Bankruptcy is a legal procedure that allows an individual or business to have some or all of their debts discharged. It is usually considered as an option of last resort, because while it can stave off financial disaster, it has some significant long-term consequences warranting careful consideration of the costs and benefits. Bankruptcy is a creation of federal law, and goes through federal courts. Therefore, the procedure governing bankruptcy in California will be roughly the same as it is anywhere else in the U.S. But individual courts have different rules for what property is exempt, so you should consult a local Oroville, California before you file.

Chapter 7 Bankruptcy in Oroville, California

In Oroville, California, there are 2 main forms of commonly-used consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy involves liquidation of some of the debtor's assets. It requires some percentage of the debtor's property to be sold in order to pay off as much of his or her debt as possible. However, the majority of property that most people own is exempt. This usually includes homes, vehicles, insurance policies, and retirement accounts. These do not need to be sold.

Once the eligible property is sold, and the funds transferred to the creditors, the dischargeable debt is excused. Some types of debt, however, can't be discharged in Chapter 7 Bankruptcy in Oroville, California. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be discharged, Chapter 7 might not be the best choice for you.

Chapter 13 Bankruptcy in Oroville, California

Chapter 13 Bankruptcy in Oroville, California differs significantly from Chapter 7. It might be a better option than Chapter 7, depending on the facts of your case. Chapter 13 bankruptcy does not discharge debt. Instead, it restructures it. This involves the bankruptcy court coming up with a new payment plan that supersedes the terms of the agreements that gave rise to the debt in the first place. This results in a new payment plan that the debtor should find manageable, if he or she can make a few sacrifices.

Which Type of Consumer Bankruptcy Should I File in Oroville, California

Whether Chapter 7 or Chapter 13 is the right choice for you depends heavily on your individual situation. If you have a steady income stream, and a lot of non-exempt property, Chapter 13 might be right for you. If you don't have a steady income, and most of your property is exempt, Chapter 7 might be a better way to go.

In any case, it would be a good idea to consult a local bankruptcy attorney in Oroville, California. Your attorney can make an educated judgment as to what your best option is, and advise you accordingly (of course, the choice to file for bankruptcy is ultimately yours).