Bankruptcy in California
Bankruptcy is governed by federal law, but California controls the exemptions that decide what property you keep. This hub explains how Chapter 7 and Chapter 13 work, the automatic stay that stops collection, and California's unusual choice between two state exemption systems — then links guides for each topic.
By Find Local Law Editorial Team · Last reviewed: May 26, 2026
Researched and drafted with AI assistance and verified against primary sources (statutes, Judicial Council forms, and official court websites). This is general information, not legal advice.
This is general information, not legal advice. Bankruptcy turns on your specific finances — talk to a California bankruptcy attorney about your situation.
Bankruptcy is governed by federal law (the U.S. Bankruptcy Code, Title 11), but California controls the exemptions that decide what property you can protect.
Where California cases are filed
Bankruptcy cases are filed in federal bankruptcy court, not state court. California has four federal judicial districts, each with a U.S. Bankruptcy Court — the Northern, Eastern, Central, and Southern District of California. The Central District is the busiest bankruptcy court in the country (U.S. Courts — Bankruptcy Basics). You file in the district where you live.
Chapter 7 vs. Chapter 13
The two most common consumer chapters are different paths:
- Chapter 7 is liquidation — a trustee can sell nonexempt property to pay creditors, and you receive a discharge of most unsecured debts (11 U.S.C. § 727). You must pass the means test. See Chapter 7.
- Chapter 13 is a repayment plan for people with regular income — you repay some or all of your debts over 3 or 5 years and can catch up on a mortgage or car (11 U.S.C. § 1322). See Chapter 13.
The automatic stay
The moment you file, the automatic stay kicks in (11 U.S.C. § 362) — an immediate halt to most collection, including lawsuits, wage garnishment, repossession, and foreclosure. See automatic stay & discharge.
California exemptions (the unusual part)
California has opted out of the federal bankruptcy exemptions, so California filers cannot use the federal § 522(d) set. Instead, California gives you a choice between two state systems — and you must pick one, not mix them:
- The “System 1” / CCP § 704 series (also used outside bankruptcy), which includes a large homestead exemption (CCP § 704.730).
- The “System 2” / CCP § 703.140(b) “bankruptcy-only” set, which includes a wildcard exemption at § 703.140(b)(5).
The guides
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Guides
- Automatic Stay & Discharge in California Bankruptcy
Filing bankruptcy triggers the automatic stay (11 U.S.C. § 362), an immediate halt to most collection — lawsuits, wage garnishment, repossession, and foreclosure. A discharge (11 U.S.C. § 524, § 727) permanently bars collecting discharged debts, but some debts are non-dischargeable (11 U.S.C. § 523), including most recent taxes, student loans, child support, alimony, and fraud debts.
- California Bankruptcy Exemptions
California opted out of the federal bankruptcy exemptions, so filers cannot use the federal § 522(d) set. Instead California offers a choice between two state systems — you must pick one, not mix: the CCP § 704 series (with a large homestead under § 704.730) or the CCP § 703.140(b) bankruptcy-only set (with a wildcard at § 703.140(b)(5)).
- Chapter 13 Bankruptcy in California
Chapter 13 is a repayment plan over 3 years (if you're below California's median income) or up to 5 years (at or above median); no plan exceeds 5 years (11 U.S.C. § 1322(d), § 1325). It lets people with regular income cure a mortgage or car default and keep their property.
- Chapter 7 Bankruptcy in California
Chapter 7 is liquidation bankruptcy: a trustee can sell nonexempt property to pay creditors, and the individual debtor receives a discharge of most unsecured debts (11 U.S.C. § 727). It requires passing the means test and completing credit counseling. Most California filers keep their property using California's exemptions.
- The Chapter 7 Means Test in California
The Chapter 7 means test (11 U.S.C. § 707(b)) compares your income to the median income for your household size in California. Below median, you generally qualify; above median, a disposable-income calculation may create a presumption of abuse. California's median figures update periodically via the U.S. Trustee.
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