As any citizen of California can attest, things are different in this state — usually for the better. Californians have strong independent and individualistic streaks, and are always seeking a challenge. Thus, it is no surprise that bankruptcy and foreclosure laws have developed relatively uniquely in the state. While it is true that the bankruptcy process is generally guided by federal law, California State law has introduced a number of wrinkles into the process. Therefore, in addition to understanding provisions of bankruptcy under federal law, it is important for people considering filing for bankruptcy to also understand how California law can affect their filing. Likewise, since foreclosures are often associated with bankruptcy, understanding the California foreclosure process is important.
The attorneys of The Bankruptcy Group are dedicated to helping Californians living in and around Sacramento, Folsom, and Roseville understand the bankruptcy process and whether it is right for them. If you think bankruptcy is a good solution to your debt, foreclosure, or other financial issues, our bankruptcy attorneys can guide you through the process from start to finish. To schedule a free and confidential consultation, contact us at 1-800-920-5351 or online today.
Bankruptcy Law in California Is Impacted by the State’s Community Property Regime
California is a community property state. Community property comes into play during a marriage. This type of property regime means that the property acquired during the marriage typically belongs to both spouses equally. The exception to this rule is when the spouses draft an agreement that states other rules should govern property acquired prior to or during the marriage. The practical effect of a community property regime includes the fact that married couples not only share in the ownership of assets, but also share in the liability for debts. This means that if one spouse files for bankruptcy in California, the totality of the community property becomes property of the estate and pulled into the bankruptcy. Although, the effects of a single spouse filing all depends on the circumstances, and cannot determine every case.
The effects are often balanced by another unique aspect of a community property bankruptcy. That is, the discharge received by the spouse who files for bankruptcy protects all property acquired after the bankruptcy, even if only one spouse filed. Any property that was subject to a bankruptcy exemption or abandoned to the debtor also receives protection from the claims discharged in the matter. To find out if a single filing works in your situation, contact a bankruptcy attorney with specific knowledge in California’s community property laws.
California Bankruptcy Exemptions
Some states permit an individual to use only federal bankruptcy exemptions. Other states only allow the use of state-based bankruptcy exemptions, or allow bankruptcy filers to select from either state or Federal exemptions. Under California law, bankruptcy filers can only use state exemptions. However, there are two sets of bankruptcy exemptions that individuals can choose from depending on their debts, assets, and other aspects of their situation.
Typically homeowners with equity in their home will select the bankruptcy exemptions provided for in the California Code of Civil Procedure §704. In contrast, individuals who lack equity in their home, are underwater, or who rent more commonly choose the exemptions provided in CCP §703.140. These exemptions are not as generous, but allow greater flexibility through their wild card provision.
California Is a Non-Judicial Foreclosure State
In many states, the foreclosure process proceeds under the watchful eye of a court. This is not so in California because the state is a non-judicial foreclosure state. What this means is that there is no court proceeding necessary or held prior to the foreclosure sale. That doesn’t mean that a home foreclosure will spring out of the blue; rather, the bank or another lender must provide the homeowner with a Notice of Default and a legally sufficient waiting period before notice of the sale can be published publicly. An additional 14 days must pass as well from the time of publication to when the actual sale was held.
It is also important to note that under California State law all loans used to purchase a house are considered in non-recourse. This means that a foreclosure in California will not result in a monetary debt in addition to a loss of the home. The lender is entitled to the collateral, or home, only and nothing additional.
Facing Foreclosure or Considering Bankruptcy? Let Our California Foreclosure Attorneys Help
If you’re considering using bankruptcy to get out of debt or to stop home foreclosure in California, the Roseville bankruptcy attorneys of The Bankruptcy Group may be able to help. To discuss your options, call 1-800-920-5351 today or contact us online to schedule a free and confidential consultation.