How California Bankruptcy Laws Can Benefit You

California bankruptcy law is one of the most extensive. It provides the necessary protections to a debtor in distress. However, California bankruptcy law doesn’t just stop at protecting a person from bankruptcy; it goes on to safeguard the rights of creditors and debtors.

California bankruptcy law protects a person from many of the negative consequences that can result from filing for bankruptcy. First, a person filing for bankruptcy protection will not have to pay taxes on any part of their income that is exempt. The exemption is determined by each individual’s financial situation, including their debts and assets. Also, California bankruptcy law requires that any part of the payment obligation that a person is required to pay on a discharge from bankruptcy does not include a penalty or tax until the full amount has been discharged.

A creditor of a debtor can be paid a lump sum of money before the discharge from bankruptcy is complete. This could be used to pay outstanding debts or other expenses of the debtor. If a creditor agrees to this arrangement, it is usually called a discharge of deferred payment. The California bankruptcy law states that once a bankruptcy court has ordered a discharge of a debtor’s obligation to pay to a creditor, that obligation cannot be reimposed against the debtor again by the California bankruptcy court.

Another thing that is protected by a California bankruptcy law is the wages that a debtor may have earned during the period of their bankruptcy. A discharge from bankruptcy will stay with the individual who owes the money, not the creditors of the debtor. A discharge doesn’t annul a loan, property, service, or agreement, it is only a release.

After a person has been discharged from bankruptcy, they must repay any debts they had during that time to the creditors. Creditors do not have to wait for the California bankruptcy court to decide if the payments can be made or not. However, if a creditor agrees to repayment, he or she must notify the debtor and also provide documentation of the agreement.

A discharge does not stop a creditor from taking action in court to collect a debt. They can pursue collection efforts, even after a discharge has been granted. If a discharge has been granted, the California bankruptcy law provides that any assets that were owned by a bankrupt person are exempt. Those assets must be sold to pay off debts. This exception may make California’s bankruptcy law very different from that of other states.
