Law 101

Debt and Bankruptcy

Consumer debt is the subject of some complex laws, covering topics such as fair debt collections practices, credit repair organizations, repossessions, overdraft protection, and more. These laws are intended to protect consumers from harassment and unscrupulous collection practices, while still allowing creditors to collect what is owed.

An unpaid debt may lead to a collections lawsuit. Losing these lawsuits can lead to wage garnishment, bank levies, and liens on real property. A debtor can respond to the lawsuit in one of several ways. See our guide on “Responding to a Breach of Contract Lawsuit” for more information.

Ultimately, consumers may find themselves in a position where it is necessary to file for bankruptcy. Bankruptcy is a legal process that permits insolvent people or businesses to wipe out their debts and start fresh. Bankruptcy proceedings are governed by federal law and take place in the U.S. Bankruptcy Court.  In Sacramento, this court is located at 501 I Street (

Individual debtors may give up assets to pay their creditors as much as possible (Chapter 7 “liquidation”), or may set up a repayment plan (Chapter 13). Other chapters apply in specialized situations. Upon filing, the debtor immediately benefits from the “automatic stay” (an injunction that stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed).

After a successful Chapter 7 bankruptcy, the debtor’s debts are “discharged” (the debtor is no longer required to pay them). A bankruptcy stays on the debtor’s credit rating for up to 10 years, and some debts, such as child support, taxes, and student loans, normally cannot be discharged. However, some assets are exempt from being liquidated (for example, pensions and 401ks; homes and cars without equity; and the basic means of day-to-day living.)

Community Resources

Bookshelves labeled Self Help Debt cases
SH@LL (Self Help @ the Law Library) Capital Pro Bono Debt Collection Defense Clinic
Calculator and forms Bankruptcy
Bankruptcy Clinic (McGeorge) Bankruptcy Pro Se Assistance Desk


The Bankruptcy Courts have prepared most of the forms needed to file for bankruptcy. For other situations, you may need to create your own forms. Our Legal Research Guides and Step-by-Steps have instructions and samples for many commonly-used forms.

Form Resources

Past Due Debt Action Letters to reply to debt collectors
Protect your identity Identity theft forms and letters
Federal Courthouse fountain US Bankruptcy Court, Eastern District of California Forms for use in the Eastern District of California Bankruptcy Court.
Pleading Paper Other Bankruptcy Forms Forms for some common situations for which there is no Judicial Council or local form

Research Guides

The Law Librarians have created these research guides as an aid for those starting a legal research project. These guides recommend print and electronic resources that will help you find answers to your law-related questions. Many guides provide step-by-step information, as well as sample forms, for common legal procedures.

Common Questions

The Law Librarians write articles on a variety of common legal issues.


The Law Librarians created these pamphlets in response to frequently asked questions on subjects not appropriate for more substantive guides.


Free online videos on debt-related topics.

cease and desist video Cease and Desist Letter Learn how to use a “cease and desist letter” to prevent creditors from harassing you.
Money Resolving Debt Collection Cases Available in English, Spanish, and Vietnamese.

Useful links

Websites with information, forms, and more.