Written by Attorney Jacquelyne N. Mosley-Pastrana.
Updated July 27, 2020
As the second-largest city in the United States, you cannot help but appreciate the mix of culture and diversity that Los Angeles holds. It’s an eye-catching place to live. From Santa Monica to Ventura, is not a dull drive (but probably slow going) but you will see plenty of palm trees. Not only are palm trees in constant view, but also the stars and tourists catch the eye. In such a desired location, the cost of living has skyrocketed. Not only do Angelenos feel the rent hikes in their pockets, but also in their gas tanks, with California’s prices topping the nation’s gas prices. Although there are plenty of places to shop, working Angelenos are affected by the closing of stores including Top Shop and various Macy’s locations. It can be nerve-racking and make you feel down, but this is a moment in time, and there is a light at the end of the tunnel because you can do something about it. You can dig yourself out just like Kim Basinger, Mike Tyson, Burt Reynolds, and Larry King did at some point in their lives. Each filed for bankruptcy protection and bounced back stronger than before to rebuild and shape their future. They got it done and so can you. Filing bankruptcy in Los Angeles can be part of the plan to provide you relief.
Chapter 7 bankruptcy and Chapter 13 bankruptcy are the most common types for individuals filing for bankruptcy in Los Angeles. Chapter 7 bankruptcy was created for honest people who genuinely don’t have the money to pay their debt. For those who qualify, the four-to-six month process wipes away most debts. Here is a timeline of what to expect when filing Chapter 7 bankruptcy in Los Angeles. On the other hand, Chapter 13 bankruptcy is for people who don’t qualify for Chapter 7 bankruptcy. It creates a payment plan to pay down their debts over 36-60 months.
The United States Bankruptcy Court of the Central District of California has five locations, including one in Los Angeles. Resources and free legal help are available with services such as the Debtor Assistance Project and Karsh Legal Clinic. The Los Angeles Bankruptcy Court offers a Self-Help desk on Mondays and Wednesdays from 10:00 a.m. - 12:00 p.m. and 2:00 p.m. - 4:00 p.m. at 255 East Temple Street Room 100 to help you to file your Los Angeles bankruptcy. The Court also provides information on how to complete your bankruptcy without an attorney by providing information and videos about the process of filing bankruptcy in Los Angeles.
Los Angeles Bankruptcy Lawyers - Estimated Cost
Many seek an attorney when filing bankruptcy in Los Angeles, because an attorney can help alleviate some of the confusion when filing for bankruptcy. Los Angeles bankruptcy lawyer fees start at about $1,100 to guide you through Chapter 7 bankruptcy and about $4,000 for a Chapter 13 bankruptcy. Most people are concerned about the cost of an attorney when filing bankruptcy in Los Angeles. The cost of a bankruptcy lawyer depends on several factors such as the number of creditors you have, your total debt, and whether the extended Means Test calculation is required for your Chapter 7 bankruptcy in Los Angeles. Many attorneys will offer free consultations to help assess the facts of your case and any anticipated issues. In addition to asking about the attorney’s experience and thoughts about your case, you should inquire about what their fee includes.
How to File Bankruptcy in Los Angeles, California for Free
Filing bankruptcy in Los Angeles is a big task, but there are steps you can take to prepare yourself to take on this process. One of the hardest parts of a California bankruptcy is following through with each step one by one.
Collect Your Los Angeles Bankruptcy Documents
To file a successful California bankruptcy, you will need to get copies of all your financial documents to help you frame your bankruptcy case. If these documents are not in your possession, you can get them online or from the institution that holds your account. You will need copies of documents related to your income such as pay stubs and recent bank statements. Get six months of pay stubs by reaching out to the human resources office or payroll department of your recent employers. You will need copies of all documents that relate to your debts (money you owe), such as tax returns and your credit report. If you can’t find the last two years of your tax returns, you can submit a request to the IRS. You will need copies of all documents related to your assets (property you own), such as real estate appraisals and savings/investment/retirement account statements. A copy of your vehicle registration may also be needed. You also need to make a list of creditors not listed on your credit report such as family, friends, and even the Koreatown mattress store where you are making payments. It is essential that you are open with the Court about your financial situation to get a fresh start through your Chapter 7 bankruptcy in Los Angeles.
Take Credit Counseling
Before you file your Chapter 7 bankruptcy in Los Angeles, you are required to assess your financial situation and explore your options through the required credit counseling course. The course is an hour-long journey that explores your financial situation and spending habits through activities such as budget creation and prioritizing expenses. You are required to take the course from an approved provider in your preferred language within 180 days before filing your California bankruptcy case. After finishing the course online, by phone, or in-person, you receive a Certificate of Completion describing the counseling you received and certifying that you fulfilled this requirement. You submit the Certificate of Completion to the Court with the rest of your California bankruptcy documents.
Complete the Bankruptcy Forms
It can feel like someone is meddling in your life as you answer the bankruptcy forms, also known as the “petition documents” for your Los Angeles bankruptcy. These forms ask questions about you, your income, your debts, your assets, and other financial matters. Take heart and try to keep in mind that the information you are providing is vital to your new beginning. The Chapter 7 and Chapter 13 bankruptcy petition, forms and instructions are on the Central District of California Bankruptcy Court’s website. You can download or print the forms to complete them. You will find that the information is repetitive but stick it out and answer each form as thoroughly as possible. This also means those 2020 season tickets to the Dodgers have to be listed.
If you are filing Chapter 7 bankruptcy in Los Angeles and you don’t have an attorney, you may also complete the forms using the online system known as the Electronic Self-Representation software (eSR). Once you start the process on eSR, it provides up to 45 days to complete your petition online. Then, within ten days of submitting your petition, you are required to submit your filing fee, your declaration form, and your supporting documentation to the court.
Get Your Filing Fee
Most people must pay a filing fee of $335 for a Chapter 7 or $310 for a Chapter 13 when filing bankruptcy in Los Angeles. Debit and credit cards are not accepted, but you can pay the fee by cash, money order, or cashier’s check. If you are having trouble paying the filing fee, you can apply to pay the fee in installments of up to four smaller payments to equal the filing fee. Installments are usually not allowed in Chapter 13 bankruptcy. In Chapter 13, you establish a plan to pay your creditors through installments. If you are having trouble paying the initial filing fee at the beginning of your case, this is not supportive of your ability to maintain a 36-60-month payment plan. The Court must assess whether a repayment plan is attainable when a person cannot afford to pay the initial filing fee. If you genuinely cannot afford to pay the Chapter 7 filing fee, you can also apply for a fee waiver. Both applications require you to submit the form(s) at the time your bankruptcy petition is filed to obtain a hearing date and the name of the judge who will rule on the application. In Los Angeles, if you file early, you may be able to get a hearing the same day (plan to be at court all day), but if not, you should plan to come to court the next day for your hearing. The decision to grant your waiver is based on your income, family size, and the information contained in the documents you filed. If your income is below 150% of the poverty guidelines, your waiver may be granted. If it is denied, the Court may accept your filing fee in installments.
It is important your filing fee is taken care of whether that’s through a waiver or payment in full for your Los Angeles bankruptcy to continue. Failure to pay the fee in full has caused many cases to be thrown out by the Court and there are no refunds for amounts you already paid. If you are using the Electronic Self Representation (eSR) system, you have to submit the filing fee, Declaration form, fee waiver/installment request, and supporting documentation, within ten days of submitting your eSR petition.
Print Your Bankruptcy Forms
After you complete your forms for your California bankruptcy, you will print them one-sided. Legal documents are required to be one-sided. Plan to have enough paper to print all your bankruptcy forms on one side of each page. If you do not have a printer, you can print at the local library for a small per-page charge. You can print at the Los Angeles Public Library for $0.25 a page. The Los Angeles County Library offers wireless printing with 10-15 pages free per day and $0.15 a page after that. Private companies like FedEx offer printing at low as $0.08 a page.
Go to Court to File Your Forms
To file your California bankruptcy, you have to submit your bankruptcy forms to the Court. Use your home zip code to determine which of the five divisional courthouses you should visit to file your case. You have the option of filing your Los Angeles bankruptcy by mail but most cautious filers visit the courthouse in person to ensure everything is received and appears to be in order.
The Los Angeles Bankruptcy Court, located at 255 East Temple Street in Los Angeles, has no on-site parking, but public parking is available nearby for a fee. When you get to the courthouse, you will pass through security and make your way to the Clerk’s Intake window. You will wait in line for your bankruptcy documents to be reviewed and filed. The Clerk who reviews your forms cannot offer legal advice but will inform if the documents appear incomplete. This provides you the opportunity to carefully review your forms and make sure you have all documents, including the Credit Counseling Course Certification. Once you’ve successfully filed, you will get your case number.
Mail Documents to Your Trustee
After filing bankruptcy in Los Angeles, you will be assigned a Trustee to oversee your California bankruptcy case. The Trustee will review the documents you submitted looking for assets to pay your debts. The Trustee will request documents such as your tax returns in preparation for your 341 meeting. Be prepared to provide any documentation requested by the Trustee before your 341 meeting in whichever mode your Trustee requested (usually email or mail).The Los Angeles Bankruptcy Court also mails Form 309A notifying each creditor in your mailing matrix that you filed a Chapter 7 bankruptcy in Los Angeles. If you get more than one Form 309A in the mail after your case is filed, it typically means that the address you provided for a creditor was wrong. Many find it helpful to double back to inspect their credit report and other documents for the address. After correcting the address, it’s important that you amend your mailing matrix.
Take Bankruptcy Course 2
After filing bankruptcy in Los Angeles there may be many things on your mind, but completing the two-hour second bankruptcy course from an approved agency, and submitting the financial management certificate should be an easy task to complete regardless. The course can be taken at your convenience online, by phone, or in-person in Los Angeles County. It costs from $10-50, and it offers you pointers on how to create a road map for your future after your California bankruptcy is complete. You will design another budget, evaluate how to use credit wisely, and take steps to set your own financial goals. Don’t get confused, as it is also known as the pre-discharge course, debtor education course, or financial management course. Many cases are closed without a discharge having been entered because people forgot about the course. It’s a good idea to clear this task and check it off the list shortly after filing your Chapter 7 bankruptcy in Los Angeles.
Attend Your 341 Meeting
About a month after filing your Chapter 7 bankruptcy in Los Angeles, you will have your 341 Meeting of Creditors. The Trustee will expect you to bring your government-issued photo identification and an original social security card. Your meeting is a short 5-15 minutes, so it’s best to plan for LA traffic and arrive on time, especially if part of your commute includes the 10 Freeway. The meeting will take place at the Office of the U.S. Trustees and the Los Angeles office is located at 915 Wilshire Boulevard, Los Angeles, CA 90017 on the 10th floor in Suite 1050. Although creditors can attend, in most cases it’s just you, your lawyer if you have one, and the Trustee. The meeting is an opportunity for the Trustee to discuss the distribution of assets, if any. The Trustee will ask you questions about your financial situation and your California bankruptcy filing. Filers just like you have completed this process by providing brief, candid, and clear answers.
Dealing with Your Car
Driving on the 405 Freeway may be annoying, especially on the weekends, but you may have adjusted to that by now. Gas is sky high, and parking is a challenge, but as long as your car can make it to an ARCO and you can find a small parking spot on the street, your day is looking up. Could you get around without a car? Probably. The Metro Trip Planner makes it pretty easy. Will you? That depends. If you have a car when filing your Los Angeles bankruptcy, chances are that you find yourself concerned about your transportation.
If you own the car, you can use an exemption to protect your vehicle and keep it. In a Chapter 7 bankruptcy in Los Angeles, you have the possibility of having your car loan debt wiped away entirely if you surrender your car. Surrender means that you return the vehicle to the lender. People frequently surrender cars with high loan payments or if the value of the car is less than what is owed. This way, the loan can be discharged, and they can start fresh without having to worry about a high car payment. Some people filing Chapter 7 bankruptcy in Los Angeles decide to keep the car if they can afford the payment and if they owe less than the value of the car. If you want to keep your car, you can choose either reaffirmation and redemption when filing your California bankruptcy. Reaffirmation is when you agree to the loan with the same lender, and everything basically stays the same. It requires you to complete and sign a reaffirmation agreement and you may have to attend a hearing so the judge can decide whether to approve it. During the hearing, the judge will ask why you need the car and advise you of your rights. Those who choose to reaffirm their car loan are advised that the car may still be repossessed for nonpayment. Redemption is when you pay the lender a lump sum equal to the fair market value of the vehicle so you can keep the car but discharge the obligation to pay the loan. If you want to go this route, but are not sure how to come up with money to make a lump sum payment, you may want to contact a redemption lender to find out if it’s truly doable.
California Bankruptcy Means Test, Bankruptcy Forms, and Exemptions for Los Angeles
California Means Test
The California bankruptcy Means Test presumes that you qualify to file a Chapter 7 bankruptcy in Los Angeles if you fall below the income limits for families of your size in California. If your income is higher, you keep going to the second part of the Means Test which considers your expenses. Some can justify claiming higher housing expenses considering that the cost of living in Los Angeles is 43% higher than the national average and 13% higher than in the rest of California. The second part of the Means Test calculation subtracts your monthly expenses from your monthly income to calculate your disposable income. Having low or no (negative) disposable income means you can file a Chapter 7 bankruptcy in Los Angeles because you pass the California bankruptcy Means Test. If your disposable income as calculated by the Means Test is too high, you may want to consult an attorney to find out why you are failing the California bankruptcy Means Test when in reality you don’t have any money left after paying all of your expenses.
Median Income Levels for California
California Median Income Standards for Means Test for Cases Filed On or After May 1, 2020
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Poverty Levels for California
California Fee Waiver Eligibility for Cases Filed On or After May 1, 2020
Eligible for fee waiver when under 150% the poverty level.
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California Bankruptcy Forms
It’s good to make sure you have the proper bankruptcy forms, especially local forms if applicable, to submit to the Court. To help your Los Angeles bankruptcy case go smoothly, it’s critical that your responses on your California bankruptcy forms match your bankruptcy documents and are internally consistent. On Schedules A/B (Property), the property should match with your other schedules such as C (The Property You Claim as Exempt) and Schedule D (Property a Creditor Can Make a Claim). For example, the value of your Beckett authenticated photo of Magic Johnson with the Lakers playing the Clippers listed in Schedule A/B, should also appear on Schedules C (The Property You Claim as Exempt), if you want to protect this piece of property by claiming an available exemption. Also, creditors on Schedules D, E, and F should match your Master Address List. Some people find it helps to refer to their credit report for the correct names and addresses of creditors.
California does not allow the use of federal bankruptcy exemptions, but people filing bankruptcy in Los Angeles may choose between two sets of California bankruptcy exemptions, called the 703 exemptions and the 704 exemptions. The exemptions protect certain property during your Chapter 7 bankruptcy in Los Angeles; property that is not exempt may be sold for the benefit of unsecured creditors. Some of the exemption protections cross over. People who have less expensive property like a standard vehicle or jewelry typically find the 703 exemptions suitable, and many have found the 704 exemptions best protect more expensive personal property, like an expensive car, and real property, like a home.