Types

• Most people in California pursue Chapter 7 or Chapter 13, according to the book “How to File for Chapter 7 Bankruptcy.” Chapter 7 allows overburdened Californians the chance to permanently discharge most of their individual debts; Chapter 13 enables working California residents to restructure and partially repay such debts under court supervision.
  
  

Income Requirements

• You cannot file Chapter 7 bankruptcy without passing a federal means test if you make more than California’s annual median income level for your household size. As of 2010, a single California resident could file for Chapter 7 bankruptcy without completing the federal means formula if he didn’t earn any more than $48,140 annually, according to the U.S. Trustee Program website. The median income level for families of four living in California was $79.477 each year. If you make more than California’s median income and a federal means test shows you have disposable cash for debt repayment, you must file for Chapter 13 debt restructuring.
  
  (References 1 and 2)
  
  

Considerations

• You can’t include certain types of “priority” debts in any type of individual bankruptcy. Alimony, child support, court fines and restitution related to crimes cannot be discharged or reduced in bankruptcy. Tax bills can only be included in your case if they are at least three years old. Only on rare occasions can a California bankruptcy judge eliminate federal student loan debts; usually the debtor must be seriously disabled to receive such leniency.
  
  

Time Frame

• It usually takes three to five years for Californians repaying debts through Chapter 13 to finish the payment plan. Sometimes Chapter 7 cases can wrap up in about four months, but this really depends on the court’s caseload and if any problems arise with a petitioner’s paperwork.
  
  

Costs

• As of 2010, it costs $299 to file Chapter 7 and $274 to file Chapter 13, according to the U.S. Bankruptcy Court Central District of California. Generally, all court costs must be paid at the time of declaring bankruptcy; keep in mind that bankruptcy courts cannot accept personal checks or credit cards. Some California residents might qualify for a fee waiver or installment payment plan.