Bankruptcy means the state of inability to pay dues or debts, or the state of having fewer assets compared to debts. You can file for Bankruptcy in California following Chapters 7, 11 and 3 of the bankruptcy law in California. These laws apply to individual as well as corporate bankruptcy, and insolvency, liquidation, debt consolidation and reorganization, etc.
These laws are also applicable to credit post bankruptcy, credit card bet, re-establishing credit, repossessions, foreclosures, and taxes, garnishments and bankruptcy. Specific laws on personal debt discharge and corporate asset liquidation and reorganization also fall under California bankruptcy legal provisions.
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In a federal law dictated bankruptcy proceeding, liquidation and reorganization of the debtor's assets take place under court supervision, which is beneficial for the creditors. The debtor is then, by virtue of a 'discharge', stripped off his debt and his property is known as 'the bankruptcy estate', which will fall under bankruptcy proceedings thereon. The 'bankruptcy code' is a term given to the law covering this process.
Bankruptcy in California law of Chapter 7 requires a voluntary case filing by the debtor. In some cases, where the debtor fails to pay debt in time, a creditor may file a bankruptcy case against the debtor. Involuntary cases usually occur where a debtor owes three or more creditors at least $10,000 in total debts. If there are 12 creditors, one creditor with $10,000 receivable dues, can also file an involuntary bankruptcy case against the debtor.
Consulting a bankruptcy attorney is one concrete way to deal with it. Although having an attorney is not a direct solution to overcoming financial problems, an insolvency lawyer for a bankruptcy case can be the right solution to a specific financial problem.
Refinancing Options
California's housing exemption laws for bankruptcy are generous and many bankruptcy filers opt for Chapter 7. Some choose Chapter 10, which has a repayment plan. In both cases, the debtor gets to keep his home if they have even a small amount of equity.
There are a number of forms of refinancing. The home equity loan may be your easiest credit source depending on the type of bankruptcy you have filed. For home equity loan, you do not have to wait 7-10 years for credit application. If you live in parts of California where the equity has significantly risen with home prices, then you can cash-out part that equity with the help of sub-prime lenders and get a second mortgage or credit.
Second mortgages come with high rates for short terms. A second mortgage allows you to apply for loans by cashing-out part your home's value while your first low-rate mortgage remains intact.
Creating a good payment history will help you rebuild your credit score post Bankruptcy in California. A line of credit will help you get a low interest loan collateral against your home. You can create a positive credit score in just 2 years by using little credit and paying it off every month. Start with a secured credit card so you can make on-time payments. You can consider a prime loan refinancing once you have good credit standing.
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