Written by Attorney Jacquelyne N. Mosley-Pastrana.
Updated October 14, 2019
Living in the capital has its perks including picturesque neighborhoods, freshwater lakes, and numerous employment opportunities. Sacramento County does much better with the cost of living than many of the bigger cities in California, but the cost of living continues to rise, and Sacramento is no exception. A recent National Low-Income Housing Coalition study estimated that someone making minimum wage would need to work an average of 78 hours a week or make over $48,000 a year to afford to rent a two-bedroom apartment in Sacramento. No matter what you make, the increased costs of living have led to increased credit card debt, as many don’t know how to pay their bills. In the midst of these challenges, many in Sactown have taken a step forward and made the decision to file Chapter 7 bankruptcy in Sacramento.
You may wonder whether bankruptcy is right for you. There are many bankruptcy misconceptions out there. The reason people file bankruptcy in Sacramento is more common than you might think. It’s due to financial setbacks that could happen to any of us. There is no shame in filing for bankruptcy. It’s a tool to rebuild your financial house. Another misconception is that you will lose everything. In reality, most people who own less than $10,000 in property keep it all. While many believe filing bankruptcy in Sacramento will harm their credit, many find it easier to rebuild and improve their credit after bankruptcy.
Which bankruptcy type should you choose? The “right” bankruptcy chapter varies from person to person, but Chapter 7 bankruptcy is most frequently used as it's for people who can’t afford to pay any of their debts. Filing Chapter 7 bankruptcy in Sacramento wipes away most debts, it stops wage garnishments and utility shut offs, and it takes only four to six months to complete. If you can’t file Chapter 7 bankruptcy, because of high income or bad timing, consider filing a Chapter 13 bankruptcy instead. Chapter 13 is commonly used to avoid foreclosure and keep more property than allowed under Chapter 7.
If you plan to file your Sacramento bankruptcy without an attorney, there is free legal assistance to help you. The Voluntary Legal Services Program of Northern California (VLSP) has a Debt Collection Defense/Bankruptcy Clinic available by calling (916) 551-2123 for an appointment. VLSP can provide advice about filing for Chapter 7, dealing with improper debt collection tactics, and identity theft. The Sacramento Bankruptcy Court has volunteer attorneys assist at its Bankruptcy Pro Se Assistance Desk on Fridays from 9:00 a.m. to 12:00 p.m. It's located at 501 I Street, Third Floor, Room 3-210, Sacramento, CA 95814, and appointments are available on a first-come, first-serve basis. Also, the McGeorge School of Law has faculty-supervised law students assist low-income community members through its Bankruptcy Legal Clinic. McGeorge School of Law is typically open during the academic school year. Its legal clinic can be reached in person Monday through Friday from 10:00 a.m. to 12:00 p.m. and 2:00 p.m. to 4:00 p.m., by phone at (916) 340-6080 from 9:00 a.m. to 12:00 p.m. and 1:30 p.m. to 4:00 p.m., or by email at firstname.lastname@example.org.
Sacramento Bankruptcy Lawyers - Estimated Cost
While it's feasible to file Chapter 7 bankruptcy yourself, Chapter 13 bankruptcy is much more difficult to file on your own. In either case, many find that hiring a knowledgeable lawyer eases their worries during their Sacramento bankruptcy. The average Sacramento bankruptcy lawyer cost to guide your Chapter 7 bankruptcy filing is $1,525. Many attorneys offer free consultations to review your case and for you to ask questions about their experience and what is included in their fee.
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How to File Bankruptcy in Sacramento, California for Free
If can’t afford an attorney, there is free legal help to guide you in filing bankruptcy in Sacramento. If you are filing a Chapter 7 bankruptcy, you may qualify to file for free. You can check to see if you can receive direct help from Upsolve to guide you through your Chapter 7 bankruptcy. You can also utilize legal aid and use available resources, including this guide, to follow the step by step process to file your California bankruptcy.
Collect Your Sacramento Bankruptcy Documents
Taking time to gather all the documents you need for your Sacramento bankruptcy is extremely helpful. You will need to gather documents detailing your income, debt, and assets. Income is how you make money. These documents include pay stubs, W-2s, bank statements, and your tax return. Debt describes what you owe, and can be found by getting a copy of your credit report. Your assets are everything you own. Documents include retirement or brokerage account statements, valuations of real estate, and copies of your vehicle registration. You may not have these on hand, but you can reach out to your institutions or contacts that would have them. For example, you can get your pay stubs by contacting your present or former employer. You can also get your tax returns from your tax preparer or request them from the IRS. Other documents that will help you include your divorce decree (if any) and all insurance policies. It's also helpful to list any individuals or businesses you owe money that did not show up on your credit report.
Take Credit Counseling
Everyone filing bankruptcy in Sacramento is required to take a credit counseling course. This course takes you through the advantages and disadvantages of filing for bankruptcy. The credit counseling course is meant to help you explore your options and learn to cut your expenses. The course will cost you from $20-50, and if your household income is below 150% of the poverty line, you can ask for the fee to be waived. To complete this requirement, you, take an approved credit counseling course, which will take about one hour. There are no in-person courses in Sacramento, but you can find courses you can conveniently take online or by phone. After you finish the course, you will receive a certificate of completion for you to submit it to the Court with your California bankruptcy petition.
Complete the Bankruptcy Forms
The bankruptcy forms are time-consuming and can seem intrusive, but don’t take that personally. Like you, other Kings Fans have completed these required forms by thoroughly describing their income, expenses, and assets. You may have thought your costume jewelry was unimportant to your Sacramento bankruptcy, but it still has to be listed. You own it so it’s an asset you have to disclose, even if it’s only worth $5. Try your best to answer these standard questions and put a value on each item you own. You can find the Petition Packages and instructions for Chapter 7 and Chapter 13 on the website of the Eastern District Bankruptcy Court. Unless an attorney is helping you or you buy bankruptcy software, you will find it repetitive entering the same information on different forms as you are figuring out how to file bankruptcy in Sacramento. It's important to double-check the information you enter and take your time as you go through everything to make sure nothing is missed.
Get Your Filing Fee
Filing a Chapter 7 bankruptcy in Sacramento costs $338 and filing Chapter 13 costs $313. It can be paid by exact cash or via money order. The Court doesn’t give change. It also doesn’t accept credit card, debit card, or personal check payments. If you can’t afford to pay your filing fee all at once, you can request to pay the fee in installments. Installments are small payments, up to four payments, until you have paid the filing fee in full. If you can’t afford to pay the fee at all, you can apply for a fee waiver. The information on the bankruptcy forms called Schedule A/B, Schedule I, and Schedule J will help you complete the application for a fee waiver. These applications should be turned in when you file your Sacramento bankruptcy. The Court looks at evidence as to whether you can pay, whether you are below 150% of the poverty level, and other information in your California bankruptcy petition. Usually there is no hearing required to grant a fee waiver, but if further investigation is needed, you may be required to attend a hearing. If your fee waiver is denied, the Court will usually allow you to pay in installments within 120 days. It's recommended that the filing fee be paid in full as soon as possible. A missed payment could result in your case being thrown out, leaving you to start over.
Print Your Bankruptcy Forms
Your California bankruptcy petition will be about 70 pages when you print it. This is not including any supporting documents. Each page should be printed one-sided. This means each page has print on one side of the paper. After you print one-sided, carefully review your printed material, making sure each page was printed, accurate, and sign in the appropriate spaces. Cautious filers make a copy of their signed bankruptcy forms for themselves, so they have a copy of everything they submitted to the Court when filing bankruptcy in Sacramento. You can print documents at the Sacramento Public Library for $0.15 a page. There are also local print shops and big companies like Staples, Office Depot, and FedEx for your print and copy needs.
Go to Court to File Your Forms
You can file your Sacramento bankruptcy by mail or in person at U.S. Bankruptcy Court, Sacramento Division, 501 I Street, Suite 3-200, Sacramento, CA 95814 from Monday – Friday from 9:00 a.m. to 4:00 p.m, excluding federal holidays. Parking is not available in the building, but there is nearby metered parking, the Light Rail and the bus. The Sacramento Bankruptcy Court is also the filing location for residents of the counties of Siskiyou, Modoc, Trinity, Shasta, Lassen, Tehama, Plumas, Butte, Glenn, Colusa, Sutter, Yuba, Nevada, Placer, El Dorado, Yolo, Solano, Alpine, Amador, San Joaquin, and Mono. You will need to pass through security when you arrive. The Court recommends arriving earlier than 4:00 p.m. so the Clerk’s Office can assist you with filing your California bankruptcy.
Whether you file your Sacramento bankruptcy in person or by mail, provide the exact amount of money for the filing fee. It's recommended you bring (or mail) two copies of your petition so you can have your copy stamped by the Court. If you’re mailing everything in, make sure to include a cashier’s check (don’t send cash by mail) and a self-addressed stamped envelope so your stamped petition can be mailed to you. It's recommended you file your Chapter 7 bankruptcy in Sacramento in person. Although the Clerk’s Office staff can’t give you legal advice, they can review your file for completeness, giving you an opportunity to confirm that you signed everything and included all required forms. After filing bankruptcy in Sacramento, many with regular access to email sign up for the DeBN electronic noticing systemto receive information about their case more quickly.
Mail Documents to Your Trustee
After filing bankruptcy in Sacramento, the Court will provide you with a case number, assign a Trustee, and set a date for your 341 meeting. The Trustee is the manager of your case and will look at your bankruptcy petition to find out if there are any assets to sell for the benefit of your creditors. The Trustee will ask for information such as a copy of your pay stubs and taxes in preparation for your 341 meeting, which takes place within about a month. You should provide the information to the Trustee as soon as possible.
The Court sends your creditors Form 309Ato inform each of them about your Sacramento bankruptcy. The first one of these you get in the mail will be sent to you by the Court. Getting more than one usually means a creditor you listed didn’t get the notice that you are filing bankruptcy in Sacramento because their address was wrong. You may have learned that creditors usually don’t attend 341 meetings anyway, but it's still important that all creditors get this notice. Other Kings fans corrected the problem by finding the right address for the creditor, making an amendment to their Master Address List, and mailing the notice to the creditor’s correct address.
Take Bankruptcy Course 2
One of the simplest and most forgotten steps in completing your Sacramento bankruptcy process is completing the second bankruptcy courseand filing the Certificate of Completion. The second bankruptcy course, often called the pre-discharge course because its completion is essential to getting your discharge. The discharge eliminates most of your debts as part of your Chapter 7 bankruptcy in Sacramento. The course gives you some tools to help you plan financial goals for life after your California bankruptcy is complete. It's general information, but you can mold it to suit your situation, especially because the budget you’ll create is based on your information. To get your certificate of completion that confirms you took the course, you have to take the course from an approved provider. After about two hours, you will have your certificate sent to you (by email or mail). You have to file the certificate with the Sacramento Bankruptcy Court.
Attend Your 341 Meeting
Attending your 341 meeting is important to receiving a discharge at the end of your California bankruptcy case. The 341 meetings for Sacramento bankruptcy cases are held on the 7th floor of the Sacramento Bankruptcy Court. The notice you received from the Court with the information about your 341 meeting will also include the room number. Sacramento has three meeting rooms. There will be between 10-12 other people waiting to speak with the Trustee, so you have to wait until your name is called. You’ll be required to present the Trustee with your photo identification and original social security card. Most of the time, it's just the person who filed Chapter 7 bankruptcy in Sacramento and the Trustee, because creditors usually don’t attend. There will be no judge, but the Trustee will ask you questions under oath. An oath is when you promise to tell the truth. The Trustee will inquire about your California bankruptcy, any changes to your forms, and any assets they may be interested in. Kings Fans just like you have recognized the importance of being truthful with the Trustee while keeping their answers short and to the point.
Dealing with Your Car
If your car is paid in full, you should be able to keep it by claiming the appropriate exemption. Exemptions are the laws that protect certain property in your California bankruptcy. If you have a very expensive car, whether you can keep it depends on how you use your exemptions. On the opposite end, some who owe too much money for their vehicle decide to let it go by surrendering the car. Surrender means you give the car back and the debt you owe on it is wiped out in Sacramento bankruptcy. This may be a good move considering the County of Sacramento is cracking down on at-home auto repair. Although you’ll have to arrange for alternate transportation after a surrender, many appreciate the clean slate a surrender provides.
If you owe money and want to keep the car after filing bankruptcy in Sacramento your options are to redeem the car or reaffirm the loan. Redemption is when you agree to pay the lender a lump sum of money to keep the car after your Sacramento bankruptcy. The lump-sum is based on the value of the car. If the amount is not something you can afford, you could turn to a redemption lender. Remember, a new loan taken out to redeem your car will not be wiped away when your bankruptcy ends. In a reaffirmation, you agree with the lender to keep the original loan and you get to keep the car as long as you keep paying for it. You will continue to be responsible for this debt after bankruptcy.
California Bankruptcy Means Test, Bankruptcy Forms, and Exemptions for Sacramento
California Means Test
The California bankruptcy Means Test is probably the hardest part of completing your bankruptcy forms because it requires your annual income to fall below the median household income for a family your size in California. If your income is higher, then the Chapter 7 Means Test Calculation calculates your expenses and subtracts them from your income to measure your disposable income, which is money you have left after your expenses are paid. If you have substantial disposable income, you fail the Chapter 7 means test because there is a presumption that you have money to pay at least a portion of your debts. The thought is that allowing you to file a Chapter 7 in that scenario would be an abuse of the system. If you have negative (no) disposable income, then there is no “presumption of abuse” and you are eligible to file for Chapter 7 bankruptcy in Sacramento.
Median Income Levels for California
California Median Income Standards for Means Test for Cases Filed In 2022
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Poverty Levels for California
California Fee Waiver Eligibility for Cases Filed In 2022
Eligible for fee waiver when under 150% the poverty level.
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California Bankruptcy Forms
It's important you submit all the required forms and that you are consistent within your California bankruptcy forms, especially your Means Test Calculation. While that is difficult to complete, the information you listed should also match Schedule I and Schedule J. In the Eastern District of California, where Sacramento bankruptcy cases are handled, local rules require the Master Address List be typed and in a particular format. Some have found it helpful to use the court’s Online Master Address List application to correctly format creditor names and addresses for their Sacramento bankruptcy.
Federal bankruptcy exemptions are not permitted for California bankruptcy cases, but after two years of residency in California, you can take advantage of the California bankruptcy exemptions. Both sets of exemptions (referred to as 703 and 704) fully protect retirement accounts, but there are differences, including the amount and types of property protected. When filing your Chapter 7 bankruptcy in Sacramento, you can use exemption 703 to protect personal property such as $26,800 of a personal injury recovery and $28,225 for any property or asset you choose through a Wildcard exemption. On the other hand, some use 704 to protect real property such as $100,000 in a home.