Bankruptcy Information.

Generally speaking, the two types of bankruptcy of
available to individuals in foreclosure are
Chapter 7 liquidation bankruptcy and
Chapter 13 debt restructuring bankruptcy.

CHAPTER 7

Chapter 7 bankruptcy is called liquidation bankruptcy because all of your property except for that property which is exempt under California state law will be liquidated (i.e., sold) to pay off your creditors. Chapter 7 bankruptcy is designed to help people who are unable to pay their existing debts. The main purpose of filing a Chapter 7 is to be discharged from most of your existing debts. The kinds of debt most commonly discharged in a Chapter 7 bankruptcy includes the following: Medical bills, department store and other credit cards, parking tickets, certain kinds of tax related debt, personal loans, some types of student loans and other debt that are not secured by collateral. Normally, the debtor who files Chapter 7 bankruptcy will be able to retain certain property that is exempt from creditors, which includes a wide variety of items including certain household furnishings, clothes, business equipment, interest in vehicles, and an exemption to a varying amount in their principal residence

Not every debt can be discharged. Debts which continue after Chapter 7 bankruptcy include most types of student loans, child support and alimony, court-ordered fines, debts relating to lawsuits where you were sued for driving under the influence, and debts obtained through fraud or intentional wrongful acts.

CHAPTER 13

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy does not wipe out your debts but instead restructures them. It is commonly known as "wage earner bankruptcy." It is designed for individuals who can pay a portion of their debts over a period of time. Generally speaking, Chapter 13 is appropriate for those who own property that is not exempt under the California rules for Chapter 7 bankruptcy, have large debts which are not dischargeable as described above in a Chapter 7 section, or have substantial balances due under automobile loans or mortgages that are past due and want to be able to pay them off without losing the vehicle or the property