When you’re deep in debt, the Crown City feels less like the City of Roses and more like a crown of thorns.

With a bustling 143,000 residents, Pasadena feels like a world away from nearby Los Angeles.  The massive outdoor mall that is Old Town beckons, restaurants tantalize, and the pricey housing stock can drain your wallet fast.  No wonder why so many Pasadena residents end up with more debt than they can handle.

Luckily, the U.S. Bankruptcy Code is available as a useful tool for reorganizing and rebuilding your financial life.  Depending on your situation and needs, either Chapter 7 or Chapter 13 can help you get back on track quickly and easily.

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Pasadena Qualifications For Chapter 7 Bankruptcy

Qualifying for Chapter 7 bankruptcy requires an analysis of your household income for the six months immediately prior to filing your case. If your income is below the median income for a family of your size then we will look to your actual current monthly income and and expenses to see if you actually have any money left over at the end of the month to repay your existing debts.

For Pasadena residents, the median income for bankruptcy purposes is governed by the same standards as for the rest of California. Specifically, for bankruptcy cases filed after April 1, 2013 the applicable median income for Pasadena filings is as follows:

  • 1 person: $48,415
  • 2 people: $63,030
  • 3 people: $67,401
  • 4 people: $75,656

If there are more than 4 people in the family, add $7,500 per person.

For some areas of California, this median income level is fairly good. For Pasadena, however, it may be downright excellent. The 2009 estimated median income for families living in Pasadena was $61,298 – lower than the numbers used in bankruptcy matters. If your family income is in line with those estimates, you should be able to qualify for Chapter 7 bankruptcy without much hassle.

Protecting Your Assets In Bankruptcy

If you live in Pasadena and qualify for Chapter 7 bankruptcy then you can wipe out most of your debts and move on quickly.

But many people in Pasadena have a car or two.  You may own a house or a condo.  And in Chapter 7, those things may be at risk unless they can be protected under the U.S. Bankruptcy Code.

Before we discuss those items, it’s important to know that California offers you the choice of two types of exemption schemes – we’ll call them 703 Exemptions and 704 Exemptions.  You can choose one or the other for your bankruptcy case, but you can’t use both in the same bankruptcy action.

When it comes to cars, using the 703 Exemptions in Chapter 7 bankruptcy allows you to protect up to $3,300 in equity (that’s the difference between the value of the vehicle and the amount you owe on it) in a single vehicle.  If you’ve got too much equity then you may be able to use an additional statute called the wildcard to protect more equity.  But bear in mind that you can exempt only one vehicle – if you’ve got more than one in your name then you may be required to use your wildcard exemption or surrender the car.

If you own any real estate – a house or condo, for example, the 703 Exemptions allow you to protect up to $20,725 in equity in Chapter 7 bankruptcy.  However, many people who file for bankruptcy in Pasadena may decide to use the 704 Exemptions which let you to protect up to $50,000 in equity in your home for a single person, $75,000 for families or head of household, or $150,000 if you are 65 years or older, or physically or mentally disabled.

Under the 704 Exemptions, you can protect a vehicle with up to $2,550 in value without a limit to the number of vehicles.  However, the 704 Exemptions lack a wildcard component so are used primarily to protect real estate equity.

If You’re In Pasadena, Consider Chapter 13 Bankruptcy

If you’re like so many people in Pasadena, the equity in your home or your car exceeds the amount you can protect in Chapter 7 bankruptcy.  If that’s the case, Chapter 13 bankruptcy may be a good option for you even if you qualify for Chapter 13.

In Chapter 13 bankruptcy, you’re responsible for proposing a Plan (we capitalize that word when talking about Chapter 13 – it’s not a typo) to repay an amount of money that’s equal to or greater than the amount of unprotected equity in your property.  If you can’t protect it in Chapter 7, you’re essentially buying it back in Chapter 13.

The Chapter 13 Plan runs for 3-5 years depending on whether your income is above median or below it, and the amount is based on a complex financial calculation that takes into account your income over the past six months, various standard expenses, and the amount of equity you can’t protect under either 703 or 704 Exemptions.

Where Pasadena Bankruptcy Cases Are Filed

If you live in Pasadena, your bankruptcy case – Chapter 7 or Chapter 13 – will be filed in the Los Angeles division of the U.S. Bankruptcy Court for the Central District of California.  Your lawyer will file the case electronically (it’s required in all bankruptcy cases), so you won’t need to go down to the courthouse for that.

You will, however, need to go to Los Angeles for your meeting of creditors and (if you’ve filed a Chapter 13 case) your Hearing on Confirmation.

The meeting of creditors in Los Angeles is held at the Ernst & Young Building, 725 S. Figueroa Street, Los Angeles, CA 90017. Chapter 7 and 13 meeting rooms are located on the lobby level. Chapter 11 meeting rooms are located on the 26th floor. Parking is available on Figueroa, 8th, and 9th. Additional parking is available at the 7th & Fig mall at a substantial charge.

Smart Pasadena Residents Call An Experienced Bankruptcy Lawyer

It’s true that you can file for bankruptcy on your own or with some paralegal or document preparation service.  By law, these services can charge you no more than $200 and are allowed to do nothing except type up your bankruptcy documents.  There’s no analysis, no planning, and no way to ensure that you’re going to be able to protect yourself or your property.

As you’ve seen already, filing bankruptcy is complicated – there are lots of things to consider, and many factors that are in play.  If you’re in Pasadena and thinking about your options, you should talk with me before making any decisions about your financial future.

Why Working With Me Is A Great Idea

1. An Experienced Lawyer, NOT a Paralegal: Bankruptcy’s not right for everyone – why get pushed into a process that won’t accomplish your goals? I’ll give you an honest and confidential opinion on your options – even if I’m not the right person to help you.

2. Get Started Without Leaving Home: It’s no fun sitting in traffic on the freeway, paying for parking, and taking time out of your busy schedule to meet with a lawyer.  That’s why I’ll help you get the answers your need without the hassle. Your confidential, no-obligation consultation can be done from the comfort of your home or office. In fact, our entire firm is virtual – we’ve got lawyers in New York and California, paralegals in San Diego and Texas, administrative staffers in North Carolina and Oregon. Every aspect of your case

3. Convenient Payment Options: Once we map out a solution to your bill problems together, we’ll work together on a payment option that won’t break your back.

4. A Nationwide Reputation for Excellence: Put your financial future in the hands of an experienced bankruptcy lawyer who teaches other attorneys how to practice in the field. I regularly speak at national events on the subjects of credit, debt, bankruptcy, and consumer protection. I’m a co-founder and past President of Bankruptcy Law Network. I’ve been part of the faculty at the prestigious Student Loan Law Workshop as well as Max Gardner’s Bankruptcy Boot Camp.  I’m also a member of the National Association of Consumer Bankruptcy Attorneys, National Association of Consumer Advocates, and Central District of California Bankruptcy Attorneys Association.

How To Get Started

You can call 626-808-4343 to set up a no-obligation phone evaluation with me or click the big button below.  Either way, we’ll make sure you’re well cared for.

Top photo: “A ורדים 2” by M.t.lifshitsOwn work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.