Written by Attorney Jacquelyne N. Mosley-Pastrana.
Updated October 14, 2019
In a city filled with beautiful beaches, parks, monuments, and history, it is no wonder that San Diego is such a desirable place to live. Every year, the cost of living in San Diego continues to climb, businesses such as Qualcomm and Dexcom lay off employees, and San Diegans are left to deal with the economic turmoil. Each year, thousands of Californians work to regain financial stability by filing for bankruptcy in the Southern District of California Bankruptcy Court, also known as the San Diego Bankruptcy Court. Bankruptcy is a process where certain debt of yours are discharged, wiped out, or reduced. Although filing bankruptcy in San Diego can be an emotional process, this is often due to misconceptions about how a San Diego Bankruptcy works.
Remember filing a Chapter 7 in San Diego is a way for honest people to gain a clean slate to provide a better life for themselves and their families. Filing a San Diego bankruptcy can not only be a fresh start, but also a responsible move to protect what you have. San Diego is a military city, and a 2018 Military Lifestyle Survey revealed financial issues/stress as the top concern of military family respondents. If hard times hit financially, it is especially stressful if you are a servicemember incurring debt with a security clearance because it can put your authorization at risk. In 2017, over 50% of the cases heard by the Defense Office of Hearings and Appeals to revoke security clearances were related to financial considerations. The good thing is that you can safeguard your security clearance through veteran debt relief or filing for bankruptcy.
The most common ways to file a San Diego bankruptcy are Chapter 7 and Chapter 13. Chapter 7 bankruptcy is for those who cannot repay their debt and meet certain income limitations. Chapter 7 bankruptcy extinguishes debts like credit cards, medical bills, and other unsecured debt. The San Diego Bankruptcy Court cannot erase some types of debts known as nondischargeable debts, but in most cases, Chapter 7 allows you to relief from the majority of what you owe.Some people choose Chapter 13 bankruptcy because their income is too high for a Chapter 7, to keep certain non-exempt property beyond what the court would allow in a Chapter 7 bankruptcy filing, or to catch up their mortgage.
San Diego Bankruptcy Lawyers - Estimated Cost
A bankruptcy lawyer can help guide you through the process of filing bankruptcy in San Diegoand counsel you on the best course of action. San Diego has no special rules, but a bankruptcy attorney can provide valuable insight and interpretation of bankruptcy law in the District of Southern California Court. If you have a more complicated bankruptcy case or if you have trouble passing the Chapter 7 Means Test, you will find it worthwhile to hire an attorney. To file a Chapter 7 bankruptcy, the average San Diego bankruptcy lawyer cost is $1,200-$1,850. For a Chapter 13 bankruptcy, the cost of a bankruptcy lawyer starts at about $3,800 and increases. These amounts do not include filing fees. If the case includes many creditors, then it may be considered more complex, and the cost would be at the higher end. Many San Diego bankruptcy attorneys offer free consultations to review your situation, including your debt, assets, interest, minimum payments, and any particular circumstances. The attorney will likely lay out what your life would look like with and without bankruptcy and whether they can help you. Ask how the fees are calculated and what they include, but you should not base your decision about who should represent you solely on the cost of a bankruptcy lawyer. Hiring a knowledgeable attorney can save you money when dealing with a complicated bankruptcy case so make sure to ask if the lawyer you are talking to about your San Diego bankruptcy offers payment plans, if you can’t pay their fee all at once.
How to File Bankruptcy in San Diego, California for Free
It is critical you have the knowledge and support you need when filing your California bankruptcy without a lawyer (“pro se”). Local resources to help you file your San Diego bankruptcy include the Legal Aid Society of San Diego and California Western School of Law’s Community Law Project. The Legal Aid Society of San Diego has workshops on Wednesdays from 2:00 p.m.-4:00 p.m. through its Bankruptcy Self-Help Center on the 2nd Floor of the San Diego Bankruptcy Court.
Collect Your San Diego Bankruptcy Documents
Before starting your San Diego bankruptcy, you will need to gather all financial documents that relate to your debts, assets, or income, including pay stubs, bank statements, tax returns, savings/investment/retirement accounts, vehicle registration, and real estate appraisals. You may need to search for these documents, but no need to fret if you cannot find them. It may take some reaching out, but you can get the documents you need to file your California bankruptcy. You can get the last two years of the taxes you filed through your tax preparer or online if you used a service such as Turbo Tax or H&R Block. You can also access your taxes within ten days by requesting them from the IRS online. You can get the last six months of your paycheck stubs by contacting the Human Resources or payroll department of your present (and prior) employer(s). You can access two months of bank statements online or through a branch of your bank. If you have multiple bank accounts, you will need to provide two months of each. When successfully filing bankruptcy in San Diego, you will also need to create a list of all creditors and the exact balances owed including those that are not on your credit report (family, friends, child support, alimony, etc.). You may not want to list them, but it is essential to be honest because you are signing everything under penalty of perjury. You should print out your credit report and remember to add any collection letters you receive to it, as they may not yet appear on your report. You will also want to list all of your assets/debts, including your car. If you own your car, it will be helpful to check the Kelly Bluebook value.
Take Credit Counseling
Before filing a California bankruptcy, you will be required to take a credit counseling class approved for people filing bankruptcy in San Diego. Once you select an approved provider and complete the course online, by phone, or in person, you will receive a Certificate of Completion. The course will only take about an hour. This certificate must be submitted to the Court with your San Diego bankruptcy documents. You are required to take the course within 180 days before filing bankruptcy in San Diego. There are also options if you need to take the course in a foreign language. The credit counseling course provides the basics in financial management to prepare you for life after your California bankruptcy. The course is generalized and focused on teaching you about living within your means. In this transitional military city, the young San Diegans who came to serve in the military and decide to stay have found the information valuable considering the cost of living, which is about 40% higher than the national average. The course will have you create a budget, rate expenses based on importance, and review if there are ways to cut down on spending. Be prepared to take a deep dive into your finances and spending. In very rare circumstances the court will not require the credit counseling course when filing a California bankruptcy. The only people that may qualify are those with a disability, incapacity, or serving as active duty military in a military combat zone. This may be valuable to San Diego’s military population deployed to combat zones, but it is crucial to keep in mind that not taking the course requires additional paperwork and you will need to justify to the trustee why you could not take the course in person, by phone, or online. You may find it simpler and less stressful to simply complete the course.
Complete the Bankruptcy Forms
While completing the forms for your California bankruptcy can seem overwhelming at first, do not get discouraged. Many people like you complete these forms successfully on their own. You can find additional guidance through the Chapter 7 or Chapter 13 Petition Packages available for download on the Court’s website and this instruction manual. You can also find specific local forms on the San Diego Bankruptcy Court’s website. Read the forms carefully as they ask specific questions about your present financial situation. Be prepared to go over the forms a few times to make sure you have the correct information and provide thorough answers. The forms are fillable through Adobe Acrobat Reader, or you can complete them by hand. You have to disclose your financial affairs and provide a monthly budget for your expenses. It is okay to estimate your monthly expenses. Another common mistake when filing a California bankruptcy is to not list all sources of income within the last six months or leaving out property you own because you received it as a gift. Finally, if you haven’t done so already, you will want to run your credit report. This will help you ensure you list all of your debts and provide correct names and addresses for all of your creditors to the San Diego Bankruptcy Court.
Get Your Filing Fee
In most cases, folks filing bankruptcy in San Diego pay their filing fee when submitting their initial case documents to the Bankruptcy Court. You can expect to pay $338 for a Chapter 7 and $313 for a Chapter 13 case. If you cannot afford the filing fee, you can pay only half the fee up front with the balance due in 30 days. Since installments are payments made over time you have to complete this application to request permission to pay in installments first. If filing Chapter 7 bankruptcy, you also have the option to request a fee waiver. When completing the fee waiver form, you will detail your family size, income, expenses, property, payment for services, and the reason you are unable to pay. Your completed fee waiver form is submitted to the San Diego Bankruptcy Court along with the rest of your California bankruptcy documents. While some districts grant a fee waiver in person on the spot, in the Southern District of California a fee waiver is granted in a week. It will consider whether your income is 150% below the poverty line, whether you can pay the fee in installments, and it will consider other circumstances. Other circumstances include income, attorneys fees, assets, and anything else it thinks could be used to pay the fee. If the fee waiver is denied, the filing fee can be paid in installments.
Print Your Bankruptcy Forms
After completing your San Diego bankruptcy forms online, you should save them to your computer with Adobe Acrobat Reader. If you do not have Adobe, it is easy to download for free. If you cannot download Adobe and you typed in the information, you should print your forms before closing or you may lose the information and have to start over again. As you print everything, make sure to sign where required keeping in mind that your signature is your agreement that the information you provide is true and complete to the best of your knowledge. Remember, it will not help you to try to save paper, because legal documents must never be printed double-sided. Since the forms are printed on regular 8.5” x 11” paper, you can print everything at any home or officer printer, at the local library, or, possibly, through one of the San Diego legal aid agencies. After you sign where required, you will give the court both an original and a copy. The clerk will “stamp” or “conform” the copy and return it to you for your records.
Go to Court to File Your Forms
To file your San Diego bankruptcy forms, go to the United States Bankruptcy Courthouse at 325 West F Street in downtown San Diego. The Southern District of California covers San Diego and Imperial Counties. The courthouse is accessible by public transportation and by car. The Court does not offer on-site parking. There is metered street parking for $1.25 an hour and a nearby private lot where parking typically costs $15 - $20. When you get to the courthouse you will have to pass through a security checkpoint to enter the building. You will submit the documents necessary for filing bankruptcy in San Diego to the Court at the Clerk’s Office. There someone will quickly go through your documents before stamping them. If the clerk finds that something is missing, they will return the documents to you and tell you it is incomplete. Do not get discouraged because they cannot provide you with legal advice as to why it is incomplete. The good thing about the clerk’s office reviewing your San Diego bankruptcy documents is that it tells you that you missed something, or did not correctly complete a form, so you can take steps to correct the error right away. That is why you should file the documents for your California bankruptcy in person if at all possible, but if that is not an option and you mail your documents, make sure to include a self-addressed envelope with the right postage so the court can return a conformed copy to you.
Mail Documents to Your Trustee
After filing your San Diego bankruptcy, you will be assigned a Trustee and given a date for the 341 meeting. You are provided with your trustee’s email address, and you can request a phone number to reach them when you first receive form 309A, Notice of Bankruptcy Case from the Court. Keep in mind Trustees are busy, so email is usually the best mode of contact. The Trustee will review your bankruptcy forms to confirm that you are unable to pay back the debt by checking all forms, your debts, and any assets. If your Trustee requests documents, you should provide these right away by court drop off, email or by mail. It is important that you provide the documents as soon as possible so that your 341 meeting can be successful. If you receive more than one Notice of Bankruptcy Case for your California bankruptcy case, it means that an address for one of your creditors is incorrect, so the notice the Court sent out was returned to sender, which, in this case, is you, because you are the debtor. A wrong address means a creditor did not receive notice of your San Diego bankruptcy filing and each creditor is entitled to notice. Most creditors do not object or attend the 341 meeting but nevertheless, each has a right to notice before the meeting. You will need to find the correct address. Some people find their credit report or the Secretary of State website helpful. After providing notice, you will need to update the Court by amending your list of creditor addresses.
Take Bankruptcy Course 2
After filing your San Diego bankruptcy, you will need to take your second debtor education course. You can take it online, by phone, or in person and it only takes about two hours. While the first education course was about prioritizing, the second financial education course centers around doing things differently, visualizing your future, and saving money. It is a generic course, so do not take it personally that it does not consider specific situations such as medical debt or divorce leading to bankruptcy. It is meant to assist everyone filing bankruptcy in San Diego develop a workable framework for money management. It emphasizes setting long term goals about how to best use your money moving forward. After you complete the second course, file your Certificate of Completion with the court as soon as possible. Not completing your financial management course and not filing your certificate of completion is one of the top reasons bankruptcy cases are dismissed before a discharge is entered.
Attend Your 341 Meeting
Your 341 meeting is a meeting between you, your attorney if you have one, yourTrustee, and any creditors that choose to participate. It is a requirement in every California bankruptcy and you have to attend. It is a short 10-15-minute meeting in a conference room at the downtown San Diego Bankruptcy Court or the El Centro District Court. You should dress business casual. Business casual is similar to the outfit you would wear working in an office where they dress simply in pants or skirt and collared shirts or blouses. It is not a good idea to dress too casually (t-shirt, jeans with holes, or sandals) because even without a judge, you want to show respect to the Trustee. Also remember, you should also not dress too fancy (suit, Christian Louboutins, Rolex, pearls, designer purse) because this does not align with your financial situation. Keep in mind, there’s no hiding the ball, so any jewelry on your fingers, wrist, or in your sock drawer at home, should be listed in your assets. In most cases, creditors do not show up and do not object to a San Diego bankruptcy. It is a good practice to bring the most recent bank statements, pay stubs, and your copy of the bankruptcy forms you submitted to the Court to your 341 meeting. During the meeting, the Trustee will ask questions about your San Diego bankruptcy.
Dealing with Your Car
In certain areas, San Diego is walkable, but to go any kind of distance, most go by car. San Diego was recently ranked as the best commuter city in the U.S. On average, you can drive anywhere in San Diego in less than 30 minutes, but if you take public transit, the time doubles. Driving from the Cabrillo Bridge in Balboa Park to La Jolla Shores Beach is proof of the typically short commute. Most San Diego households use one or more vehicles to drive to work, to transport kids, and to get around the city. After filing your San Diego bankruptcy, you have options when it comes to your car. If you own your car or have equity in the car, you can protect it by claiming the proper California exemption. Equity is the value of the car minus what is owed on the car. Exempt property is the property you can keep during your California bankruptcy. If you still owe money on the car, you need to decide whether it is worth keeping after filing bankruptcy in San Diego. If your car payment is high and you owe more than the car is worth, it may make sense to surrender the car and have the debt is wiped away as part of your California bankruptcy case. Some even buy a different cheaper car later. Remember that if you need a car, whether it is this car or not, you can decide. Some who owe money on their car and choose to keep their car opt for a reaffirmation or redemption during their California bankruptcy. An attorney can provide good advice as to the best strategy when it comes to your car and help you with the paperwork.
California Bankruptcy Means Test, Bankruptcy Forms, and Exemptions for San Diego
California Means Test
In 2005 Congress passed the Bankruptcy Abuse Prevention and Consumer Act (BAPCPA) and for San Diegans filing for relief under Chapter 7 bankruptcy this required them to pass the California bankruptcy Means Test. The Means Test was created to ensure that only those who cannot pay their debt file for Chapter 7 bankruptcy.
The first part of the California bankruptcy Means Test measures your current monthly income and whether you are below the income limits. You calculate your income for the six months before you filed for bankruptcy. Income from all sources must be listed, including military Basic Housing Allowance (BAH), and family help. For bankruptcy, the Means Test does not include social security benefits or payments to victims of war crimes and terrorism. You take the amount over the six months, and divide by six for the monthly income. Then multiply your monthly income by 12 for your annual income. If your annual income is below the median for those of your family size in California, you have passed the Means Test and may file for Chapter 7 bankruptcy in San Diego. The median income is the average income for those of your family size in California.
If your income is higher than the median, you will need to complete the California Means Test Calculator. This part of the California bankruptcy Means Test measures your disposable income. Disposable income is the money you have left after paying your expenses. To pass the Means Test, you need to add up all your expenses from the prior six months. Not all your expenses can be deducted. Some are limited by the IRS's national standards, but taxes are included in expenses. Multiply your monthly expenses by 12 to determine your annual expenses. Take your annual income and subtract your expenses, and this will reduce your disposable income. With the cost of living 40% higher than the national average, San Diegans may be able to include additional expenses to reduce your disposable income. These can be included as long as they can be explained to the Bankruptcy Court. If your disposable income is negative, you have passed the California bankruptcy Means Test, and you can file a Chapter 7 bankruptcy in San Diego.
Chapter 7 bankruptcy is reserved for those who cannot afford to pay down their debt. The California bankruptcy Means Test is not perfect and can be hard on low-income and middle-class families. If you failed the Means Test because of positive disposable income, you should go back and double check your numbers and calculations. You may want to consider whether a California bankruptcy under Chapter 13 is right for you and can also consult with a bankruptcy lawyer for help.
In some cases, you may be exempt from the California bankruptcy Means Test calculation. If your debt is from non-consumer debt, such as business debt, you are exempt, meaning, you do not need to complete the Means Test Calculation. For example, if you invested money buying Marvel licensed products, but they did not sell at Comic-Con and you lost money, the debt incurred to buy the products is a non-consumer debt. In this case, you can file for Chapter 7 bankruptcy as long as your non-consumer debt exceeds your other debts, and only complete the form Statement of Exemption from Presumption of Abuse.
San Diegans who are disabled veterans or active duty reserves who incurred their debts primarily while on active duty or performing homeland defense do not need to complete the Means Test Calculation portion of the California bankruptcy Means Test. Regardless of your income during the first part of the Means Test, your disability and debt acquired while serving your country would qualify you as exempt.
Median Income Levels for California
California Median Income Standards for Means Test for Cases Filed On or After May 1, 2021
|Household Size||Monthly Income||Annual Income|
Poverty Levels for California
California Fee Waiver Eligibility for Cases Filed On or After May 1, 2021
Eligible for fee waiver when under 150% the poverty level.
|Household Size||State Poverty Level||Fee Waiver Limit (150% PL)|
California Bankruptcy Forms
There are about 24 California bankruptcy forms in the petition packet which is available for download on the Bankruptcy Court’s website. The forms you will need for your Chapter 7 bankruptcy in San Diego are organized by the type of information the court is seeking. This includes, but is not limited to, details about you, your property, your debt, you contracts/leases, your co-debtors, your income, your expenses, and your financial affairs.
Californians are not able to claim federal bankruptcy exemptions in their Chapter 7 bankruptcy in San Diego. To benefit from California bankruptcy exemptions, the laws that allow you to keep property, you must have lived in California for the past two years. If you have not lived in California for the past two years, then you can use the exemptions for the state where you lived 2 - 2.5 years ago. There are two systems of California bankruptcy exemptions to choose between. Spouses cannot double the exemptions; the system you choose depends on your assets.