San Francisco is one of the most beautiful cities in the United States, but that beauty also comes at a cost. San Francisco is notorious for having one of the highest costs of living in the country. A family of four might be earning more than $100,000 per year in San Francisco and still be scraping by because of the high cost of housing and other necessities.

It’s understandable then that even San Francisco residents with good, high-paying jobs are often struggling to make ends meet. It’s very easy to get stuck in a cycle of charging bills to credit cards, and a single medical emergency can be a devastating blow to a family with already tight finances.

The good news is that there is a way out of debt, no matter your circumstances. A San Francisco bankruptcy attorney can assist you in filing for bankruptcy and getting out of debt.

Why File for Bankruptcy in San Francisco?

If you’re thinking about filing for bankruptcy, odds are you’re already quite behind on your bills and receiving frequent calls and letters from creditors. Whether you file for Chapter 7 bankruptcy or chapter 13 bankruptcy, the biggest advantage of filing for bankruptcy is the automatic stay. What this means is that as soon as you’ve filed, all creditors must cease their efforts to collect debt from you. Though you may eventually have to forfeit certain assets depending on your circumstances and which type of bankruptcy you file, this will also delay any efforts to foreclose on your home or repossess vehicles.

One concern that many San Francisco residents have about filing for bankruptcy is how it will affect their credit score and future ability to borrow money. While this is an understandable concern, if you are already facing a large amount of debt, your credit score may already be damaged to the point where filing will have little effect.

It’s also important to remember that credit can be quickly rebuilt. After a discharge of your debts, you will likely be able to obtain a secured credit card that you pay ahead of time. Responsible use of a secured credit card along with regularly paying your bills can quickly rebuild your credit.

And bankruptcy isn’t permanent. A Chapter 7 bankruptcy filing is removed from your credit report after 10 years, while Chapter 13 filings are removed after seven years.

What Debts Can Be Eliminated by Filing for Chapter 7 Bankruptcy in San Francisco?

One of more misunderstood parts of bankruptcy law is that there are actually two types of bankruptcy that San Francisco residents can file for, each with advantages and disadvantages depending on your specific financial circumstances.

Chapter 7 bankruptcy is typically ideal for San Francisco residents with lower income, few assets, and high unsecured debt loads, such as credit cards and medical bills. While you may have to forfeit some assets in Chapter 7 bankruptcy, the advantage is that once your case is closed, you are discharged of most or all of your debts. Chapter 7 bankruptcy cases typically take 3-6 months to complete.

If you are in San Francisco and thinking about filing for bankruptcy, the first thing you’ll have to do is pass the means test. This means showing the court that your income for the last six months is less than the average income of a California household of the same size. If your income is below this threshold, you automatically qualify for Chapter 7 bankruptcy.

Now, wages are higher in San Francisco because of the high cost of living, so many debtors are above this limit, however, that’s not the only thing a court will consider in the means test. The court will also look at how much disposable income you have after your monthly expenses for necessities like rent and utilities. If you don’t have enough disposable income, you’ll qualify to file for Chapter 7 bankruptcy.

While most unsecured debts are discharged at the end of a Chapter 7 case, and there is no limit to how much debt you can discharge in Chapter 7, some debts will remain with you no matter what. These debts include:

• Student loans (although there are rare exceptions)
• Alimony
• Child support obligations
• Federal tax liens
• Court fines
• Attorney’s fees in certain cases

How Can a San Francisco Chapter 13 Bankruptcy Attorney Help?

Just because you can’t qualify for Chapter 7 bankruptcy, that doesn’t mean you’re stuck with your debt. If your income is high enough, you may qualify for a Chapter 13 bankruptcy plan. In Chapter 13 bankruptcy, you get to keep nonexempt assets that you may have to forfeit in Chapter 7 bankruptcy, such as a second vehicle or a jewelry collection.

However, you will be on the hook to pay back many of your debts. The trustee and your attorney will help you craft a plan that pays back secured creditors, such as your mortgage or vehicle lender, and priority debts such as back taxes.

This payment is made monthly to the trustee who distributes it to your creditors. Chapter 13 repayment plans last for either three or five years. However, at the end of the repayment period, your unsecured debts are discharged just like in Chapter 7 bankruptcy, so long as they’re under the current statutory limit of $360,475.

The same debts that remain at the end of a Chapter 7 case also remain after a Chapter 13 case, with one notable discharge: junior liens on homes, such as second mortgages, are discharged in Chapter 13 bankruptcy.

Contact a San Francisco Bankruptcy Lawyer

If you’re running out of ways to pay your bills and debt is keeping you awake at night, it could be time to file for bankruptcy. An experienced San Francisco bankruptcy attorney can help walk you through the process and determine whether you should file for Chapter 7 or Chapter 13 bankruptcy. To schedule a consultation, contact us online or call the office today at 510-255-4646.