How to File for Bankruptcy in California

Los Angeles Court House
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A California bankruptcy case works much the same way as it does in other states. Bankruptcy is a federal legal process that allows individuals and businesses to obtain relief from their debts.

In all states, bankruptcy is governed by federal law, specifically the U.S. Bankruptcy Code. However, California, like some other states, has its own list of bankruptcy exemptions.

How Bankruptcy Works in California

A person or a business that is unable to pay their bills goes through the bankruptcy process to seek debt relief from their creditors. When a party files for bankruptcy, they ask the court to allow them to create a repayment plan to pay off their debts over time or to discharge some or all of their debt.

Bankruptcy is typically a last resort for those facing financial hardship – it can be a complex, difficult and sometimes lengthy process.

The United States Bankruptcy Code governs the bankruptcy process. Proceedings are conducted in federal bankruptcy courts, and the rules and procedures for bankruptcy are the same throughout the country.

However, some aspects of the bankruptcy process, such as exemptions available to protect certain types of property from being seized by creditors, can vary by state. California bankruptcy exemptions may be different from those in other states.

Types of Bankruptcy Filings

Whether the debtor is an individual, small business, large corporation or municipality, there are several types of bankruptcy to fit their specific needs. Each type has its own set of requirements, rules and procedures.

Different types of bankruptcy include:

  • Chapter 7:‌ Allows people and businesses to sell nonexempt assets to pay off their debts. It is typically used by those who cannot pay debts and have little to no assets.
  • Chapter 9:‌ Used by municipalities to protect them from their creditors while they develop and negotiate plans for debt adjustment.
  • Chapter 11:‌ Used by a business to restructure its debts while remaining in operation. The business creates a plan to repay its creditors over time.
  • Chapter 12:‌ Much like Chapter 11, but used by family farmers and fishermen to repay their creditors over time as they reorganize their debts.
  • Chapter 13:‌ Allows individuals to reorganize their debts and create a repayment plan for creditors.
  • Chapter 15:‌ Allows individuals and businesses to file for bankruptcy in the United States, while also having assets and debts in other countries.

Differences Between Chapter 7 and Chapter 13

Most Californians file for two main types of bankruptcy: Chapter 7 and Chapter 13. They are the most common types of bankruptcy filings in the U.S.

A Chapter 7 bankruptcy (known as "liquidation" bankruptcy), allows a debtor to discharge or eliminate most of their unsecured debts, such as credit card debt or unpaid health care bills. In a Chapter 7 bankruptcy, the debtor's assets may be sold to pay their debts. Certain assets, such as the debtor’s primary residence and other necessary personal property, may be protected from being sold if exempted.

A Chapter 13 bankruptcy (known as "reorganization" bankruptcy) allows the debtor to keep their assets and pay off debts over a three- to five-year period through a repayment plan. To be eligible for Chapter 13 bankruptcy, the debtor must have a regular income and their debts must fall within certain limits.

703 and 704 Bankruptcy Exemptions in California

California has two sets of exemptions that can be used in a bankruptcy case, known as 703 exemptions and 704 exemptions. The state's 703 exemptions are more generous than the 704 exemptions in some cases, but not all.

For example, 703 exemptions allow the debtor to protect a larger amount of equity in real estate and a higher value of personal property, but 704 exemptions offer more protection for retirement accounts and other types of income.

When filing for bankruptcy in California, debtors have the option to choose either the 703 or 704 exemptions. They cannot take from federal exemptions and can choose only from one set of the state exemptions.

Bankruptcy Exemptions Under California Law

These are some examples of bankruptcy exemptions in California. (All amounts will readjust for inflation in 2025.)

703 and 704 Bankruptcy Exemptions

703 Exemptions (System 2)

704 Exemptions (System 1)

Homestead Exemption

  • $31,950 for real property used as a residence.
  • Exemption can be used for cemetery plot.
  • $600,000 for real property used as a residence, can apply to boat, mobile home, condominium, cooperative, community apartment or planned development

Motor Vehicle Exemption

  • $6,375
  • $3,625

Tools of the Trade Exemption

  • $9,525
  • $9,525 (plus $9,525 for spouse if they are in the same business).
  • $4,850 of this amount can be used for a commercial vehicle.

Wildcard Exemption

  • $1,700 and any homestead amount that hasn't been used (the full $31,950 is available if it hasn't been used).
  • None

Personal Property Exemptions

  • $800 per item of animals, appliances, books, crops, clothing, furnishings, household goods and musical instruments.
  • $1,900 in jewelry.
  • Health aids.
  • Wrongful death support recovery.
  • $31,950 in personal injury recovery.
  • Alimony and child support.
  • Appliances, clothes, food and furnishings that are reasonably necessary.
  • $3,825 in building materials for home improvement.
  • $9,525 in art, jewelry or heirlooms.
  • Health aids.
  • $1,826 in bank account.
  • $3,825 of Social Security payments if not mixed with other funds.
  • $1,900 in public benefit payments if not mixed with other funds.
  • Personal injury and wrongful death causes of action and support recoveries.
  • Cemetery plot.
  • 75 percent of wages if they paid within 30 days before the debtor filed for bankruptcy.
  • Vacation credits for public employees.
  • FEMA benefits.

Retirement Account


  • Tax-exempt retirement accounts (includes SIMPLE, traditional or Roth IRAs).
  • Pensions, profit-sharing, stock bonuses or additional ERISA-qualified plans.
  • Private and public retirement benefits.

Public Benefit


  • Unemployment insurance, public assistance, Social Security benefits, veterans' benefits, reparations benefits for crime victims.
  • Financial aid for students.
  • Public assistance.
  • UI benefits.
  • Workers' compensation.
  • Relocation benefits.

Insurance Benefit Exemptions

  • Unmatured life insurance contracts with the exception of credit insurance contracts.
  • Up to $17,075 of unmatured life insurance accrued interest, dividends, cash, loan or surrender value.
  • Disability benefits.
  • Life insurance payments.
  • Life insurance benefits of unlimited value.
  • $15,250 in a life insurance policy that has not matured.
  • Fraternal unemployment benefits and society benefits.
  • Disability or health benefits.
California Legislature: CCP PART 2 Civil Actions [307 - 1062.20] Title 9 Enforcement of Judgments [680.010 - 724.260]

Debtors planning on filing bankruptcy in the Golden State should know that these exemptions can change at any time and that exemptions can vary depending on the specifics of each case.

Property That Cannot Be Exempted in California

Not everything a debtor owns can be exempted. Chapter 7 bankruptcy filers lose property that is not covered through an exemption. In this instance, a bankruptcy trustee who handles the debtor’s case will use what isn’t covered by the state’s exemption laws to pay creditors.

In a Chapter 13 bankruptcy, debtors can keep everything they own. However, they’ll pay the value of nonexempt property equity or their disposable income in their repayment plan, whichever is greater.

How to Qualify for a California Bankruptcy

To qualify for bankruptcy in California, a debtor must meet certain requirements according to federal bankruptcy law. Each type of bankruptcy has its own eligibility requirements.

To qualify for Chapter 7 in California, the debtor must pass a means test. The means test is a financial assessment that compares the debtor’s income to the median income for an average household in California.

If the debtor’s income falls below the median income, they automatically qualify for Chapter 7 bankruptcy. If their income is above the median income, they may still qualify if they can show that they do not have enough disposable income to pay their debts.

Qualifying for Chapter 13 Bankruptcy

To qualify to file Chapter 13 bankruptcy in California, the debtor must have regular income. They must also have unsecured debts, such as credit card debt or medical bills, that do not exceed $465,275 and secured debts, such as a mortgage or a vehicle loan, that are not more than $1,395,875.

Steps for Filing Bankruptcy in California

To file for bankruptcy in the Golden State, a debtor will:

  1. Determine which type of bankruptcy is right for them.
  2. Take a credit counseling course from an approved provider to help them understand options for managing debt.
  3. Gather financial documents to support the bankruptcy petition, including a list of debts, assets and income.
  4. Complete the bankruptcy petition and other required forms and file them with the bankruptcy court in the district where they live.
  5. Attend a meeting of creditors ("341 meeting") where the bankruptcy trustee will ask questions about their case.
  6. Complete required post-filing courses, such as an approved financial management course.
  7. Receive discharge of their debts through the bankruptcy court.

Where Are the California Bankruptcy Courts?

In the state of California, bankruptcy cases are heard in U.S. Bankruptcy Court for the Central District of California, the Eastern District of California, the Northern District of California, and the Southern District of California.

U.S. Bankruptcy Court Locations and Counties Served in California


Court Locations

Counties Served

Central District of California

Los Angeles, Riverside, Santa Ana, San Fernando Valley and Santa Barbara

Los Angeles, Orange, Riverside, San Bernardino, San Luis Obispo, Santa Barbara and Ventura

Eastern District of California

Sacramento, Fresno and Modesto

Alpine, Amador, Butte, Calaveras, Colusa, El Dorado, Fresno, Glenn, Inyo, Kern, Kings, Lassen, Madera, Mariposa, Merced, Modoc, Mono, Nevada, Placer, Plumas, Sacramento, San Joaquin, Shasta, Sierra, Siskiyou, Solano, Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolumne, Yolo and Yuba

Northern District of California

San Francisco, Oakland, Santa Rosa and San Jose

Alameda, Contra Costa, Del Norte, Humboldt, Lake, Marin, Mendocino, Monterey, Napa, San Benito, Santa Clara, Santa Cruz, San Francisco, San Mateo and Sonoma.

Southern District of California

San Diego

San Diego and Imperial

Debtors can find bankruptcy court locations nearest their area by visiting the U.S. Bankruptcy Court’s website or through California's district courts.

FAQs About Bankruptcy in California

Let's take a look at some of the most frequently asked questions regarding bankruptcy in California.

How hard is it to file bankruptcy in California?

Filing for bankruptcy in California is not particularly difficult, but it does require some preparation and planning. To file for bankruptcy in California, the debtor must first determine which type of bankruptcy is right for them.

What can you keep in a bankruptcy under California state law?

California bankruptcy exemptions available to the debtor depend on whether you file for Chapter 7 or Chapter 13 bankruptcy, and which set of state exemptions you choose to use. You may be able to keep your home, car, retirement accounts, personal property and tools of the trade, among other things.

Can I file bankruptcy myself in California?

Yes, it is possible to file bankruptcy without a bankruptcy attorney in California, but it is generally recommended to seek legal advice to ensure that the process goes smoothly and to maximize chances of a successful outcome.

What is the difference between Chapter 7 and Chapter 13 bankruptcy in California?

Chapter 7 bankruptcy is a liquidation bankruptcy, which means that the debtor is required to sell some assets to pay off debts. The debtor may be required to pass a means test to qualify.

Chapter 13 bankruptcy is a reorganization bankruptcy, which allows the debtor to keep certain assets and create a repayment plan to make monthly payments to pay off debts.

How much debt do you need to file bankruptcy in California?

There is no specific amount of debt that you need to have in order to file for bankruptcy in California. However, in a Chapter 13 bankruptcy, unsecured debts cannot exceed $465,275, and secured debts cannot be more than $1,395,875.

How long does a bankruptcy take in California?

The length of time it takes to complete a bankruptcy case in California depends on the type of bankruptcy. A Chapter 7 bankruptcy usually takes about three to six months from start to finish. In a Chapter 13 bankruptcy, the creditor creates a repayment plan to pay off debts over a period of three to five years.

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