California Nursing Home Abuse Lawyers Blog

When a troubled business is badly in debt and unable to service that debt or pay its creditors, it may file (or be forced by its creditors to file) for bankruptcy in a federal court under Chapter 7. A Chapter 7 filing means that the business ceases operations unless continued by the Chapter 7 Trustee. A Chapter 7 Trustee is appointed almost immediately. The Trustee generally sells all the assets and distributes the proceeds to the creditors. indicates Los Angeles Bankruptcy Attorney Steven C. Peck.

This may or may not mean that all employees will lose their jobs. When a very large company enters Chapter 7 bankruptcy, entire divisions of the company may be sold intact to other companies during the liquidation.

Fully-secured creditors, such as collateralized bondholders or mortgage lenders, have a legally-enforceable right to the collateral securing their loans or to the equivalent value, a right which cannot be defeated by bankruptcy. A creditor is fully secured if the value of the collateral for its loan to the debtor equals or exceeds the amount of the debt. For this reason, however, fully-secured creditors are not entitled to participate in any distribution of liquidated assets that the bankruptcy trustee might make.

In a Chapter 7 case, a corporation or partnership does not receive a bankruptcy discharge--instead, the entity is dissolved. Only an individual can receive a Chapter 7 discharge (see 11 U.S.C. § 727(a)(1)). Once all assets of the corporate or partnership debtor have been fully administered, the case is closed. The debts of the corporation or partnership theoretically continue to exist until applicable statutory periods of limitations expire.

Continue reading "Chapter Seven Business Bankruptcy An Overview" »

Bankruptcy for GMAC Inc., the auto and home lender majority owned by the U.S. government, would have cost the government as much as $50 billion, the Treasury Department's lead auto industry adviser said.
Sending GMAC into bankruptcy would have required the government to inject $40 billion to $50 billion into a newly formed company that would then lend to General Motors Co. and Chrysler Group LLC dealers, said Ron Bloom, chief adviser for the Treasury's auto task force. Bloom spoke today at a hearing of the Congressional Oversight Panel in Washington.

The panel, headed by Elizabeth Warren, is seeking information on the timing and rationale behind the government's bailout of Detroit-based GMAC. The firm, which is the primary lender to General Motors and Chrysler dealers, has benefitted from $17.3 billion in bailout funds and is now 56.3 percent owned by U.S. taxpayers.

"Weighing all the risks, we believe this was the most prudent course of action," Bloom said. Denying GMAC a bailout would have added "execution risk" of reviving GM or Chrysler from their own bankruptcies, he said.

The panel oversees the government's administration of U.S. bailout funds and recommends regulatory changes. It's planning a March report on GMAC's rescue and the company's efforts to return to profitability, spokesman Peter Jackson said last week.

At the end of December, GMAC received $3.8 billion in a third installment of government money. GMAC got $12.5 billion in two previous bailouts and almost $1 billion that was funneled through GM, which used it to invest in GMAC.

GMAC Chief Executive Officer Michael Carpenter told the panel the lender is "unlikely to require additional capital." Chief Financial Officer Robert Hull also testified today, saying the $20 billion in equity the company has on its balance sheet shows it's solvent.

GMAC posted a $10.3 billion loss last year, driven in part by defaults on home mortgages. Analysts testified today that the best solution for GMAC and General Motors would be to place the lender into bankruptcy and sell the auto-financing business back to GM, which may suffer without its own in-house lender.

"If you do not have a captive finance facility, GM will be at a discount to others who have one, like Ford," Michael Ward of Soleil-Ward Transportation Research told the panel.

Ford Motor Co., the second-largest U.S. automaker, makes loans to dealers and consumers through Ford Motor Credit Co.

The best chance for the government to get repaid will come when closely held GMAC proves it can finance itself in the debt markets and then sells shares to the public, according to Jim Millstein, the Treasury Department's chief restructuring officer. At that time, the government will convert its preferred shares in the company into common, he said.

"The first path toward an exit requires refinancing of the balance sheet and creating a longer runway of liquidity," Millstein said. "We're looking at sometime a year out" for an initial public offering, Millstein said.

A GMAC IPO won't happen until the company decides what to do with its mortgage operations and Residential Capital LLC unit, according to Chris Whalen, managing director of Torrance, California-based Institutional Risk Analytics. GMAC has said it's considering "strategic alternatives" -- Wall Street parlance for a unit's sale or shutdown -- at the unit.

GMAC showed it could access the debt markets without a government guarantee earlier this month. The company sold $2 billion in five-year notes without U.S. backing for the first time since May 2007, according to data compiled by Bloomberg.

GMAC had $27.9 billion of long-term debt coming due this year, and another $36.7 billion combined due in 2011 and 2012, according to the company's third-quarter filing.

Continue reading "A Bankrupt GMAC Could Cost the Government $ 50 Billion" »

Chapter 7 bankruptcy is sometimes referred to as "fresh start" bankruptcy. It gets this name because it can erase most debts. Generally, a Chapter 7 bankruptcy makes the most sense for individuals overwhelmed by medical or credit card debt. It is can also be a useful strategy for people facing loan refinances or who have lost an income source through a layoff. and have absolutely no ability to pay their debts says California Bankruptcy Attorney Steven C. Peck.

Typically, a Chapter 7 bankruptcy is used by folks who aren't likely to gain the ability to pay back their debt under a payment plan such as occurs under a Chapter 13 bankruptcy. The process of filing Chapter 7 bankruptcy is fairly straightforward but does require an eligibility and application process, including a means test to determine your eligibility to receive a Chapter 7 Bankruptcy discharge.

Continue reading "Chapter Seven Bankruptcy: A Fresh Start" »

A consumer debtor may choose to liquidate under Chapter 7 or reorganize under Chapter 11 or 13 (depending on the amount of outstanding indebtedness). See 11 U.S.C. § 109(e). A consumer debtor who successfully liquidates under Chapter 7 will receive a "discharge," which is effectuated by the entry of a discharge order by the bankruptcy court. See 11 U.S.C. § 727(a)(1). A consumer debtor who successfully obtains court approval of a reorganization plan under Chapter 11 or 13 generally will receive a discharge following the completion of all payments required by the plan. See 11 U.S.C. §§ 1328(a), 1141(d)(5).

The discharge is the "heart of the fresh start provisions" of the Code. H.R. Rep. No. 595, 95th Cong., 1st Sess. 384 (1977) (reprinted in COLLIER ON BANKRUPTCY App. Pt. 4(d)(i)). A discharge under the Code releases a debtor from all debts that arose before the bankruptcy petition, with the exception of certain debts that are "nondischargeable," regardless of whether a claim is filed. See 11 U.S.C. §§ 523, 727(b). A discharge also acts as an automatic and permanent injunction against a creditor's attempts to recover those debts which were a personal liability of the debtor prior to bankruptcy. See 11 U.S.C. § 524(a).

Any creditor or party in interest may object to the entry of the discharg. See 11 U.S.C. § 727(c). Alternatively, a creditor may seek to establish that the debtor's obligation to that creditor should not be discharged. See 11 U.S.C. § 523(c).[ 1 ] Section 523(a) sets out the types of debts that are not dischargeable in bankruptcy. Section 523(c), however, provides that the debtor will be discharged from a debt of a kind specified in subsection (a)(2) (debts for false representations), (a)(4) (debts for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny), and (a)(6) (debts for willful and malicious injury) unless the court determines such debts to be nondischargeable. A creditor objecting to discharge under § 727(a) or dischargeability under § 523(a)(2), (a)(4), or (a)(6) bears the burden of proof by a preponderance of the evidence. See Grogan v. Garner, 498 U.S. 279, 286 (1991). "Intertwined with this burden is the basic principle of bankruptcy that exceptions to discharge must be strictly construed against a creditor and liberally construed in favor of a debtor so that the debtor may be afforded a fresh start." Hudson v. Raggio & Raggio, Inc. (In re Hudson), 107 F.3d 355, 356 (5th Cir. 1997).

Dischargeability Objections under § 523
1. Divorce-Related Debts (§ 523(a)(15)) and Debts for Willful and Malicious Injury (§ 523(a)(6)) Are Discharged Upon Successful Completion of the Chapter 13 Plan
Turning to the discharge in Chapter 13 cases, a Chapter 13 debtor receives what is sometimes referred to as a "super discharge." A Chapter 13 debtor is entitled to discharge of most, but not all, types of prepetition debts upon completion of payments under a Chapter 13 plan -- including many of the otherwise nondischargeable debts listed in § 523(a). See 11 U.S.C. §§ 1328(a). Certain debts to a spouse, former spouse, or child of the debtor that are not domestic support obligations (§ 523(a)(15)) are among those that may be discharged in a Chapter 13 bankruptcy. See 11 U.S.C. §1328(a)(2). Section 1328(a)(2) also provides that debts for willful and malicious injuries under § 523(a)(6) are dischargeable in a Chapter 13 case with one notable exception -- when the debtor seeks a hardship discharge under § 1328(b). Rule 4007(d) of the Federal Rules of Bankruptcy Procedure provides:

On motion by a debtor for a discharge under § 1328(b), the court shall enter an order fixing the time to file a complaint to determine the dischargeability of any debt under § 523(a)(6) and shall give no less than 30 days' notice of the time fixed to all creditors in the manner provided in Rule 2002. On motion of any party in interest after hearing on notice the court may for cause extend the time fixed under this subdivision. The motion shall be filed before the time has expired.
FED. R. BANKR. P. 4007(d). Should the debtor at some time in the future seek a hardship discharge under § 1328(b), the plaintiff will have an opportunity to renew its objection to the dischargeability of its debt, if it so chooses, pursuant to § 523(a)(6).

At this stage in the debtor's case, the plaintiff's § 523(a)(6) claim is not ripe for decision because "resolution of the issue has no meaningful effect until and unless the debtor moves for hardship discharge, a contingency that occurs only in a small percentage of Chapter 13 cases." Ambassadors Travel Services v. Liescheidt (In re Liescheidt), 404 B.R. 499, 505 (Bankr. C.D. Ill. 2009). As the Liescheidt court explained:

Where a debtor is proceeding toward a full compliance discharge, that would by definition discharge a Section 523(a)(6) debt, there is no reason to litigate the issue of whether the debt is, in fact, one for a willful and malicious injury. Whether it is or isn't doesn't matter, since it will be discharged either way if the debtor receives a full compliance discharge. Only if the debtor subsequently moves for a hardship discharge, which would not discharge a debt for a willful and malicious injury, would it matter. This principle is embodied in Rule 4007(d), which provides that when a debtor files a motion for hardship discharge, the court shall fix a deadline for creditors to file complaints under Section 523(a)(6) and provide notice of the deadline to all creditors.
Id. at 504. The same is true in this case. Unless and until the debtor seeks a discharge pursuant to § 1328(b), there is no reason to litigate whether the debt at issue is one for willful and malicious injury. The Court, therefore, concludes that the debtor's motion for summary judgment with respect to the plaintiff's § 523(a)(6) claim should be granted without prejudice in the event the debtor seeks a hardship discharge.

Complaints Objecting to Dischargeability Based on False Representations or Actual Fraud ( § 523(a)(2)(A)) Must Be Timely Filed
In contrast, several of the plaintiff's claims in this case involve causes of action that are not part of the "super discharge." Debts for false representations or actual fraud (§523(a)(2)(A)), for a domestic support obligation (§ 523(a)(5)), as well as several other types of debt not relevant here, may be excluded from discharge in a Chapter 13 case, just as they would be in a Chapter 7 case. See 11 U.S.C. § 1328(a)(2). However, the debtor asserts that the plaintiff's § 523(a)(2)(A) claim is barred because the plaintiff failed to timely filed the adversary complaint.

A complaint objecting to dischargeability must be filed no later than 60 days after the first date set for the meeting of creditors. See FED. R. BANKR. P. 4007(c). Although the court is empowered to extend the time "for cause," the motion to extend the time must be filed "before the time has expired." Id. This restriction on extending the time is expressly excluded from the court's general power to enlarge time periods after the fact. See FED. R. BANKR. P. 9006(b)(3). Thus, regardless of the circumstances, the Court has no power, after the bar date for filing a complaint has passed, to extend the time to file a complaint to determine dischargeability of a claim alleged to be excepted from discharge under §§ 523(a)(2)(A).

In one matter the plaintiff, argued that it obtained an extension of the deadline to object to dischargeability in this case. The Court did not enter an order granting the plaintiff such an extension. Rather, the plaintiff appears to argue that the Court should have understood its motion to file a late proof of claim as a motion to extend the deadline to file objections under §§ 523 and 727 as well. The plaintiff did not provide the Court with any authority to support its argument, and a review of its motion to file a late proof of claim does not support the plaintiff's suggestion that this motion clearly sought additional time to object to discharge or dischargeability. Furthermore, the plaintiff's motion to file a late proof of claim was filed after the deadline had passed for objecting to discharge or dischargeability. As a result thereof, the debtor was entitled to a discharge.

Continue reading "Complaints Objecting to Discharge or Dischargeability of Debts In Bankruptcy Must Be Timely Filed" »

Consumer credit problems are taking their toll on more and more people, according to bankruptcy numbers released recently.

The National Bankruptcy Research Center (NBRC) reported that bankruptcy filings in November 2009 were up 12 percent from November 2008 figures. November 2009 also marked the ninth straight month that the number went past 100,000, as more than 110,000 bankruptcy filings were tracked.

Comparing the first 11 months of 2009 to the same time period in 2008, filings were up by 32 percent and have gone beyond the 1.3-million mark.

"Nationwide, the filings to date amount to almost 11,500 filings per million households," indicates California Bankruptcy Attorney Steven C. Peck. who may be contacted toll free at 1.866.999.9085 and on-line at www.premierlegal.org.

Furthermore, the center saw Chapter 13 filings go up by 12 percent, while Chapter 7 requests increased by 42 percent. This rise comes despite a revision to the law that makes it more difficult to file for Chapter 7.

Regardless of the type of bankruptcy filed, it's bound to affect the person's credit score. A recent report from FICO noted that a bankruptcy can lower the filer's credit score by as much as 240 points, depending on where it was prior to the filing.

Read more: http://www.creditfyi.com/News/consumer-credit-difficulties-leading-to-more-bankruptcies-234.htm#ixzz0fth7Gnsz

The U.S. Code limits who may file for Chapter 7 bankruptcy based on several different criteria. For a general discharge, any individual qualifies who maintains legal residency. In addition, all U.S. citizens may request relief regardless of their current country of residency. Further, foreign citizens may also request relief when either owning or operating a business within U.S. territories says Los Angeles Bankruptcy Attorney Steven C. Peck.

Unique filing restrictions also apply to Chapter 13. Debtors who propose a repayment plan must currently earn a regular income. Salaries or profits from the operation of a business satisfy the requirement. Both individuals and corporations may propose plans and request relief from the court. A debtor who does not produce regular income is not qualified.

After establishing basic qualification, the means test imposes a more difficult requirement that applies in all chapters. Nevertheless, the application of the test is limited to individuals. Originally, lawmakers designed the test with the intent of restricting who may file for Chapter 7 bankruptcy. In practice however, the rate at which individuals choose a general discharge recently increased dramatically.

How the Means Test Restricts Who May File for Chapter 7 Bankruptcy
The amount of a debtor's net disposable income, after paying for basic living expenses, determines who may file for Chapter 7 bankruptcy. The calculation of net income relies on slightly different components than used in traditional accounting practices. The means test requires debtors to use average income and expenses over the last full six months immediately before filing. indicates California Bankruptcy Lawyer Steven C. Peck.

Total income is easy to ascertain because the test uses actual income received. The test then adopts a variety of allowable expense deductions. Basic living expenses include allowances based on the average cost of necessities. The test also includes the amount of payments due on outstanding debts and extraordinary expense actually paid for a few categories.

Debtors earning more than $200 net income per month do not fit within restrictions on who may file Chapter 7 bankruptcy. The test further provides two additional exceptions for qualification. Debtors that owe an exceptionally high amount of consumer debt may potentially qualify using two different formulas.

The Chapter 7 Qualification Standard
The amount of net disposable income available to creditors sets the qualification standard for who may file Chapter 7 bankruptcy. Lawmakers restrict access to a general discharge because of perceived abuse. Despite these restrictions, the total number of Chapter 7 cases filed during the first quarter of 2009 rose by 46.3 percent according to U.S. Court administrators. Contact California Bankruptcy Attorney Steven C. Peck toll free at 1.866.999.9085 to discuss your bankruptcy options.

Even paradise has its share of problems: In this case, it'd be a rising number of personal bankruptcy filings. The Honolulu Star-Bulletin reported in mid-February that bankruptcy filings in Hawaii rose 32.7 percent this January when compared to the same month one year earlier. This is only continuing a trend in Hawaii: In January of 2009, bankruptcy filings had soared 82.5 percent from the same month in 2008. It only proves that bankruptcy is a serious issue across the entire United States, even in those states traditionally associated with fun, sun and beach living.

Chapter 13 on the Rise In Hawaii, according to the Star-Bulletin, the biggest percentage increase in bankruptcy filings were of the Chapter 13 kind, which rose from 38 cases in January of 2009 to 60 in January of 2010. That represents an increase of nearly 58 percent. If you're looking for a hint of good news in the Star-Bulletin story, this is it: Chapter 13 bankruptcy is by far the least economically damaging type of bankruptcy for consumers to file. Under this form of bankruptcy, a judge works out a repayment plan so that struggling consumers can pay back their creditors in a time frame that works for them. The judge also makes sure that the consumers aren't burdened with monthly payments that they can't afford. Chapter 7 bankruptcy filings are far more significant.

The Seriousness of Chapter 7 Under a Chapter 7 bankruptcy filing, there is no repayment plan. Instead, a certain portion - or maybe the entirety - of consumers' debts is simply forgiven. This may seem like the easy way out for consumers struggling to pay their bills. But Chapter 7 bankruptcy filings actually come with a high cost. First, consumers may lose most of their important assets. This includes their homes and cars. Secondly, when consumers have Chapter 7 bankruptcy filings on their records, they often find it difficult to apply for mortgage or car loans in the future. They also struggle to obtain credit cards. The reason? A Chapter 7.

Continue reading "State Of Hawaii Has Rising Bankruptcy Filings" »

As comprehensive health care reform has been stalled for several weeks now, progressive legislators, advocates and health care consumers across the country have been feeling a deep sense of frustration and outrage. The insurance industry and their conservative allies in Congress have used every tactic available to shift public debate away from the core reason insurance reform was needed in the first place: the denial of coverage to those with preexisting coverage, and the out-sized profits and administrative waste by insurance companies that has priced health care out of the reach of millions of Americans. Last year, there were 900,000 families that faced bankruptcy due to medical costs, and remarkably, of those 900,000, 75% (675,000) had insurance coverage indicates California Bankruptcy Attorney Steven C. Peck.

State legislative leaders across the country are using state campaigns against these insurance abuses to refocus public debate on the need for comprehensive reform. While fixing a few of those problems at the state level will help, almost all state leaders pushing these bills also recognize that long-term action on health care needs the support of federal reform for success or more citizens will be forced to file bankruptcy to discharge their medical debts.

Continue reading "More Bankruptcy Looms Absent Comprehensive Health Care Reform" »

Mortgages with unsavory terms of payment are very prevelant in today's business world. Balloon payments, interest rates that continue to rise over the life of the loan, and the decline in property values have all hit homeowners hard. Many home equity lines of credit have been either called in or cancelled by the banks because home values have dropped substantially. Home equity has disappeared before the homeowner's eyes.

It's no wonder that so many responsible citizens have found themselves pinned to the wall with no easy solutions. Chapter 13 reorganization and a seasoned bankruptcy attorney can help you sort out your financial situation and get a new lease on life.

What exactly is a Chapter 13 bankruptcy?

A Chapter 13 filing is sometimes referred to as a wage-earner's option. This reorganization will allow the filer to save their home from foreclosure, which is often a main goal of the process. If the house is already in foreclosure, this filing will stop the foreclosure process.

The filer's debts will be reorganized into more manageable payments to be paid off between three to five years, along with the mortgage at its original loan length. The person who has filed for bankruptcy will pay monthly payments to a trustee of the courts who will then distribute the money in an agreed upon manner between the creditors. The debtor will no longer have any contact with the creditors.

In order to be eligible to file for Chapter 13, the filer's total debts must be under a ceiling amount which is periodically readjusted. The filer also must not have any record of failing to show up for any previous bankruptcy meetings and proceedings. They must be motivated to responsibly get rid of their debts via Chapter 13's protection. A single person may file alone or a married couple may file jointly.

Continue reading "What is a Chapter 13 Bankruptcy?" »

California ranked third in the country in December for economic stress based on unemployment, foreclosure and bankruptcy rates, reports the Associated Press.The wire service analyzed 3,141 counties to come up with its Economic Stress Index.

AP said that in December the country hit its highest stress levels since the recession officially began in December 2007. The average county score was 10.8, up from 10.2 in November. An area is considered stressed if the score exceeds 11.

California registered an economic stress score of 16.25. Nevada had the highest score at 21.08 based on having the worst foreclosure and bankruptcy rates and second-worst unemployment rate. Michigan was second with a score of 17.43.

The one bit of good news was that California was the only one of the top five states whose stress rate didn't increase from November to December.

And the least-stressed state? North Dakota with a score of 4.99.

The AP's Economic Stress Index found that the average county's score in December was 10.8. That's a sharp jump from the 10.2 reading in November. The previous worst reading since the recession began in December 2007 was 10.3 in March 2009.

The index calculates a score from 1 to 100 based on a county's unemployment, foreclosure and bankruptcy rates. A higher score indicates more economic stress. Under a rough rule of thumb, a county is considered stressed when its score exceeds 11.

Nearly 45 percent of the nation's 3,141 counties were deemed stressed in December. That compares with less than 39 percent in the previous month.

Nevada was again the most economically distressed state in December, with a Stress score of 21.08. It had the nation's worst foreclosure and bankruptcy rates and second-worst unemployment rate.

It was followed by Michigan (17.43), California (16.25), Florida (15.78) and Illinois (14.12). All except California saw their Stress score rise from November to December.

North Dakota (4.99) was again the least-stressed state in December. Next were South Dakota (5.47), Nebraska (5.63), Vermont (7.14) and Montana (7.71). Still, each saw its Stress score worsen from November to December.

The leading energy-producing states remained economically healthier than the nation as a whole. But they suffered the biggest jump in economic stress during the second half of 2009. These states had previously managed to sidestep the worst of the economy.

No longer. Alaska's 21-year streak of job growth ended late last year, when it lost 2,100 jobs. Alaska's Stress score rose from 8.37 in December 2008 to 9.95 in December 2009.

A downturn in energy exploration dragged Wyoming into a recession last year, more than a full year after the national recession start.

Wyoming's Stress score doubled from 4.16 to 8.33 in the year that ended in December, driven by higher unemployment. The loss of high-paying mining jobs has been especially painful in the nation's least-populous state.

Wyoming avoided the foreclosure crisis suffered by Sun Belt states. But residential building permits have shrunk to a level not seen in a decade.

Montana has ranked consistently among the least economically stressed states in the AP index. Yet it's begun to show cracks. The state's wood-products industry has been declining. And the closing of a Smurfit-Stone linerboard mill at the end of December was a blow to the Missoula area. Each job paid an average $70,000 a year.

Montana's Stress score rose from 6.04 in December 2008 to 7.71 in December 2009. The state suffered housing price declines, a sluggish mining sector and sharp drop in overtime pay for workers, said Patrick Barkey, director of the Bureau of Business and Economic Research at the University of Montana.

In the past six months, foreclosure rates have risen fastest in a stretch of Western counties extending from Montana to Arizona. Foreclosures also have surged in manufacturing counties in the industrial Midwest, parts of Florida and metro Atlanta.

"Consistently high unemployment continues to feed into the foreclosure problem, indicates Los Angeles Bankruptcy Attorney Steven C. Peck. "We've already got significant foreclosures taking place already. Now, more traditional ones are taking place because one or more household members have lost their jobs."

Bankruptcy rates in the past six months have grown fastest in Nevada, Arizona, California and Utah.

Continue reading "Economic Stress Index Continues Strong in the United States" »

We'd all like to think that the nation's economy is improving, but the rising number of business bankruptcy filings offers proof that commercial businesses throughout the country are still hurting. According to a recent story from the Reuters news service, business bankruptcy filings in the United States this January came in 7 percent higher than in the same month in 2008. An astounding total of 6,502 U.S. businesses filed for bankruptcy protection in January. At this rate, the economic slump will continue throughout the year and into 2011. That's the type of bad news that no one wants to hearsays California Bankruptcy Attorney Steven C. Peck.

The reason for the continued growth of bankruptcy filings is simple: Consumers are hurting. Just look at the numbers. The national unemployment rate stood at 9.7 percent for January. That's actually an improvement from December, when that rate topped 10 percent. But it still means that far too many workers are unemployed. It's hard to visit the jewelry store, go out to the restaurant for a fancy meal or snap up a new car when you don't have a job. To make matters worse, those consumers who are employed aren't confident that they'll still have their positions next week, next month or next year. Businesses are still laying off even their best workers. Again, not many people are going to buy a new TV or video game system if they're worried that they'll be collecting unemployment the following week indicates Los Angeles Bankruptcy Attorney Steven C. Peck.

Foreclosures Add to Problem At the same time, housing values have plummeted and residential foreclosures have skyrocketed. According to online foreclosure data company RealtyTrac.com, 2.8 million U.S. households received a foreclosure filing in 2009. That's a record high. Again, few consumers are willing to pay for a $70 haircut or send their children to private violin lessons if they're worried about losing their home. They'll pay their mortgage first, if possible, and everything else second.

Unfortunately, there's little evidence that the rate of business bankruptcy filings will decrease any time soon. Drive down your own town's central business district and count the number of shuttered stores. It should make for a depressing drive. The only hope? Time. The United States has suffered terrible recessions and economic slumps before. It has always survived them and come out stronger. That will happen again. And this time, the hope is that we will have all learned from the mistakes of easy lending and lavish spending. If not, then we shouldn't be surprised to see another round of bankruptcy filings in the next decade.

Continue reading "Bankruptcy Filings Are Still on the Rise" »

This Bankruptcy matter was brought pursuant to Section 524 of the Bankruptcy Code, for consideration of a reaffirmation agreement between the debtors (the "Debtors") and (the "Creditor") and to show cause as to why the reaffirmation agreement should not be stricken as a result of a failure to comply with Rule 4008(a) of the Federal Rules of Bankruptcy Procedure. The Debtors sought to reaffirm a debt in the amount of $10,998.21, which debt is secured by a 2002 Toyota Tundra,
The reaffirmation agreement was filed with the Court on January 26, 2010, and was therefore not filed with the Court within sixty (60) days after the first date set for the Section 341 meeting of creditors as required by Bankruptcy Rule 4009(a). The Debtors filed their bankruptcy petition on October 29, 2009, and on the same date filed their statement of intentions indicating that they intended to retain their 2002 Toyota Tundra and reaffirm their debt with the Creditor. Upon reviewing the agreement, the record in this case, and the arguments presented at the hearing, the Court finds that the Debtors properly filed their statement of intention indicating that they wanted to reaffirm the debt, as required by Section 524(c), and further, the Debtors took all reasonable steps to perform their intention with respect to such property pursuant to Section 521(a)(2).

The reaffirmation agreement between the Debtors and the Creditor, filed on January 26, 2010, is stricken and will not be approved by the Court as the reaffirmation agreement was filed with the Court beyond sixty (60) days, as required by Bankruptcy Rule 4008(a). Further, since the Debtors timely complied with the requirements of Section 524(c) and 521(a)(2), and in all respects agreed to reaffirm the debt on the original terms of the contract, the Court finds that (1) the automatic stay remains in effect, (2) the vehicle remains property of the estate pursuant to Section 521(d) that would give it effect have not been met, so long as the Debtors remain current in their payments on the property. See Coastal Federal Credit Union v. Hardiman, 398 B.R. 161, 189 (E.D.N.C. 2008); In re Husain, 364 B.R. 211, 219 (Bankr. E.D. Va. 2007); In re Hinson, 352 B.R. 48, 53 (Bankr. E.D.N.C. 2006).

Continue reading "Untimely Reaffirmation Agreements Will Be Stricken" »

With unemployment expected to persist above 10 percent through 2010, more Americans whose debt has ballooned may wonder whether they should seek protection from their creditors.

Last year was the seventh-worst on record for personal bankruptcy: 1.4 million new cases were filed nationwide.Deciding whether to take the plunge is the result of art more than science or accounting norms. Many financial advisers recommend considering filing for bankruptcy if you can't figure out a way to pay off your unsecured debt within five years says Los Angeles Bankruptcy Attorney Steven C. Peck.

But most agree that if you can avoid filing, you should. Bankruptcy is for people who can't make their debt payments and can't earn more income or refinance or renegotiate their debts. If that is your situation, here are a few tips:

• Avoid scams: Above all, be wary of anyone who demands money to help settle your debts. In a common ploy the scam artist starts by getting you to set aside a large sum - in his or her care says Peck. In what's often called debt settlement, the scammer then advocates for you with creditors. But he can't arrange better payments than you could on your own - and he charges a fee. His monthly fee can end up setting you back further.

• Counseling requirements: A 2005 change in bankruptcy laws means people must go through two counseling sessions that can run one or two hours or longer, the first before filing and the second after resolving their debt.

"The purpose of the pre-filing counseling is not to dissuade or point an individual in any one direction it is to get a sense of what does it cost to run your house." The counselors must be government-approved.

• Chapter 7 or 13? What type of case you'll file depends on your situation. The rules for the two most common types of cases are in two sections of federal bankruptcy law known as Chapter 7 and Chapter 13.

In Chapter 7 cases, generally reserved for people who make less than their area's median income, a court-appointed trustee sells your assets and distributes whatever cash he can get to your creditors.

Chapter 13 covers people who have steady income, own property they want to keep and have too much unsecured debt. This process helps them create a plan to pay off their unsecured debts in three to five years. It can offer more leeway.

• IT'LL COST YOU: Even in financial distress, you must pay the court where you file your case. Federal law sets the fee for filing a Chapter 7 case at $299 and a Chapter 13 case at $274. Either amount can be paid in installments.

On top of that you'll usually pay a lawyer, and attorneys' fees vary greatly.

In Chapter 7, lawyers are paid at the beginning of the case under court rules. Peck says his law firm charges a $1,000 minimum for Chapter 7 cases.

For Chapter 13, he said, many courts regulate lawyers' fees and set a flat rate, because those cases are more complicated and can take more time. In Los Angeles, that fee is $3,300.

Continue reading "Personal Bankruptcy: The Need for Protection from Creditors" »

Ventura County bankruptcy filings jumped 59 percent in 2009 from the previous year, according to the U.S. Bankruptcy Court in Los Angeles.

It is a sign of the recession's toll, and even more drastic when compared to the peak of the housing boom in 2006 to 2009 -- a 606 percent increase in filings, from 583 to 4,117.

Nationwide, filings for fiscal year 2009 totaled 1.4 million, up 34.5 percent from the previous year, according to the Administrative Office of the U.S. Courts.

Ventura County falls within the Central District of California, a seven-county region that reported all bankruptcy filings rose 71 percent, from 57,145 in 2008 to 97,473 in 2009. Personal bankruptcies were not broken into a separate category by the bankruptcy court.

Local and national data also reveal a dramatic rise in the number of Chapter 11 filings, which allows businesses to operate as usual under court supervision until a reorganization plan is approved by two-thirds of the creditors.

In Ventura County, Chapter 11 filings have increased from three in 2006 to 30 in 2009. Among the local businesses that filed a Chapter 11 bankruptcy last year was the law firm Masry & Vititoe in Westlake Village -- made famous in the 2000 movie "Erin Brockovich." Nationwide, Chapter 11 filings rose from 8,799 in 2008 to 14,745 in 2009. Among the companies that filed for Chapter 11 protection last year were Reader's Digest Association Inc.; General Motors Corp.; Eddie Bauer Holdings Inc.; Chrysler LLC; Citadel Broadcasting Corp.; and the Tribune Co., publisher of the Los Angeles Times and Chicago Tribune.

What's different about some of these large Chapter 11 bankruptcies today is they aren't going through traditional reorganizations because bank money isn't there like it once was for restructuring, said Jack Williams, resident scholar at the Alexandria, Va.-based American Bankruptcy Institute.

"Most management wants to try the traditional route because it keeps the business on track, the employer in business, the tax base and keeps relationships in place," he said. "But now, because banks aren't doing financing with bankruptcies, (debtors) are looking to private markets, hedge funds, private equity funds and vulture capitalists."

A "vulture capitalist" buys new entities created by distressed companies. The crippled companies separate bad assets from good ones, with the good assets going to the new entities, Williams said, effectively allowing outside investors to cherry-pick and leave behind debts.

"So you're not seeing traditional reorganization," he said. The buyer instead comes in as the new entity's owner and "its carcass is picked clean of anything of value," he said.

Going forward, Williams forecasts a 20 percent to 25 percent increase in business bankruptcy filings this year.

As for consumer filings, he expects a slight but not significant rise. After the lengthy economic downturn, Williams is hearing from more and more people who've exhausted their savings. But for many of them filing for bankruptcy -- especially in the wake of the heightened fees imposed by the 2005 amendments to bankruptcy laws -- isn't an option.

"Now there are people who are way too poor to file a bankruptcy petition," he said.

Valencia attorney Louis Esbin, former president of the Central District Consumer Bankruptcy Attorneys Association, said membership in the group is on the rise. But the association is seeing more attorneys who have never practiced bankruptcy law.

"We call them newbies," Esbin said. "They're lawyers who've never practiced in this area before and they're advertising and soliciting business in this area, and they're having clients retain them."

The trend is raising concern among veteran bankruptcy lawyers and judges who fear people or businesses struggling with debt won't get quality representation, Esbin said. To address the issue, the association is setting up a mentoring program to help lawyers new to the practice. Esbin also is working with the Bankruptcy Law Advisory Commission to the State Bar of California to encourage more lawyers get certified. The certification means an attorney has met rigorous, objective standards and demonstrated knowledge in bankruptcy and/or creditors' rights law.

"That's one way the public can differentiate expertise," he said

A suspended Ventura attorney's Chapter 7 bankruptcy did not discharge his $14,000 debt to the State Bar for the costs of his 2005 disciplinary proceedings, the Ninth U.S. Circuit Court of Appeals ruled yesterday.

The court held that amendments to Business and Professions Code Sec.6086.10 in 2003 sufficiently rendered attorney discipline costs imposed by the California State Bar Court exempt from forgiveness in bankruptcy, reversing a ruling by the circuit's Bankruptcy Appellate Panel.

John William Findley III, who joined the State Bar in 1991, was disciplined in 2005 for failing to perform legal services competently, communicate with clients or obey court orders, and placed on probation for two years with an actual suspension of 30 days.

The State Bar assessed a fee of $13,463 to cover the cost of his disciplinary proceedings, plus $406.80 for the cost of certifying court documents, $128.25 for the cost of transcripts, and $56.89 for witness fees.

Sec. 6086.10(a) mandates such an assessment, absent proof of hardship, when an attorney has been disciplined, and Sec. 6140.7 requires payment as a prerequisite to reinstatement.

Findlay filed for Chapter 7 bankruptcy and received a discharge of his debts while his discipline case was pending before the State Bar Court's Review Department. He then argued that his bankruptcy discharge excused payment of the disciplinary cost award and sought reinstatement.

The State Bar, however, contended in proceedings before the bankruptcy court that 11 U.S.C. § 523(a)(7) excepted the award from discharge. The statute excepts a debt from discharge "to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss."

The bankruptcy court ruled that the award was non-dischargeable and granted summary judgment for the State Bar, but the BAP reversed, relying on the Ninth Circuit's 2001 ruling in State Bar of California v. Taggart 249 F.3d 987.

There, the Ninth Circuit held that attorney disciplinary costs imposed under a previous version of Sec. 6086.10 were eligible for discharge since the Legislature did not intend cost awards as punishment, and enacted the statute in order to create the possibility of fines in the context of attorney disciplinary proceedings

In response to Taggart, the Legislature amended the California Business and Professions Code in 2003 to add subsection (e), which specifies that "costs imposed pursuant to this section are penalties, payable to and for the benefit of the State Bar of California...to promote rehabilitation and to protect the public."

Writing for the Ninth Circuit, Judge David R. Thompson explained that the plain language of the 2003 amendment "strongly suggests that the California legislature disagreed with the Taggart court's inferences about its intent in enacting Sec. 6086.10."

The jurist reasoned that the amendment "undermines the result in Taggart" insofar as it clarified the Legislature's intent in imposing attorney disciplinary costs in the prior version of the statute, and expressly stated that lawmakers enacted attorney disciplinary costs to serve penal and rehabilitative ends.

Judge Sidney R. Thomas and Senior U.S. District Judge Ann Aldrich of the Northern District of Ohio, sitting by appointment, joined Thomas in his decision.

Findlay was disciplined again in 2008, placed on another two years of probation with 90 days of actual suspension and suspended until he paid sanctions. He remains ineligible to practice law, according to the State Bar website.

Continue reading "State Bar Debts Are Non-Dischargeable in a Chapter Seven Bankruptcy" »

Bankruptcy is an action which must be done after a good research and preparedness. It's clear that filing bankruptcy certainly stops the process of foreclosure but the way it accomplishes this feat must be watched closely. We will concentrate here on Chapter 13 of the United States Bankruptcy Code.

By knowing the process of applying a bankruptcy a person can get clear whether it will stop foreclosure or not. Bankruptcy from the Chapter 13 allows the mortgagor to extend his payment period by 3 to 5 years. The repayment capacity plays an important role, and it can clear of some debts. This happens only with some cases where an item is not an asset. This includes the automobiles.

First step is to petition the court to accept the Chapter 13 filing. The court is not required to accept it, but if does then an appointed trustee decide the repayment schedule. It is not accepted if the petition is filed in recent time or if it does not qualify. Once the petition is accepted the trustee divides the wealth that the lender can share with the home owner. By doing so the owner loses the ability to sell his / her house without proper authorization. Considering foreclosure this is a far better state and thus you can avoid foreclosure.

If he plans to sell the house then he must sell it in a Fair Market Value. The trustee estimates the houses value so as to stop selling the house below the market values. Even if a sale with low market value takes place then it can be nullified and deal can be cancelled. This will be uncomfortable for both buyer and seller.

The lenders are aware of the bankruptcy filing. When the Chapter 13 Bankruptcy petition is filed, the lenders attorney files a petition for relief of the automatic stay pursuant to 362(a) based upon the ability of the debtor to make the necessary payment purusnat to the Chapter 13 Bankruptcy plan, should the chapter 13 Debtor miss a payment, then the creditor could move the court to have the Banruptcy dismissed. The foreclosure process will re-commenc, delaying the original foreclosure..

The bankruptcy will badly affect your repayment capacity and it will be associated to your account for ten years instead of seven. It will also be stored in your public record for twenty years. These records can be accessed by any high authorities so better mention it in any legal forms or job applications. Bankruptcy is a short term fix for the foreclosure and it is not a solution. For more specific assistance, try consulting an experienced attorney if you consider bankruptcy as a safe option to exit.

Contact Steven peck's Premier legal toll free to talk to an experienced California Bankruptcy Attorney toll free at 1.866.999.9085 and visit us on-line at www.premierlegal.org.

In the United States, federal bankruptcy was designed by congress as a relief measure to persons or organizations who are financially distressed. In other words, in the face of insolvency, an individual or organization can find relief against their debt obligations in federal bankruptcy.

Chapter 7 of the federal bankruptcy code provides for the appointment of a trustee for the liquidation of assets of the debtor for orderly distribution to the creditors. When a debtor's assets are being liquidated, federal bankruptcy code requires that this should be subject to certain exemptions.

Federal bankruptcy exemptions determine how much property a debtor can keep when they file for Chapter 7 bankruptcy and also the category of items. One of the schedules in a debtor's petition under the federal bankruptcy code is the schedule of exempt property. In essence, Federal bankruptcy law provides that creditors cannot claim certain properties of a debtor.

In the same manner, the debtor cannot be discharged of some debts. In some states, state exemptions are different from federal exemptions (in the United States). Although each state is permitted by law to adopt its own exemption law, certain states allow Federal bankruptcy exemptions and so a debtor may choose to abide by the federal list of exemptions or by that of their home state. But overall, the state decides which exemption is upheld in a bankruptcy court within that jurisdiction. This underscores congress goal to offer protection to financially distressed individuals or organizations. Married couples may double all exemptions under federal bankruptcy code.

Bankruptcy is something that could happen to anyone. Even big organizations do lose their shirts. Since bankruptcy is something that could actually happen to anybody, our laws provide safety nets for people, municipalities and business entities that have financial difficulties. Chapter 12 Bankruptcy deals with family farmer or fisher folks, Chapter 11 Bankruptcy deals with business reorganization, Chapter 9 talks about municipalities while Chapter 15 focus on ancillary and cross-border cases. Although there are many types of bankruptcy, only two of these types of bankruptcies actually concerns individuals like you. Chapter 7 and Chapter 13 Bankruptcy tell you how you van dissolve you piles of debts.

According to a study in 2007, on the rate of federal bankruptcy and state bankruptcy, businesses are embracing proceedings under state laws rather than federal bankruptcy laws because proceedings under the former is faster, less expensive and more private.

In view of this, the debtor should endeavor to compare Federal bankruptcy exemptions with their states exemptions using the guidance of a solicitor when filling their bankruptcy forms.

Filing Fees For Bankruptcy

Filing for bankruptcy entails some expenses. Just because you are broke that does not mean that you are exempt from court filing fees. However, the good news is that filing fees for individuals are very much lower compared to those filing fees imposed on businesses. For instance, where businesses filing under Chapter 11 Bankruptcy are required to filing fee in the amount of $ 1,039, individuals who are filing bankruptcy under Chapter are only required to pay $299 while those who are filing under Chapter 13 gets to pay $274. Family farmers and fisher folks also get to pay lower fees compared to big companies. Under Chapter 12 Bankruptcy these people are only required to pay $239. Sounds complicated? Not really. If you have experts to guide you through bankruptcy filing and the proceedings that will follow thereafter, you will get through the whole thing without a snag.

No matter the route you choose, guidance and information is very essential. Bear in mind that bankruptcy is not a panacea to financial indiscretion but an opportunity to start afresh and making use of the lessons learnt during pre-bankruptcy.

Continue reading "Chapter Seven Federal Bankruptcy Provisions Explained" »

If you are feeling overwhelmed by bills, payments, and creditors you might want to consider Chapter 7 bankruptcy. It can be a great way to start your financial life over again with your head above water.

Chapter 7 bankruptcy is the most common type of personal bankruptcy filed. Almost two thirds of all personal bankruptcies are of the Chapter 7 variety. This article will describe what Chapter 7 bankruptcy is and address some common questions you may have about filing.

Chapter 7 bankruptcy is also known as liquidation. In Chapter 7, you sell your property which is non-exempt, in an effort to help pay off people you owe money to. It's a relatively quick process that often times is completed in just a few months.

What follows are 3 commonly asked questions about Chapter 7 bankruptcy

1. Do creditors have to leave me alone after I file? In short, yes. Creditors by law are required to stop all actions after you file for Chapter 7 bankruptcy. This is why bankruptcy could be a good way to get yourself a new lease on your financial situation.

2. Are my bankruptcy filings made public? Yes they are public records. Although, most likely no one will find out you went bankrupt unless you choose to tell them. There are a substantial number of Chapter 7 filings that occur and most are not heavily publicized.

3. What are some of the reasons that people need to file for bankruptcy? Usually individuals that are filing for bankruptcy are doing so because of unforeseen events. Things such as medical bills due to an accident or illness, losing a job, marital issues, etc. Bankruptcy can provide a fresh start after an unfortunate situation.

If you are considering a Michigan bankruptcy, Chapter 7 might be a good thing to consider. You should speak with a Michigan bankruptcy attorney to get a better handle on your options.

Bankruptcy can be a good way to get out of debt. Often times, it is far more effective than debt consolidation or debt settlement/forgiveness. If you are searching for a Michigan bankruptcy chapter 7 attorney, get a free consultation with California and Los Angleles bankruptcy chapter 7 lawyers from Premier legal toll free at 1.866.999.9085 or visit us on-line at www.premierlegal.org.

Before a person can become eligible for a chapter 7 type of bankruptcy, he or she must pass the means test and other eligibility requirements. What is the means test and who may file chapter 7 bankruptcy? The means test is a process where the bankruptcy court investigates your result whether you are eligible or not to acquire the help of the government in paying or discharging your debts. The first factor to determine who may file chapter 7 bankruptcy is how much income a person earns in a month. Having an income that is acknowledged as above average income or classified as above average in the state that you live in can decrease your chances of being eligible to file a chapter 7 type of bankruptcy. This is because in most cases, having an income that is above average simply implies that a person have an income that exceeds his expense and therefore, has a sufficient extra amount of money that can be put to pay for his debts through another type of bankruptcy which is chapter 13.

Another factor that can affect whether you can file bankruptcy is your previous bankruptcy. If you have previously filed a chapter 7 bankruptcy and is still between the 8 year period, most likely, you are not eligible to file a chapter 7 bankruptcy. The 8 year period has to pass before you can file a chapter 7 bankruptcy again.

A person can file chapter 7 type of bankruptcy in different ways. Hiring a fulltime bankruptcy lawyer can give an easy filing. The bankruptcy lawyer does the whole thing like arranging your papers, represent you in court and he will guide you through the process, if it is your first time to file bankruptcy. The only problem in having a full time bankruptcy lawyer to help you is that it cost a lot of money.

If money is the problem for you then you can probably do all the work by yourself. This means preparing all the bankruptcy papers by your self, arranging them and filling out the bankruptcy papers. This can be a cheap way to file your bankruptcy but the only disadvantage by doing it this way is that it can be hard on someone who has to learn all the legal terms and the right way to do it. You cannot speed up your papers or else the bankruptcy trustee might find an error later and then you might end up amending your papers or worst, having to sacrifice more properties than what it was supposed to be.

If you do not want to take the risk of having some mistakes in your papers and still wanted to do the filing with the least amount of expense possible, then bring your papers to a petition preparer. They will fill out the forms and prepare your papers the right way and all you need to spend is their flat fee. For more support on how to file bankruptcy contact Steven peck's Premier legal toll free at 1.866.999.9085 to talk to an experienced California Bankruptcy Lawyer and visit us on-line at www.premierlegal.org.

When you reaffirm a debt in a Chapter 7 bankruptcy, you are signing a legal document that removes that particular debt from the bankruptcy proceedings. The document would state that you agree to the original terms of the account and will continue to make payments as agreed. Most reaffirmations are done on big-ticket items such as a house or car -- in other words, for secured debts that you wish to keep.

When you reaffirm a debt, you are pulling that debt out of bankruptcy protection permanently. The point of a Chapter 7 bankruptcy is to eliminate your debt and start you fresh on the road to financial recovery. Reaffirm a debt only if you are sure that doing so is absolutely necessary.

As it regards creidt card reaffirmation, If your primary reason is to keep the account open for your use, I'd advise against it. Why? There is no guarantee that the creditor will leave the account open. In fact, I believe it is unlikely that a reaffirmed account would remain open.

My suggestion for you is to acquire a secured credit card after your bankruptcy. The card account is secured by money you deposit in an account with the bank or credit union that issues the card. These cards provide the same conveniences as a regular credit card, and you should be able to qualify for one, post-bankruptcy. Compare secured credit cards carefully: Many have high fees, high rates or both. Be sure you are getting the card that meets your needs for the lowest fees possible.

When you begin to rebuild your credit after your bankruptcy, create a spending plan. That can help you know exactly where your money is going and ensure that you save some each month. The only sure way to avoid unwanted debt in the future is to set aside money for unexpected expenses we all encounter. Your goal should be to have three to six months' living expenses in a liquid account that has limited access.

Continue reading "Reaffirmation of Debt in Bankruptcy: Some Basic Principles" »

Debt settlements have seen a significant increase in volume over the past year and are growing in popularity among Americans who are looking for a way to eliminate debt and avoid bankruptcy. Due to the recent recession there are more people currently in debt than anytime in history. Delinquent accounts are rising at alarming levels and creditors are becoming very worried about not collecting their unsecured debt.

As a result of the bad economy and fear amongst creditors, debt settlements are being negotiated for very generous percentages. If you are over $10,000 in unsecured debt, it would financially behoove you to look into a debt settlement while conditions are so favorable says Los angeles Bankruptcy Attorney Steven Peck.

A legitimate debt settlement company will be able to eliminate at least 50% of your unsecured debt and cases in the 70-80% range are not at all uncommon in this market. Creditors are more than willing to make deals and a debt settlement company can provide significant leverage on your behalf. They have established relationships with all the major creditors including banks, credit card companies, and medical companies so they will be able to get consumers a more favorable settlement and expedite the process as well.

The only real consequence of debt settlements is that it will affect you credit score but nowhere as bad as bankruptcy. Your credit score will drop initially but in the long run it will actually help you out seeing as how you will not have as much outstanding debt. Your outstanding debt is a major factor in getting new credit lines or loans and debt settlements allow consumers to eliminate debt which will eventually help them get new credit lines. Most Americans are more than willing to trade a lower credit score in order to eliminate over half of their debt.

If you want to get out of debt and hire a debt settlement company for debt negotiation then I have an important piece of advice. Do Not go directly to a particular debt settlement company but rather first go to a debt relief network who is affiliated with several legitimate debt companies. In order to be in the debt relief network, the debt settlement companies must prove a track record of successfully negotiating and eliminating debt. They must also pass an ethical standards test. Going through a debt relief network will ensure that the debt company you are provided with is a legitimate and respected company. This is the most efficient way in finding the best debt settlement companies and increasing your chances of eliminating your debt.

Continue reading "Debt Settlements: A Prudent Way to Avoid Bankruptcy?" »

There are three primary types of bankruptcy available to individuals:

Chapter 7: Involves surrendering some of your property in return for a discharge of many of your debts. The trustee sells any non-exempt property and pays your creditors. Chapter 7 filing fee is $299.

Chapter 13: Involves a payment plan or rehabilitation-style case for individuals with a regular source of income. In Chapter 13, you keep your property, but must commit to a three- to five-year repayment plan. You then obtain a discharge of most of the debts not paid in the plan. The filing fee for Chapter 13 is $274.

Chapter 11: A more complex rehabilitation-style case used primarily by business debtors, but sometimes by individuals with substantial debts and assets. The filing fee for Chapter 11 is $1,039.

In both Chapter 7 and 13 types of bankruptcy, most creditors must stop efforts to collect debts after you file your case.

What are the changes under the 2005 law?

Changes to bankruptcy law may make it harder for some people to file bankruptcy. A few filers with higher incomes are no longer allowed to use Chapter 7 bankruptcy, but instead have to repay at least some of their debt under Chapter 13. All debtors now have to get credit counseling before they can file a bankruptcy case -- and additional counseling on budgeting and debt management before their debts can be wiped out.

Continue reading "Three Primary types of Bankruptcy for Individuals" »

Although the goal of the federal bankruptcy laws is to offer a financial "fresh start" to the honest but unfortunate debtor allowing a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.

A discharge releases you from personal liability for certain specified types of debts. Discharge means you are no longer required to pay those debts. It is your 'get out of jail free card', so to speak. It is refreshing, and; relieving. And best of all, it is morally, ethically, and; legally o.k. It is your fresh start!

The discharge directs creditors to refrain from taking any form of collection action on discharged debts, including legal action and communications with you such as telephone calls, letters and personal contacts. In other words . . . hopefully in your case . . . No more worrying. When you place it in our hands, you will hopefully begin to feel release, and; begin to sleep at night, knowing that no one will harass you on the phone any longer.

Not all debts are discharged in a California bankruptcy. Although you may be relieved of personal liability some debts may continue after the discharge. For instance some liens on a property may remain after the bankruptcy case. A second trust deed; in some cases, might be discharged completely! That means, that if you have a $100,000.00 secondary lien on your home, it could be wiped off completely (this of course is on a case by case basis, and; you will need to call the law firm for an appointment to discuss your case).

A secured creditor may enforce the lien to recover the property secured by the lien. In other words, if your car is still under financing, the lender can repossess the vehicle. You may; however; reinstate the loan if you so desire in certain situations.

Other types of debt that are not dischargeable include alimony, child support, certain taxes and debts for death or personal injury caused by the debtor's operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances. (Of course, all bankruptcy matters are on a case by case scenario, and; each client's matters must be discussed with the attorney in order to insure that all of the rules of bankruptcy are applied and; that the best relief possible is being given to you).

Continue reading "Chapter Seven Dischargeability: Basic Principles" »