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Bankruptcy will negatively impact your credit and might make it a lot harder to get new credit, according to the United States Bankruptcy Court Southern District of California. Most general bankruptcy-related regulations are federal and thus also upheld through the bankruptcy laws in California.
A Chapter 7 case will be reflected on your credit reports for 10 years from the date you filed bankruptcy, while a Chapter 13 repayment plan will be reported on your credit for seven years from the date you requested this type of bankruptcy. Under no circumstances can any California bankruptcy court reverse accurate credit reporting before the federally-mandated period of time ends.
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California Bankruptcy Exemptions
As long as you've lived in California for at least two years at the time you declare bankruptcy, you can keep at least some of your assets under state bankruptcy laws.
When you file Chapter 7, a type of case that requests permanent forgiveness of debts like credit card accounts and medical bills, you often risk losing assets such as a home, according to the book "How to File for Chapter 7 Bankruptcy." Under a Chapter 13 partial debt repayment plan, you still run the risk of losing some of your assets.
But California bankruptcy laws are especially generous when it comes to asset exemptions, notes the "Bankruptcy Action" website. A single California resident could keep $75,000 equity in real estate; a disabled or older-than-65 single California resident declaring bankruptcy can keep as much as $150,000 in real estate equity.
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Additional Property Exemptions
No one, whether or not he lives in California, can lose a retirement account through personal bankruptcy, according to the book "How to File Chapter 7 Bankruptcy."
California residents declaring bankruptcy can keep up to $6,750 in heirlooms and jewelry; personal and business goods are almost always exempt from bankruptcy court seizure even in other states.
California bankruptcy laws also permit residents to keep 75 percent of any income earned in the 30 days preceding the initial bankruptcy petition filing, according to the "Bankruptcy Action" website. This rule usually applies to other sources of income, including legal settlements.
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Payment of Fees
You must either fully pay your fees upon declaring Chapter 7 or Chapter 13 or apply for a waiver or installment arrangement, according to the United States Bankruptcy Court Southern District of California.
As of 2010, it cost $299 to file Chapter 7 and $274 to file Chapter 13; the court costs do not include any legal help you might require such as hiring an attorney. Under bankruptcy laws in California, personal checks and credit or debit cards cannot be accepted for payment of court costs.
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"Bankruptcy Action: California Bankruptcy Exemptions: http://www.bankruptcyaction.com/caexemptions.htm"
"How to File for Chapter 7 Bankruptcy;" Stephen Elias, Albin Renauer and Robin Leonard; 2009
"United States Bankruptcy Court Southern District of California: Filing Pro Se: http://www.casb.uscourts.gov/html/prose.htm"