How to File Bankruptcy for Free in California (2020 Guide)

Collect Your California Bankruptcy Documents

You’ll submit most of the information for your California bankruptcy case by submitting the official bankruptcy forms to the court. Collecting certain documents that contain the information you’ll need beforehand will make that part a lot easier for you. Plus, there are a few things - like your last income tax return - that have to be submitted to your trustee during the bankruptcy process. 

To correctly calculate your monthly income, you’ll need to collect your paycheck stubs from the last 6 months. If you’re self-employed or a gig worker, document your monthly income in a way that makes sense for your situation. 

You’ll also need to provide a list of all your creditors to the bankruptcy court. You can get a free credit report to help with this but you should also review any collection notices you’re getting in the mail. That way you can make sure you’re not missing anyone.

Take Credit Counseling

You’ll have to complete credit counseling in the 6 months before filing your bankruptcy case. Federal law requires it, no matter what type of bankruptcy someone files. Make sure to sign up for this course with one of the providers approved for California bankruptcy cases. 

You don’t have to go anywhere to complete this requirement; most providers offer it online or over the phone. There is a small cost associated with taking the course, but several non-profit companies are approved to offer the course in California. So, if the first phone number you call ends up quoting you $50 - the maximum allowed under federal law - shop around. There’s bound to be more affordable options available.

Complete the Bankruptcy Forms

The bankruptcy forms are the same for everyone that files in the same district as you. Some of thenational forms are pretty self-explanatory and easy to complete by yourself. Others, like the one asking you to list your exempt property, can be a little more technical. 

If you hire a bankruptcy attorney, they’ll ask you all the questions that they need answered to prepare the California bankruptcy forms. If you’re using Upsolve’s free app, it’ll walk you through all of the questions on the forms, then generate them for you. 

Since you are the one signing the bankruptcy forms before they are filed with the court, it's important for you to carefully review everything. You can learn more about the California bankruptcy process by visiting the court’s self-help center in San Diego or the self-help desk at the Sacramento courthouse. 

Get Your Filing Fee

If your income is less than 150% of the federal poverty guidelines, you can file an application to have the filing fee waived. If you don’t meet the requirements for a fee waiver, but are unable to pay the full $335 all at once - maybe due to an ongoing garnishment -, you can apply to pay the court filing fee in installments instead. 

If you are able to pay the court filing fee in full, you should bring it with you when you go to the courthouse to file all of your bankruptcy documents. You can’t use a credit card, debit card, or personal check to make this payment. California bankruptcy courts generally accept US Postal Service money orders and cashier's checks from an acceptable financial institution (this probably means major bank). Cash usually works too, but many bankruptcy courts are not accepting cash at the moment due to the coronavirus pandemic. 

Print Your Bankruptcy Forms

Once you have (1) taken credit counseling, (2) collected your documents and completed your California bankruptcy forms, and (3) made a game plan on how to handle the filing fee, you’re ready to officially begin the process of filing Chapter 7 bankruptcy in California. 

If you completed all documents on your computer, print everything out twice so you have a copy for your own files. If you’re filing without any help, remember there are a lot of different forms that make up the full filing package, so having a checklist will come in handy.

Go to Court to File Your Forms

California has 4 federal districts, which means there are four bankruptcy districts. You can find out which district your case needs to be filed in using  this tool provided by the Eastern District of California. You can file your case by dropping the California bankruptcy forms off in person, or by mailing them to the bankruptcy court. Folks that file without an attorney (“pro se”) inCalifornia's Central District, can file their bankruptcy case online using the court’s Electronic Self-Representation (eSR) Bankruptcy Petition Preparation System.

If you’re going in person, Keep in mind that the court is a federal building, so you’ll be required to pass through security on your way in and that you can’t file your case on a federal holiday. 

Mail Documents to Your Trustee

Once your California bankruptcy is filed with the court, most of the heavy lifting is done. The court will assign a bankruptcy trustee to handle your Chapter 7 bankruptcy case. The bankruptcy trustee sells nonexempt property and pays it to creditors in order of priority, depending on the types of debt someone has. Most Chapter 7 filers don’t have any nonexempt property.  

They may send you a letter asking you to send them bank statements, paycheck stubs and similar documents in addition to your federal income tax return. It’s important that you pay close attention to any such requests you may receive from your trustee. 

Take Bankruptcy Course 2

The Bankruptcy Code requires everyone to take this course after filing bankruptcy even if there is nothing someone could have done differently to avoid it. It’s important to take this course from one of the approved providers, and while you don't have to get it done before your 341 meeting, you certainly can. 

Once you have completed bankruptcy course 2, your certificate of completion will need to be  filed with the bankruptcy court. Make sure you ask your course provider whether they will file the certificate in your Chapter 7 bankruptcy case for you, or if you are required to do it yourself. 

If you don’t complete this course, you will not receive your discharge; however, the case administration continues. Since the discharge is the main benefit of filing Chapter 7 bankruptcy in California, it is important not to forget this step.

Attend Your 341 Meeting

In most cases,the 341 meeting, or "meeting of creditors," is the only time a bankruptcy filer goes to court. You won’t meet with a judge or other court official on this day. Instead, the bankruptcy trustee that is handling your case will meet with you to ask you some standard questions about your case. 

While it's not required, there are some easy tips and tricks on how to prepare for your 341 meeting. Other than showing up, the most important part is that you bring a valid picture ID and proof of social security number. The bankruptcy trustee will only accept certain forms of identification, so if you don’t know where your actual social security card is, make sure you have an acceptable alternate.

Dealing with Your Car

If you own your car free and clear (or it’s worth more than you owe), make sure to claim the appropriate bankruptcy exemption under California law to protect this value. If you have a car loan, bankruptcy law gives you 3 options for dealing with it. You can surrender it to the bank and discharge the loan, you can purchase the car for its current value and discharge the rest of the loan, or you can keep everything the same by entering a reaffirmation agreement with the bank.