where do I go to court?

The court hearing in a bankruptcy case is called the "Meeting of the Creditors". It is held at a location designated by the San Diego Bankruptcy Court for the Southern District of California. You appear with an attorney from the Pacific Bankruptcy Center at which time you are examined on the bankruptcy trustee concerning your case.

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