Author: Kostopoulos Bankruptcy Law

Facing a lawsuit in California is stressful. One day you’re juggling bills, and the next, a court notice or collection letter lands in your mailbox. 

It can feel overwhelming, like there’s no way out. 

Many people in this situation start wondering if filing bankruptcy could be the answer. Could it actually stop the lawsuit? Could it give you some breathing room? 

In this post, we’ll explain if filing bankruptcy stops a lawsuit. Plus, we’ll also go over the important exceptions you need to know about.

Can Filing Bankruptcy Stop A Lawsuit?

Yes, filing bankruptcy can stop a lawsuit in California in most cases.

When you file for bankruptcy (either Chapter 7 or Chapter 13), an automatic stay immediately goes into effect. The automatic stay is a powerful protection under federal bankruptcy law that temporarily halts most collection actions against you. 

That includes lawsuits over unpaid debts, wage garnishments, foreclosure actions, repossessions, and even phone calls from creditors (more on this later).

So, if you’re being sued in California for debts, filing bankruptcy will stop the lawsuit right away.

Also Read: How Long After Bankruptcy Can You Buy a House?

Types Of Lawsuits Bankruptcy Can Stop In California

Most lawsuits tied to unpaid debts will be stopped. Here are the most common lawsuits bankruptcy can freeze:

• Credit card debt cases
• Medical bill lawsuits
• Personal loan disputes
• Deficiency balances
• Wage garnishment actions

In all these cases, bankruptcy doesn’t just stop the lawsuit. It can also wipe out the underlying debt completely, depending on the chapter you file. 

That’s the long-term win that people often forget about.

Lawsuits Bankruptcy Does Not Stop

Now here’s the part that’s super important. Bankruptcy isn’t a magic eraser for every type of case. Some lawsuits fall into categories that federal law says bankruptcy can’t touch. 

Also Read: Can You Wipe Out Medical Debt In Chapter 7 Bankruptcy?

Let’s go through them one by one:

#1 Criminal Charges

Filing bankruptcy won’t touch criminal charges at all. 

The courts in California make a very clear line between debt problems and criminal behavior. 

If you’re facing something like a DUI, theft, or any other criminal matter, bankruptcy doesn’t freeze or erase it. The prosecutor and judge don’t care that you filed. 

What bankruptcy might help with are financial penalties that look like debts (say court fees or restitution payments) but even those aren’t usually dischargeable. The criminal case itself keeps moving forward no matter what. 

So if your lawsuit is tied to criminal charges, bankruptcy isn’t your shield. It’s really designed for financial issues, not legal accountability.

#2 Child Support And Spousal Support Cases

Family support obligations are totally outside the reach of bankruptcy. 

California courts treat child support and spousal support as untouchable. You can’t wipe them out in Chapter 7, and you can’t reorganize them away in Chapter 13. 

If you’re behind on payments, the lawsuit or enforcement action doesn’t stop just because you filed bankruptcy. That means wage garnishments for support can continue, and court hearings related to those obligations will still happen. 

Bankruptcy might free up some money by erasing other debts, which could make paying support easier, but the obligation itself never goes away. 

Judges see child and spousal support as top priority.

#3 Some Tax-Related Proceedings

Taxes get really complicated when it comes to bankruptcy. 

In California, certain old income taxes can sometimes be discharged if they meet strict rules, like being several years old, filed on time, and assessed long before your bankruptcy. 

But not all tax issues stop when you file. 

For example, if the IRS or California Franchise Tax Board has already placed a lien on your property, that lien often survives bankruptcy. Audits, investigations, and certain collection actions can also continue despite the automatic stay. 

Bankruptcy can pause some IRS collection efforts temporarily, but it won’t erase all tax debts.

So while bankruptcy might give you breathing room, it’s not a magic solution for every tax-related lawsuit or problem.

Also Read: Will Filing for Bankruptcy Affect My Tax Return?

#4 Lawsuits Related To Fraud Or Certain Intentional Actions

Bankruptcy laws don’t protect people from debts tied to intentional bad acts. 

If you’re being sued for fraud, embezzlement, or deliberate harm, filing bankruptcy won’t make that case go away. Creditors can even file an action inside your bankruptcy case, asking the judge to rule that the debt is not dischargeable. 

Courts draw a hard line between mistakes or financial struggles versus intentional wrongdoing. 

For example, lying on a loan application, running up debt with no intention of paying, or deliberately damaging someone’s property are all treated differently than simple unpaid bills. 

These lawsuits usually keep moving forward, and even if the automatic stay pauses them briefly, the underlying debt often survives bankruptcy.

What Happens If A Judgment Has Already Been Entered?

Timing is huge here. 

If a lawsuit is still pending, bankruptcy pulls the emergency brake. But if the creditor has already won and a judgment is on record, things get messier.

In California, a judgment often turns into a lien on your property. 

That lien sticks even after bankruptcy, unless you qualify for lien avoidance. That’s a legal tool you can sometimes use to clear a judgment lien if it interferes with property that’s protected by exemptions. 

But it’s not automatic, and it usually requires a lawyer to set it up properly.

So the earlier you file, the better. Filing before a judgment gives you more control and keeps creditors from locking onto your assets. Waiting until after can limit your options.

Chapter 7 Vs. Chapter 13 And Lawsuits

The way your lawsuit gets handled also depends on which chapter you file under.

Chapter 7 erases unsecured debts like credit cards, medical bills, and personal loans. For lawsuits tied to those debts, Chapter 7 doesn’t just stop the case – it usually ends it for good because the debt itself gets discharged. 

The downside is that if you have assets that aren’t protected under California’s exemption laws, the court might sell them to pay creditors.

Chapter 13 is a repayment plan. Lawsuits tied to debts still stop when you file, but instead of wiping everything instantly, you pay back some of it through your plan. 

That said, Chapter 13 lets you protect assets that might have been at risk in Chapter 7. It also helps if you’re behind on mortgage or car payments and want to keep your stuff.

Bottom Line

Filing bankruptcy will stop a lawsuit. Thanks to the automatic stay, most debt-related cases stop the second you file. 

That means no more wage garnishments, no more scary court dates, and no more collectors breathing down your neck.

But it’s not universal. Criminal cases, family support issues, certain tax disputes, and fraud-related lawsuits all keep going. And if a creditor already has a judgment, bankruptcy may not fully undo the damage without extra steps.

So don’t wait until it’s too late! 

If you’re staring down a lawsuit, the sooner you look into bankruptcy, the more options you’ll have.

Falling behind on HOA fees is stressful enough. Add in the thought of filing bankruptcy, and the whole situation can feel super complicated.

Many California homeowners assume that once they file, every HOA bill just disappears along with credit cards and medical debt. Unfortunately, it doesn’t work quite that smoothly. 

Some fees can be wiped out, but others will keep showing up as long as your name is tied to the house.

In this post, we’ll shed some light on if bankruptcy gets rid of HOA fees in California.

Does Bankruptcy Get Rid Of HOA Fees?

Yes. If you’ve fallen behind on HOA payments before filing, bankruptcy can usually wipe those out. That applies in both Chapter 7 and Chapter 13 cases.

In Chapter 7, your unpaid HOA dues are treated like unsecured debt. 

Once you get your discharge, those old HOA fees are gone. You no longer owe them personally.

In Chapter 13, the setup is different because you’ll make monthly payments through a repayment plan. Those overdue HOA fees are bundled into the plan. 

At the end of your case, anything left unpaid is discharged.

Also Read: What Happens To Inherited Property In Bankruptcy?

So in short, filing bankruptcy in California can take care of HOA debt you’ve already racked up. That’s a big relief for many homeowners who are drowning in back payments. 

But the story doesn’t end there….

What About New HOA Fees?

Here’s the catch: bankruptcy only clears out the fees from before you filed. Any HOA fees that come due after your filing date are a brand-new debt. 

Bankruptcy doesn’t touch them.

Everything before the filing date can be erased, but everything after is your responsibility. That’s true even if you’re no longer living in the house. 

As long as your name is on the deed, the HOA can keep charging you.

Imagine this: you file for Chapter 7 in May. The HOA bills you for June, July, and August. 

Even if you’re in the middle of bankruptcy, those new bills are yours to pay. The HOA doesn’t care that you’re in the process of giving up the property. They see your name on the title, and that’s all that matters to them.

This surprises a lot of people. They assume once they file, all their HOA troubles disappear. 

Also Read: How Does Bankruptcy Affect Independent Contractors?

The “Surrender” Problem In California

You might be thinking, “Okay, I’ll just surrender the property in my bankruptcy and walk away.” That seems logical, right? Unfortunately, it’s not that simple.

In bankruptcy, “surrender” means you’re telling the court and the lender that you don’t plan to keep the house. But until the lender actually forecloses and takes ownership, you’re still on the hook for HOA fees.

Banks don’t always move fast in California. Foreclosure can take months. Sometimes even years. 

During that whole time, the HOA keeps billing you.

It creates this strange in-between stage. You’ve already decided you’re done with the property, but legally, you’re still the owner. And as the owner, you’re stuck with the assessments. 

It feels unfair, but that’s how the law is set up.

This “limbo” stage is one of the biggest headaches for homeowners going through bankruptcy. You’re trying to move on, but the HOA keeps dragging you back in with more fees.

Also Read: How Long After Bankruptcy Can You Buy a House?

HOA Liens On Your Property

Another wrinkle to think about is liens. 

In California, HOAs have the power to record a lien against your property when you fall behind. That lien secures the unpaid assessments.

Now, this is where bankruptcy gets complicated. Your personal obligation to pay those old fees might get wiped out. But the lien itself usually sticks to the property.

So let’s say you file Chapter 7 and discharge the debt. You don’t owe the HOA personally anymore. But if you want to keep the home, that lien doesn’t just vanish. It has to be dealt with (either paid off or negotiated) before you can refinance or sell.

This is one of those fine-print details that often catches people off guard. 

Bankruptcy is powerful, but it doesn’t erase every type of lien attached to real estate.

What California Homeowners Should Keep In Mind

By now you can see that HOA fees don’t vanish as cleanly as other debts in bankruptcy. There are a few key takeaways to keep in mind if you’re thinking about filing:

• Past-due HOA fees from before your filing date can usually be discharged.
• Any fees that pop up after filing are yours until the lender officially takes the property.
• HOA liens can survive bankruptcy and complicate things if you keep the home.

What this really means is that timing matters. The day you file creates a line that divides old debt from new. 

If you’re still in the property months after filing, be ready for those new bills.

It also means planning matters. Some homeowners rush to file without realizing they’ll still be responsible for HOA fees during the surrender process. 

For people who want to stay in their home, knowing about liens is just as important. Clearing them up is part of the long-term plan if you want to refinance or sell.

Bottom Line

Bankruptcy can get rid of past-due HOA fees in California, but it doesn’t wipe away everything. 

Any new fees that show up after filing will stick with you until your name is off the title. And liens from old assessments can linger on the property, even after your personal liability is gone.

It’s not all bad news. Bankruptcy is still a powerful tool for dealing with debt. But when HOAs are involved, it pays to know exactly how the rules work. 

That way, you’re not caught off guard by surprise bills months after filing.

If you’re juggling HOA fees and other debts, talk with a bankruptcy attorney before making moves. A little strategy upfront can save you a lot of stress down the road.

Thinking about buying a house after bankruptcy can feel a little overwhelming, right? 

You’re excited about the idea of owning again, but that “B-word” hanging on your credit report makes you wonder if lenders will even give you the time of day. 

The truth is, you’re not locked out forever. 

In fact, plenty of people in Michigan go through bankruptcy and still end up with keys to their own place down the road. It just takes time.

In this guide, we’ll walk through how long after bankruptcy you can buy a house again, what types of loans are available in Michigan after bankruptcy, and how to boost your odds of getting that “yes” from a lender.

How Long After Bankruptcy Can You Buy A House?

You have to wait 1 – 4  years before you can buy a house in Michigan after bankruptcy. 

The waiting period depends on what type of bankruptcy you filed and what kind of mortgage you’re applying for. 

Here’s a quick breakdown:

Type of Bankruptcy / Situation	Loan	Waiting Time
Chapter 7 (discharged)	Conventional mortgage	~ 4 years after discharge.
Chapter 7 (discharged)	FHA or VA loan	~ 2 years after discharge.
Chapter 13 (discharged)	Conventional mortgage	~ 2 years after discharge.
Chapter 13 (filed, not yet discharged)	FHA / VA programs (in some cases)	1 year after filing with timely payments and meeting additional criteria.
If bankruptcy was dismissed	Conventional loan	Longer waiting (often ~4 years) from the dismissal date

Let’s break it down in more detail:

Chapter 7

Chapter 7 is the type of bankruptcy that wipes out most of your unsecured debts, like credit cards and medical bills. 

It’s quick but it also comes with a longer wait time when it comes to mortgages.

For most loan programs, you’ll need to wait at least two to four years after your Chapter 7 discharge date before you can qualify.

Also Read: How Soon After Chapter 7 Can I Sell My House?

FHA loans (which are government-backed and pretty forgiving) usually require a two-year wait. Conventional loans backed by Fannie Mae or Freddie Mac often make you wait four years. 

VA loans typically have a two-year wait as well.

So if you filed Chapter 7, you’ll be sitting out for at least two years, but that time is actually a chance to rebuild your credit, save money, and prep for homeownership.

Chapter 13

Chapter 13 works differently. Instead of wiping debts away, it sets up a repayment plan that usually lasts three to five years. Because of that, mortgage rules are a little kinder.

You might be able to qualify for certain loans after just 12 months of on-time payments in your repayment plan. But you’ll need the bankruptcy court’s approval. 

And you’ll still need to prove to the lender that you’re managing money responsibly.

Once the repayment plan is complete and the bankruptcy is discharged, the waiting period shortens even more. 

FHA and VA loans often become available right away, while conventional loans usually want a two-year wait after discharge.

Loan Options In Michigan After Bankruptcy

When the waiting period is over and you’re ready to buy, the next big step is figuring out what type of loan works best for you. The good news is Michigan homebuyers have several solid choices, and some are more forgiving after bankruptcy than others.

Also Read: Can I Sell My House in Michigan if I Didn’t Reaffirm My Mortgage?

Here’s what you’ll likely be looking at:

• FHA loans are flexible with credit and only need a small down payment.
• VA loans are for veterans and military members, with no down payment required.
• Conventional loans take more time and stronger credit, but can be worth it for better rates.
• USDA loans work well in rural areas and often come with little to no down payment.

Each of these has slightly different waiting periods after bankruptcy, so it pays to compare and see what fits your timeline best.

Tips To Improve Mortgage Approval Chances

Okay, so you’re in that waiting period. Now what? This is your time to get ready so when the window opens, you’re in the best position possible. Here are a few smart moves:

#1 Save For A Larger Down Payment

The bigger your down payment is, the less they have to worry about taking a risk on you. Even if an FHA loan only asks for 3.5%, aiming higher can give you way more breathing room. 

A larger down payment means you borrow less, which brings down your monthly payments and your interest costs.

With a smaller mortgage, you’ve got a little more wiggle room in your budget when those things pop up. If saving feels slow, try automating it.

Have a set amount move straight from your checking to savings every payday. 

Over time, those little deposits stack up into something pretty impressive.

Also Read: What Happens To Inherited Property In Bankruptcy?

#2 Keep Steady Employment And Income

Banks are betting on your ability to pay them back every single month for years. Stability is what gives them confidence. 

If you’ve been in the same job for at least two years, that’s a golden sign for lenders. It shows consistency, which makes them feel safer approving your loan.

If you’re self-employed, the bar is a little higher. 

You’ll probably need to show at least two years of solid income records. The key is to prove that money is coming in regularly and not just in bursts.

#3 Reduce Other Debts Before Applying

Here’s the thing: lenders don’t just look at how much you make. They look at how much of your income is already spoken for by other debts. 

That’s called your debt-to-income ratio, or DTI. 

The lower it is, the stronger your application looks.

So before you take on a mortgage, it helps to knock out the smaller debts hanging around. Credit cards with balances? Knock those down. Car loans? See if you can pay extra and wrap them up sooner. 

Every dollar of debt you pay off frees up more of your income for that future house payment.

Even better, reducing your debt usually bumps up your credit score. 

#4 Work With A Michigan Mortgage Advisor

Every lender has their own rules, and they don’t always spell them out clearly. 

That’s where a local mortgage advisor can be helpful. They know which lenders are open to working with buyers who’ve been through bankruptcy and which ones might not be worth your time.

A good advisor can also help you understand your options and show you what you realistically qualify for, and help you avoid pitfalls. 

Plus, they’ve usually seen it all before, so nothing in your financial history is going to shock them.

Bottom Line

In Michigan, you can absolutely buy a house again but it just takes time. 

Chapter 7 filers usually wait two to four years. Chapter 13 filers can sometimes qualify after just a year of on-time payments.

In the meantime, focus on the things you can control: save money, keep your job steady, pay down debt, and get some local advice. Stay the course, and before you know it, you’ll be holding the keys to your new place in Michigan.

Filing for bankruptcy is never something you plan on, but life happens. Bills pile up, clients pay late, and suddenly the numbers just don’t work anymore. 

If you’re an independent contractor in Michigan, that can feel even scarier because your income isn’t as steady as a 9-to-5 paycheck. You might wonder if filing will wreck your business, take away your tools, or stop you from getting future work. 

The good news? It’s not nearly as career-ending as it sounds. 

In this post, we’ll go over how bankruptcy affects independent contractors in Michigan, and what you need to know before making a move.

Can You Still Be A Contractor After Bankruptcy?

The short answer is yes, you can still be a contractor after filing bankruptcy. 

Bankruptcy doesn’t take away your right to work for yourself. Michigan courts don’t stop you from being self-employed, and your clients aren’t banned from hiring you just because you’ve gone through bankruptcy.

The bigger impact usually shows up behind the scenes. 

Your credit will take a hit, which can make things like getting a business loan, financing equipment, or signing up for certain insurance plans more difficult. 

Also Read: Can You Get A Credit Card While In Chapter 13?

Some clients also run background or credit checks, especially if you work in industries tied to money or security. 

In those cases, bankruptcy could raise a few eyebrows.

Still, most independent contractors keep working just fine. Clients usually care about your skills and reliability way more than your credit report.

Chapter 7 Vs. Chapter 13 For Independent Contractors

When it comes to bankruptcy, most independent contractors end up filing under Chapter 7 or Chapter 13. The differences matter a lot.

Chapter 7 is known as “liquidation bankruptcy.” It wipes out most unsecured debts, like credit cards and medical bills, pretty quickly – usually within a few months. 

But, in exchange, some of your assets might be sold to repay creditors. 

Michigan does have exemptions, though, so you might be able to keep your work tools, vehicle, and other essentials you need to keep earning.

Also Read: Can You Wipe Out Medical Debt In Chapter 7 Bankruptcy?

Chapter 13, on the other hand, is more of a repayment plan. Instead of wiping everything away, you create a three- to five-year plan to pay back some or all of your debt. The upside is you usually get to keep more of your assets. 

The downside? It’s a long-term commitment that ties up part of your income every month.

For independent contractors, the choice often comes down to stability. 

If your income is unpredictable, Chapter 7 can feel like a clean slate. If you’ve got more consistent earnings and assets you want to protect, Chapter 13 might make more sense.

Protecting Tools, Vehicles, And Business Assets

This is the part that usually freaks contractors out the most. 

“Are they going to take my truck? My laptop? My toolbox?”

The good news is Michigan law allows exemptions for certain personal and business property. That means you don’t automatically lose the stuff you rely on to earn money. 

In most cases, bankruptcy trustees understand you need those items to keep working.

Make sure you list everything clearly when you file. If you try to hide assets, you could lose protection. But if you’re upfront, there’s a decent chance your essential tools and gear will be safe.

Bigger assets, like a second work vehicle, expensive equipment, or a property tied to your business, can get trickier.

Those may be at risk, depending on your bankruptcy type and how much equity they hold.

Talking with a bankruptcy attorney before filing can help you figure out the best way to shield what matters most.

Income Proof And Record-Keeping Responsibilities

As an independent contractor, your income probably isn’t as simple as a paycheck every two weeks. One month might be amazing, the next month slow. 

Bankruptcy courts understand that, but they’ll still expect you to prove what you earn.

That means you’ll need records. Bank statements. 1099 forms. Invoices. Payment receipts. Basically, anything that shows how much money you’ve brought in and where it came from. 

If your bookkeeping has been messy up to this point, it’s time to clean it up.

The trustee assigned to your case will want a clear picture of your finances. The more organized you are, the smoother things will go. 

Plus, good record-keeping will help you long after bankruptcy because you’ll know exactly where you stand financially.

Also Read: What Happens If You Miss A Chapter 13 Payment?

How Bankruptcy Impacts Future Work And Credit

Bankruptcy stays on your credit report for years up to 7 – 10 years. 

That can make life harder when it comes to borrowing money or getting approved for things like business credit cards.

But here’s the flip side: your credit can actually start to improve faster than you’d think. 

Once those old debts are wiped out, your debt-to-income ratio looks better, and you can slowly rebuild with responsible credit use. Some lenders even start sending offers within a year or two.

Work-wise, most contractors don’t see a big drop in opportunities just because of bankruptcy. Clients usually aren’t digging into your credit unless the contract is huge or tied to sensitive financial data. 

Still, if your business relies on bonding, licensing, or government contracts, you’ll want to check if bankruptcy affects those areas.

Is Bankruptcy Right For You?

Bankruptcy isn’t a magic solution, and it isn’t always the best path. 

If your debt feels crushing, you’ve fallen behind on taxes, or collectors won’t stop calling, it could be worth considering. But it’s also a pretty serious move that impacts your financial life for years.

Before jumping in, think about alternatives. 

• Can you negotiate with creditors directly? 
• Can you consolidate your debt into one manageable payment? 
• Could you boost income short-term to catch up? 

Sometimes those options make more sense than filing.

On the other hand, if you’ve tried everything and you’re still sinking, bankruptcy might be the clean break you need. 

Many independent contractors actually come out stronger afterward because they finally have room to breathe and focus on building their business again.

Bottom Line

Bankruptcy does not affect independent contractors in Michigan a lot. You can keep working. You can keep being your own boss. You can even keep most of the tools and vehicles you depend on every day.

The biggest changes usually show up in your credit, your ability to borrow, and the extra responsibility of keeping clean financial records. 

But with some smart planning and honest conversations with a bankruptcy attorney, you can get through it without losing your livelihood.

Bankruptcy is stressful enough on its own. Toss in the thought of inheriting money or property while you’re in the middle of it, and things can get confusing fast. 

You might wonder: do you get to keep the inheritance, or does it all go to your creditors? 

The truth is, it depends on timing, the type of bankruptcy you filed, and California’s exemption rules.

In this post, we’ll explain what happens to inherited property in a California bankruptcy in detail.

The 180-Day Rule Explained

This is the big rule you need to know right away: the 180-day rule. 

Basically, if you inherit something within 180 days (about six months) after filing your bankruptcy case, that inheritance usually becomes part of your bankruptcy estate. 

In other words, the trustee can take it to pay creditors.

Think of it this way – bankruptcy courts don’t want people filing and then conveniently keeping a big inheritance right after. So they made this rule to prevent that. 

If the inheritance comes after that 180-day mark, things usually look better for you in Chapter 7. 

But Chapter 13 plays by a different set of rules, which we’ll get into soon.

Also Read: How Much Does A Lawyer Charge For Chapter 7 In California?

What Happens To Inherited Property In Chapter 7?

Chapter 7 is often called liquidation bankruptcy. The trustee looks at your assets and sells off anything that isn’t protected by exemptions. The money then goes toward paying off your debts.

So what happens if you inherit something here? 

If it comes within that 180-day window, the inheritance is considered part of the bankruptcy estate. That means the trustee has the right to take it.

Now, exemptions can help. California has specific rules that let you keep certain types of property, or at least a portion of it. 

For example, some equity in a home, a car up to a certain value, or personal items like clothing can be protected. If your inheritance fits within the limits of the exemptions you chose, you may be able to hang on to some or all of it.

But if your inheritance lands in your lap after those 180 days, the trustee usually can’t touch it. At that point, it’s all yours.

What Happens To Inherited Property In Chapter 13?

Chapter 13 is different because it’s a repayment plan that usually lasts three to five years. 

You don’t lose your stuff the way you might in Chapter 7. Instead, you agree to make regular payments to your creditors over time.

Here’s the catch: inheritance can still affect you here, even if it comes after 180 days. 

Why? Because the court looks at your financial ability to pay throughout the entire plan. If you suddenly get a big inheritance two years into it, the trustee may argue that you can afford to pay more. 

Also Read: Money Received After Filing Chapter 7

That could mean your monthly payments increase, or your repayment plan gets adjusted.

So unlike Chapter 7, the timing doesn’t protect you as much in Chapter 13. Any inheritance you get while your repayment plan is still active can potentially be factored in.

Types Of Inherited Assets And How They’re Treated

Not all inheritances look the same. Some are straightforward cash, while others might be a house, land or even a car or jewelry. 

The way each is handled in bankruptcy can be slightly different:

Cash Inheritances

Cash is the hardest to protect in a bankruptcy.. 

If you’re in Chapter 7 and that money shows up within 180 days, it usually gets scooped up by the trustee. Unless you’ve got exemptions to cover part of it, the funds are likely headed toward your creditors. 

In Chapter 13, even if the inheritance comes years after you’ve filed, the court may still expect you to put that cash toward your repayment plan. 

Cash is the easiest for the system to claim and the toughest for you to hang on to.

Real Estate

In Chapter 7, the trustee might try to sell the property, especially if your share of it isn’t covered by California’s homestead exemption. If you already own a house, that exemption might shield some of the value, but it often won’t protect a brand-new inheritance fully. 

In Chapter 13, you probably won’t lose the property outright, but the value of the inheritance could cause your repayment plan to go up. 

That means more of your income will be directed toward creditors. 

Real estate is one of the trickiest assets to inherit during bankruptcy, because it can create both value and debt at the same time.

Also Read: How to Remove a Judgment Lien from Property Chapter 7

Personal Property

Not all inheritances are giant homes or land. Sometimes it’s smaller, but still valuable, items like cars, jewelry, artwork, or family heirlooms. 

In Chapter 7, the trustee can sell these if they’re worth more than the exemptions allow, which means you could lose things you really care about.

The wildcard exemption in California can help cover some of this, but it has limits. 

In Chapter 13, you probably won’t lose the items themselves, but their value might increase your payment obligations. Even if it’s something sentimental, like your grandmother’s ring, it still gets counted when the court looks at your financial picture.

California’s Exemption Systems

California is a little different from other states because it gives you two exemption systems to choose from when you file bankruptcy. 

You can only pick one, so the choice really matters. 

The system you select can decide if you get to keep part of an inheritance or if it ends up with your creditors. 

Here’s how the two options break down.

• System 1 focuses on protecting home equity and is usually best for people who own a house with significant value.
• System 2 is more flexible and includes a wildcard exemption that can cover cash, bank accounts, or other personal property.

Picking the right system depends on your situation, and the wrong choice could mean losing more of your inheritance than you need to.

Bottom Line

Inheriting property while dealing with bankruptcy in California is complicated.

In Chapter 7, inherited property within 180 days can be taken by creditors unless exemptions apply. In Chapter 13, inherited property can change your repayment plan no matter when they come in.

The kind of asset you inherit (cash, real estate or personal property) also impacts how things play out.

The smartest move is to plan ahead.

If an inheritance is on the horizon, take the time to talk to a professional before you file. A little strategy upfront can make all the difference in what you keep and what you lose.

Drowning in medical bills is a lot more common than most people think. 

One trip to the ER, one unexpected surgery, or a few nights in the hospital, and suddenly you’re staring at numbers that look more like a mortgage than a bill. 

In California, where healthcare costs run high, it can feel downright impossible to catch up once you fall behind. That’s why so many people start wondering if Chapter 7 bankruptcy actually wipe out medical debt.

The answer is usually yes, but like most things in the legal world, there are details you’ll want to know before jumping in.

In this post, we’ll explain how Chapter 7 bankruptcy will wipe out medical debt in California.

How Does Chapter 7 Treat Medical Debt?

Medical bills are considered unsecured debt. 

That’s just a fancy way of saying the debt isn’t tied to anything you own, like a car loan is tied to your car or a mortgage is tied to your house. 

Because of that, Chapter 7 usually sweeps them right off the table.

When you file Chapter 7, the court steps in and looks at everything you owe. Credit card balances, personal loans, medical bills – they all go into the same basket. 

Also Read: What Happens if You Don’t Pay Medical Bills in California?

And unless something unusual is going on, they all get discharged, which means you’re no longer legally required to pay them.

There isn’t any special law that protects hospitals or doctors. Your medical debt doesn’t get any special treatment compared to your Visa balance. For most people, that’s a huge relief because medical bills often make up the biggest chunk of debt they’re struggling with.

Who Can Use Chapter 7 For Medical Debt Relief?

Not everyone can just decide to file Chapter 7 and be done with it. 

You need to qualify under what’s called the means test. 

Don’t let the name scare you, it’s basically a math check to see if your income is low enough to make Chapter 7 the right fit. The court compares your household income to the median income for households of the same size in California. 

If you’re under that number, you’re in pretty good shape. If you’re above it, the court looks a little deeper at your expenses and debts to see if you still qualify.

People often think they won’t qualify because they earn too much, but that’s not always the case. High rent, childcare, or other living costs in California can sometimes tip the scale in your favor. 

And if you truly don’t qualify, there’s still Chapter 13 as a backup option.

The other thing to keep in mind is your assets. 

Chapter 7 is sometimes called liquidation bankruptcy because in theory, some of your property could be sold off to pay creditors. 

But California has exemptions that protect a lot of what you need, like your car, household items, retirement accounts, and sometimes even a big chunk of home equity. 

So for many people, they don’t lose anything at all.

What Happens to Medical Debt In Chapter 7

So what does the process actually look like once you file? 

First, the second you file your paperwork, something called the automatic stay kicks in. 

That’s legal protection that immediately stops hospitals, clinics, or collection agencies from bugging you for money. No more phone calls, no more letters, no more lawsuits over those bills.

Then the court assigns a trustee to your case. 

Also Read: What Can You NOT Do After Filing Chapter 7?

Their job is to review your paperwork, check for honesty, and figure out if there’s anything non-exempt you own that could be sold. In most cases, there isn’t. After that, you go to a short meeting with the trustee, answer some basic questions, and wait a couple of months.

At the end of it all, the judge signs off on your discharge. 

That means your medical debt is legally erased. It doesn’t matter if it was $10,000 or $100,000. Once discharged, you’re not responsible for paying it anymore. 

The creditor can’t chase you for it, can’t sue you for it, can’t garnish your wages for it. It’s gone.

Limits And Exceptions To Discharging Medical Debt

Now, like most things in law, there are some exceptions. 

Chapter 7 is powerful, but it doesn’t clear everything in every single situation. Here are the main exceptions:

• If you racked up medical debt through fraud, like lying on a hospital credit application, it might not be dischargeable.
• If a hospital has already placed a lien on your personal injury settlement or judgment, that lien might survive even after bankruptcy.

But outside of those edge cases, the vast majority of ordinary medical bills will be wiped out in a Chapter 7 discharge.

Chapter 7 Vs Other Options For Medical Debt

So what if Chapter 7 isn’t the right fit? 

Maybe you don’t pass the means test. Or maybe you have assets you don’t want to risk losing. That’s where it helps to know the alternatives.

Also Read: How Do You Rebuild Credit After Chapter 7 Bankruptcy?

Chapter 13 is the main backup plan. Instead of wiping debt away instantly, Chapter 13 sets up a repayment plan that lasts three to five years. You pay back what you can afford each month, and whatever is left at the end gets discharged. 

For people with steady income but too much debt to qualify for Chapter 7, this can still be a lifesaver.

There are also non-bankruptcy options. 

Some hospitals in California offer charity care or financial assistance programs. 

You can also try negotiating directly with providers or debt collectors to reduce your balance. Debt settlement companies exist too, but you have to be careful there since fees and risks can be high.

That said, if your medical debt is huge and you’re truly drowning, Chapter 7 is usually the cleanest, fastest way to wipe it off.

Final Thoughts

Medical debts will be wiped out in Chapter 7 bankruptcy.

It’s not always fun to think about filing bankruptcy, but sometimes it’s the only realistic path to a fresh start. If you qualify, Chapter 7 can clear away overwhelming medical bills in just a few months, stop collections in their tracks, and give you breathing room again.

Of course, every situation is unique. If you’re seriously considering this step, it’s smart to sit down with a bankruptcy attorney and go over the details of your case. 

They can help you figure out if Chapter 7 really is your best option or if another path might work better.

Chapter 13 bankruptcy can feel like a lifeline when you’re drowning in debt. It gives you room to breathe, keeps creditors off your back, and lets you pay what you owe in a manageable way. 

But what happens if life throws you a curveball and you miss a payment? 

Don’t panic. A single slip doesn’t mean your case is over.

In this post, we’ll break down what happens if you miss a Chapter 13 payment in Michigan.

Immediate Consequences Of Missing A Chapter 13 Payment

The first thing to know is that one missed payment usually isn’t the end of the world. 

The trustee assigned to your case keeps track of all payments. If you skip one, it will show up right away. Sometimes, nothing happens immediately. 

You might just get a notice reminding you that you’re behind. 

Other times, the trustee may reach out to your attorney to figure out what’s going on.

Now, if you make a habit of missing payments or ignore the issue, that’s when things start to get serious. The Chapter 13 process depends on you following the court-approved repayment plan. Falling behind can threaten the whole case.

Also Read: Chapter 13 Payment Plan Example

Think of it like missing payments on a car loan. One late payment might be forgiven, but several late payments will put you at risk of losing the deal entirely.

Risk Of A Case Dismissal

The biggest risk of not paying is dismissal of your case. 

When your Chapter 13 case is dismissed, you lose the protection of the bankruptcy court. 

That means creditors can start calling again, repossessions can resume, and lawsuits can move forward. Basically, all those collection activities that had been paused by the automatic stay are back on the table.

Michigan bankruptcy courts, like others across the country, don’t want to dismiss cases unless they have to. They prefer that repayment plans succeed. 

But the trustee’s job is to make sure the plan runs smoothly. If you’re not making payments, they can file a motion to dismiss. 

At that point, the court reviews your case. 

If there’s no good explanation, dismissal becomes a very real possibility.

Also Read: Chapter 13 Dismissal Refund

What To Do If You Miss A Chapter 13 Payment?

Missing a payment doesn’t have to derail your entire case. Here’s what you should do if you’ve missed one:

#1 Contact Your Bankruptcy Attorney RIGHT AWAY

The very first thing you should do is call your attorney. 

Don’t wait a few weeks hoping the problem disappears. Your attorney knows how trustees handle missed payments and can guide you through the right moves. 

Sometimes, they can step in and stop the trustee from filing a motion to dismiss. 

Other times, they may negotiate more time for you to catch up.  

#2 Understand The Consequences

It’s tempting to brush off a late payment and promise yourself you’ll fix it “next month.” But the stakes are bigger than that. 

A missed Chapter 13 payment doesn’t just create a late fee, it threatens the entire case. 

If your case gets dismissed, you lose bankruptcy protection, and creditors can immediately resume collection efforts. That means phone calls, lawsuits, wage garnishments, and even foreclosure if you’re behind on your mortgage. 

Understanding the seriousness of the situation will keep you focused.

Also Read: What Can You Not Do After Filing Chapter 13?

#3 Catch Up On The Missed Payment

If you can pay the missed installment quickly, do it. 

Many times, the trustee won’t take action if the payment is caught up before your case falls too far behind. Even if it means cutting back on expenses or dipping into savings, catching up buys you peace of mind and keeps your plan running smoothly. 

The faster you make it right, the more likely your case stays safe from dismissal.

#4 Communicate With The Chapter 13 Trustee

Trustees aren’t the enemy – they want repayment plans to succeed. 

If you’re upfront about why you missed a payment, they may be more flexible than you think. 

Staying silent, on the other hand, almost always makes things worse. 

A quick phone call or a letter from your attorney explaining your situation can show the trustee that you’re taking your obligations seriously and not trying to abandon your plan.

#5 Request A Payment Plan Modification (If Needed)

Sometimes, a missed payment isn’t just a one-time fluke. Maybe you lost hours at work, faced unexpected medical bills, or had another major life change. 

In those situations, your repayment plan may no longer be realistic. 

Your attorney can file a request with the court to lower your payments or extend the repayment term. 

Michigan courts will review your income and expenses, and if they see a genuine need, they may approve a modification that makes your payments affordable again.

What Happens If You Keep Missing Payments?

If missed payments pile up, the trustee will likely file a motion to dismiss your case. That means the court takes a hard look at your repayment plan and your payment history. 

At this stage, you’re at real risk of losing all the protections that Chapter 13 gives you.

A dismissal puts you back at square one. 

Creditors regain the right to call, sue, garnish, or repossess. If your home was safe from foreclosure because of the bankruptcy, that safety net disappears. 

In Michigan, where foreclosures can move quickly, this is especially dangerous.

Repeated missed payments can also hurt your chances if you try to file again. Courts may look at your history and question your ability to stick to a new plan. 

That doesn’t mean you’re out of options as sometimes converting to Chapter 7 is possible, but it does limit the flexibility you once had.

Bottom Line

If you miss a Chapter 13 payment in Michigan, your case is at risk of dismissal, but one payment usually won’t ruin everything if you act quickly. 

The best move is to contact your attorney immediately, catch up on the missed amount if you can, and stay in touch with your trustee. 

If your finances have changed, you may even be able to modify your repayment plan to keep the case alive.

A missed payment doesn’t end your bankruptcy, but ignoring it almost certainly will.