Determining Eligibility

• Your eligibility to file Chapter 7 bankruptcy in California is based on the means test. The means test uses your income to determine whether you are capable of repaying your debts. To pass the means test, your income for the previous six months must be equal to or less than the median income for your household size as established by federal guidelines. In California, the 2010 median income limit for a single debtor was $47,969. The limit for a family of four was $79,194.
  
  

Credit Counseling

• Before you can file Chapter 7 in California, you must complete credit counseling with an agency that is approved by one of the four district bankruptcy courts. You must attend credit counseling within the six month period prior to filing and submit proof that you have done so at the time you file. You may ask the court to waive this stipulation only if you can prove that you are filing under emergency circumstances.
  
  

Filing

• You can file your Chapter 7 in the Northern, Southern, Eastern or Central district bankruptcy courts. When you file, you must pay the required filing fee. As of 2010, the Chapter 7 fee was $299. You are not required to be represented by an attorney to file bankruptcy in California. You must furnish the court with a complete list of your creditors, your debts and assets, income and a statement of financial affairs. At the time you file, the court will enforce an automatic stay against your creditors, which prevents them from taking collection actions against you. The stay will remain in place until your case is dismissed or discharged.
  
  

Exemptions

• As part of your Chapter 7 filing, you agree to surrender some of your property to the court. The court will liquidate your assets and distribute the proceeds to your creditors. The state of California allows you to exempt a certain portion of these assets. As of 2010, homeowners could exempt up to $150,000 worth of home equity depending on their filing status. You can also exempt a motor vehicle up to $2,550; building materials up to $2,700; jewelry and family heirlooms up to $6,750; and tools of the trade up to $2,075.
  
  

Considerations

• If you had a Chapter 7 petition involuntarily dismissed in the previous 180 days, you are ineligible to file again until the six-month wait period has elapsed. You cannot use Chapter 7 to eliminate your liability for student loans, tax debts or past due child support. Chapter 7 bankruptcy can remain on your credit for up to 10 years following the date of discharge. This can significantly impair your ability to obtain new loans or lines of credit and it may result in your being charged much higher interest rates.