November 10, 2011

What Happens After Filing Bankruptcy?

Posted in Bankruptcy tagged at 9:19 am by demetriagraves

This is a series of articles that go over in more detail the timeline of a bankruptcy filing and what to expect on each step. In last week’s article I discussed what to expect prior to your bankruptcy case being filed. In this article I will go over what you can expect after your case is filed up through the day when the bankruptcy court grants you a discharge of your debts.

Immediately upon filing your bankruptcy case the bankruptcy court issues an order called the Automatic Stay that stops all collection efforts against you. The Automatic Stay is one of the most powerful tools in bankruptcy law. Whether you are being sued, your house foreclosed, your wages garnished, or are dealing with never ending collection calls, the Automatic Stay mandates that all collection efforts stop immediately. The bankruptcy court will mail out notice to your creditors within about 2-3 business days.

Every Chapter 7 bankruptcy case is assigned a trustee. The trustee assigned to your case works under the Department of Justice and their job is to evaluate your case, review your documents, and collect any non-exempt assets that can be distributed to your creditors.

A week or two after your case is filed you will receive a letter from your bankruptcy trustee informing you of the date for the Meeting of Creditors (more about that below), and requesting some bank statements, pay stubs, and tax returns. It is vital that you respond to your trustee’s request for documents in a timely manner. If you don’t, your bankruptcy case can be delayed.

If you have assets that you own free and clear that are not protected under California’s exemption laws, in a Chapter 7 bankruptcy your trustee can seize those assets, sell them, and distribute the proceeds to your creditors. Your clothing,  personal possessions and the home you live in are usually protected by exemption laws, so you don’t have to worry about losing all your assets.

The Meeting of the Creditors, or “341” meeting sounds a lot scarier than it is. While it is the creditor’s meeting, it is usually a meeting between you, your attorney and your bankruptcy trustee. Rarely do creditors actually appear at the meeting.

This meeting is an opportunity for your bankruptcy trustee to meet with you and ask you questions about your bankruptcy filing while under oath. You will be required to show government issued photo ID – i.e. your driver license, and proof of your social security number.

Once the meeting begins you will be asked a few questions by the trustee. Specifically, you will be asked if you reviewed and signed your bankruptcy documents prior to filing. If you owe or pay child support or spousal maintenance, and if you are a beneficiary under a will or trust. Then, if the bankruptcy trustee has any specific questions about your case he/she will ask them at that time.

The typical Meeting of Creditors lasts about 5 minutes – literally 5 minutes. I know it is easy for me to say, but the Meeting of Creditors, while important, is nothing to lose sleep over.

Once the Meeting of Creditors is over the only thing you have left to do is to complete a Financial Management Course. This course must be completed within 30 days after the Meeting of Creditors.

About 60 to 90 days after the Meeting of Creditors is held you will receive your Discharge Order from the bankruptcy court if you are in a Chapter 7 bankruptcy case. This order is the official document that says you are no longer legally obligated on your debts. It also signals the end of your bankruptcy case in most instances. Creditors who try and collect on debts that have been discharged are subject to being sanctioned.

Once you get through this second stage of the bankruptcy process you are well on your way to becoming debt free. In most cases the hard part is over and it is time to merely wait for the bankruptcy court to finalize your case.

If you have further questions about the bankruptcy process and if it’s the best option for you. I offer a free 30 minute telephone consultation where you can get your questions answered.

November 3, 2011

Kim Kardashian Divorce

Posted in Uncategorized at 8:09 am by demetriagraves

After spending $10 million on a spectacular highly publicized wedding on August 20, 2011. Then a having dream honeymoon, its seems like its over for newlyweds Kim Kardashian, 31 and Kris Humphries, 26 after only 72 days of marriage. Perhaps Kim only wanted the big ring and the celebrity wedding for her reality show but didn’t think much about the actual realities of marriage because she has filed for divorce on Oct 31, 2011. It’s a good thing neither of them actually paid for the wedding, in fact they made more than $17 million out of their wedding in TV and magazine deals. There are rumors that the split comes from a difference of opinion on where the couple wanted to live. Kris was planning on settling down in Minnesota while Kim wanted to stay in California so she could be close to her family.

The reality star cited “irreconcilable differences” in her divorce papers and she is not asking for spousal support. She is also requesting that no spousal support be paid to her future ex. So the NBA star won’t be getting any of Kardashian’s money. Kardashian also asks that each party pay their own attorney fees.

Indeed, there’s a huge financial gulf between the future exes. Kim helped her family rake in $65 million in 2010 alone thanks to endorsement deals, a Sears clothing line, her own perfume and earnings from her E! reality shows.

By contrast, Humphries – currently not working thanks to the NBA lockout – made a reported $3.2 million a year as a forward for the New Jersey Nets.

There are rumors that the athlete was the victim of an “investment fraud,” thanks to Andrey C. Hicks, a scam artist and a guest at their doomed August wedding. Humphries is said to have lost hundreds of thousands of dollars for investing in Hicks’ bogus “billion dollar” hedge fund.

This is Kardashian’s second divorce, she wed music producer Damon Thomas in 2000 when she was just 19 and he filed for divorce two years later.

“I hope everyone understands this was not an easy decision,” Kardashian said, “I had hoped this marriage was forever but sometimes things don’t work out as planned.”

What Can I Expect Before My Bankruptcy Case is Filed?

Posted in Uncategorized at 7:57 am by demetriagraves

Last week I went over the whole timeline of a bankruptcy filing and how long the whole process takes. This week I want to provide more detail on the various stages of the bankruptcy process and I want to focus more on what happens prior to filing. Often, the scary part of bankruptcy is not knowing what to expect. There are a lot of bankruptcy myths out there that cause many people to not seek out bankruptcy help, even though it can really help them out of a tough spot. Having an accurate understanding of the bankruptcy process usually relieves a lot of stress and can help you work towards becoming debt free. Chapter 7 bankruptcy cases can basically be broken down into three parts: pre-filing, pre-meeting of creditors, and post -meeting of creditors.  In this article I will focus on the pre-filing stage of your case.

Usually the first step is the bankruptcy consultation. I, like many bankruptcy attorneys, offer a free bankruptcy consultation where we can discuss your specific situation, go over the basics of a Chapter 7 bankruptcy and determine if bankruptcy is a good option for you. Prior to your consultation it is helpful to have at least a general idea of what your debts are. Sometimes things have gotten so bad people have thrown their hands up and completely checked out when it comes to what they owe and who they owe it to.

There is a lot of information required to file a bankruptcy case. The typical Chapter 7 case is about 50-60 pages long when completed. Information like income, expenses, debts, assets, financial transactions, business information, contracts, and the like are required to be disclosed to the bankruptcy court. I work with my clients to gather this information and then prepare the bankruptcy petition, schedules, and statement of financial affairs.

Throughout this process it is vital that the information you provide to my office is accurate. I know this is a pain. Getting information on assets, debts, income, pay stubs, bank statements, etc. are time consuming and tedious. But the more accurate we can be in your bankruptcy filing the smoother the process will go for you once your case is actually filed. Also, be completely honest with your attorney. The penalties for failing to disclose an asset or transaction are severe. When it doubt, disclose. I promise, it will save you a lot of grief down the road.

Before your case can be filed you must complete a court approved bankruptcy credit counseling course. My clients are able to do this online and it takes a little over an hour. It is not a big deal, but must be done before I can file your case.

In a Chapter 7 bankruptcy case you will be required to pay all legal fees and court costs prior to your case actually being filed with the court. I go over this at the initial consultation with clients so that arrangements can be made for payment in full prior to filing.

The final step before your bankruptcy case is filed is the review and sign. This is where we meet and go over all of the documents we intend to file with the court. The purpose of the meeting is two-fold: first, we want to make sure that all the information we are providing the court is thorough and accurate. Second, after your case is filed you will meet with your bankruptcy trustee and be required to testify under oath that you reviewed and signed the documents prior to filing. After this meeting you will have accomplished both purposes.

After all the work has been done in gathering information and preparing the documents the day finally arrives to file your case. At the final Review and Sign we will set a date when your case will be filed.

While this is just a brief overview of the pre-bankruptcy process, it is important to note that this is an important time in your case. The accuracy of the information we provide to the court will help in determining if your case will proceed smoothly or if you will have problems that will delay the final discharge.

October 27, 2011

Timeline of a Bankruptcy Filing

Posted in Bankruptcy tagged at 11:05 am by demetriagraves

Some common questions I get asked about filing bankruptcy are, how long does it take and is there anything I should be doing or not doing before I file? For many people struggling with debt there are limited options and often they decide to turn to the bankruptcy court. The most common type of bankruptcy filing is Chapter 7, which can wipe out unsecured debts and provide a fresh start in as little as a few months.

But the process can be complicated. In many cases, what you do before filing is just as important as what happens after. Check out the Chapter 7 timeline below to see what a bankruptcy filer can expect and how long the process usually takes.

1 Year Before

Attempting to delay payments of defraud creditors, such as through hiding, transferring, or destroying property or assets, in the year before filing for bankruptcy could be considered bankruptcy fraud and could result in an unfavorable outcome in your case and criminal penalties.

Paying back a relative or business partner (“insiders”) during the year before filing could be deemed an unlawful preference by the court and it may seek to recover those payments and distribute them to your other creditors. It’s a good idea to talk to a bankruptcy attorney if you have questions about this.

6 Months Before

In the 6 months before filing you must have a meeting with an approved nonprofit budget and credit counseling agency.

3 Months Before

If you take out credit of $500 or more for luxuries in the 3 months before filing that luxury debt may not be dischargeable.

Filing for Bankruptcy

As soon as you file your bankruptcy petition, the court will order an injunction called an “Automatic Stay” that will prevent creditors from taking most legal or collection actions against you during your case or until it is lifted by the court.

You are appointed a trustee, a federal employee who will meet with you and oversee your case.

15 Days After

Certain papers declaring your assets, liabilities, expenses and income must be filed within 15 days of your petition, but are typically included with your filing.

15 days after filing your petition the court will schedule the meeting between you, your trustee, and creditors.

30 Days After

Papers declaring your intention to keep property that serves as collateral, or hand it over to creditors, must be filed and served to the trustee and creditors within 30 days of your petition or by the date of the meeting of creditors, whichever occurs first.

3 to 6 Weeks After

The meeting between you, your trustee, and creditors typically happens 20 to 40 days after filing. If you do not attend the meeting your case will be dismissed.

Withing 6 weeks you must file a certificate from an attorney that you have been advised on your bankruptcy options, and file a statement of any increased income or expenditures you can foresee in the near future.

4 to 6 Months After

A successful Chapter 7 bankruptcy case typically leads to a debt discharge within 4 to 6 months of filing.

Could Your Small Business Survive A Divorce?

Posted in Divorce tagged at 8:11 am by demetriagraves

There are many couples who are running small businesses together and it’s not uncommon for them to be faced with big decisions as to how best position the company for success.  What happens, however, when the couple decides that it is time to end their personal relationship and divorce becomes a serious reality and not just a possibility? Many couples find that being both husband and wife and business partners can be challenging. That challenge is increased several times over when a divorce works its way into the business relationship.

According to information from the National Federation of Independent Business, there are more than one million husband-and-wife partnerships running businesses nationwide. When divorce becomes a reality, the couple, their legal representation and even the judge can have a tough time sorting through all the material.

For those who may not know, divorce law is centered on the idea of marital property, whereby, anything acquired during a marriage is in all likelihood consider marital property.

In the event the husband or wife was running the business and the other spouse was at home raising kids or working elsewhere, it does not matter. The law will look at this scenario as the partner not inside the business still in some manner contributed to its success. That being the case, the person more removed from the business is still entitled to their fair share of the company, oftentimes half.  In instances where one individual had the business prior to the marriage, but kept it during the married relationship, any increase in revenue during the couple’s time together is viewed as marital property.

So what are some of the possibilities that can come out of a divorce involving business partners? Among the three most common are:

  • Buyouts – While some divorced couples do continue working together, many find it’s not doable. If that is the case in your situation, would you consider a buyout of your business partner? An accountant can help provide you with the financial details of such a decision, whether in fact it will all be done at once or over time. Remember, however, losing one of the partners could have a major impact on the business, so think it through.
  • Staying in business together – While this one may not be at the top of your choice list, it can prove amicable in some instances. Given the fact you are not likely a very rich and large corporation, it doesn’t mean you cannot put in place a board of directors for the business. By doing so, you get an unbiased opinion (hopefully they’re not playing favorites) and can move along and do what is best for the company.
  • Putting the business up for sale – This can be an unpopular decision, but sometimes it is best for all parties involved. It is important for divorcing couples to remember that less than 50 percent of small business put up for sale actually sell. Selling the business should be a last option given that you have hopefully been successful financially up to now with it. If the business is bringing in good revenues, both parties may be advised to work out a situation so that scenario can continue.

At the end of the day, both involved parties need to ask themselves if they could see a scenario where they could be divorced from one another, yet continue to work together on a regular basis.

If you are considering a divorce but aren’t sure of your options I offer a free initial consultation where I can answer all your questions and help you determine the best way to proceed.

October 20, 2011

Alternatives To Bankruptcy

Posted in Bankruptcy, Credit Negotiation, Debt Settlement tagged , , at 7:32 am by demetriagraves

Anyone who has had a call from a debt collection agency knows that this can be a very confusing and frustrating experience. Part of the collection agency’s strategy is to deliberately overwhelm you with legal terms and threats, so that you’ll just give in to their demands without considering what is really best for your overall situation. Their aim is to get you upset so you’ll be more pliable. Plus the normal response when you receive a mail notification from a collection agency is to immediately hit the panic button. So what can you do to get out of this uncomfortable situation, without making decisions or agreements that you later regret?

As an attorney, I have helped many people successfully file for bankruptcy and wipe out their debt. Plus once you file bankruptcy, the collection calls and threats will stop. But are there alternatives to filing bankruptcy? Yes – the main alternative to filing bankruptcy is credit negotiations and/or debt settlement. This can be a minefield if you don’t know what you’re doing. So, if you decide you’d like an alternative to bankruptcy, I offer a credit negotiation service that may be right for you.

Many consumers are unaware of their risks with unpaid debts. Yes, it’s true that a creditor could sue you in court and win a judgment, allowing the creditor to garnish your wages or hire a sheriff to come get your property. However, the chances of this happening are not as great as you would think.

It’s true that collection agencies are turning to lawsuits more and more these days, but once you make the creditor aware that you know the law and have an attorney on your side, they are more likely to leave you alone. With savvy consumers, many debt collectors think it is simply too much trouble and expense for them to take legal action against a debt. They look at the cost of filing a suit versus the amount that they are likely to recover.

Many consumers feel that their debts are overwhelming and there is nothing they can do other than file a bankruptcy. They believe those awful tales spun by collection agencies of impending doom, especially about garnishment and seizure of property. Collection agents fail to mention (surprise!) that in order for these actions to take place, the creditor must first go to court. Due to lack of information, many consumers get panicky and assume that bankruptcy is their only option.

So if you have debts that are out of control or are being harassed by a collection agency and don’t know what to do. Please contact my office for a free 30 minute telephone consultation where we can go over you options and you can decide if credit negotiation might be the best option for you.

California Passes Divorce Law For Same Sex Couples

Posted in Divorce, Family Law tagged , at 7:23 am by demetriagraves

The California legislature has just passed a bill, which was signed into law in October by Governor Jerry Brown that allows same-sex couples to divorce who got married in California but now reside in another State. Or couples that have always resided in another State but came to California to get married when same-sex marriage was available in California and are now wanting a divorce but are unable to get a divorce in their home State. The bill is titled SB (Senate Bill) 651.

One aspect of the battle over same-sex marriage has been the lack of access to divorce courts for same-sex married couples that reside in non-recognition states. Judges in many states have refused to grant divorces to lesbian or gay couples who went elsewhere to get married or have relocated from the state in which they got married, on the grounds that granting a divorce would constitute a form of official recognition of their marriage. Most of these couples are not asking a judge to grant them any property or spousal support based upon their marriage, since they’ve usually already settled those issues – they just want to get an order of dissolution. And the couples have good reasons for wanting the court order. Even if they have resolved their financial affairs, they need to get a divorce so they can be free of future liabilities and so they will be able to marry or legally partner a new romantic interest.

The legal origin of these problems stems from what is referred to as the “domicile” rule, which means couples ordinarily can only get divorced in the state in which they reside at the time of their break-up, regardless of where they lived when they got married. The purpose of this rule, which goes back more than a century, is to prevent nasty spouses from evading the divorce rules of the state they live in, by simply hopping across the state line to get a divorce in another state. For example, if a husband in New York didn’t like the property rules imposed on him by the New York court, it would be unfair to his wife if he could simply drive a few miles away to a more lenient state and file for divorce there.
While these rules may make sense for heterosexual couples who can always get a divorce in whatever state they live in, they wreak havoc for couples who live in states that won’t grant them a divorce under any conditions – even if they’ve reached a property settlement with their spouse. This is a vivid example of where the denial of the right to marry ends up as a denial of the right to get a divorce.
The new law will go into effect in January 2012. It provides that if a couple got married in California but lives in a state that won’t grant them a divorce (which is presumed if the state doesn’t recognize their marriage), the California court will have jurisdiction to grant them a dissolution. The divorce case will be filed in the county where the couple got married, and the dissolution is supposed to be adjudicated “in accordance with California law.”
There is a lot that remains unresolved in this new legislation, especially what it means to adjudicate a divorce in accordance with California law if the spouses are not residents. But for those who have been able to reach their own private settlement agreement, this will enable them at least to obtain a formal dissolution. And, while there is also some uncertainty on the details, chances are the dissolution will be honored in other states, even non-recognition states. This will allow the ex-spouses to enter into contracts as a formerly married person, and to be treated once again as an unmarried person.

October 13, 2011

What Is Included in a Bankruptcy?

Posted in Bankruptcy tagged at 12:20 pm by demetriagraves

I am frequently asked if a particular debt or item of property can or must be “included” in a bankruptcy filing. For example, if one wants to repay their mother or sister, do you have to list that debt?  Or, do you have to list a particular item of property?
The most common misconception there is about bankruptcy is that there is some choice about what to include. The truth is that one has NO choice what to include in a bankruptcy. All relevant information MUST BE included.  To file a bankruptcy, one must answer detailed questions about his/her assets (property), liabilities (debts), income, expenses, and other aspects of one’s financial affairs.  All debts must be listed.  All property must be listed.  It is technically a crime to knowingly fail to fully answer the questions.
As far as what happens with a debt or an item of property, that is a different question.
If, for example, you want to keep the automobile on which you are making payments, you must list the debt owed to the secured creditor.  But you can keep it if you continue making the payments and reaffirm the debt.
If you want to repay your sister, you still have to list her in the bankruptcy petition.  If it is a Chapter 7 you are filing, there is nothing stopping you from repaying her (or any other creditor you want to pay) after the bankruptcy.  On the other hand, if you are filing a Chapter 13 (a full or partial repayment plan), then your sister must be treated the same as all the creditors – meaning  she will be paid the same percentage of the debt, and at the same payment schedule, as the rest of your creditors.
I offer a free 30 minute telephone consultation where you can get all your questions about bankruptcy answered.

Steps to Take If You’re Planning a Divorce

Posted in Divorce, Family Law tagged , at 12:11 pm by demetriagraves

Some couples who postponed getting a divorce because of the poor economy are finding they can no longer wait. If you’re among those planning to leave your marriage, there are important steps to take as soon as possible.

1. Get informed. In some marriages, one spouse handles the finances and the other has limited knowledge about the family’s assets. Copy print documents and computerized records about all of your family’s financial assets as early in the process as you can. Sometimes when your spouse learns you have hired an attorney, that’s when documentation can disappear.
2. Move money from joint accounts. Consider transferring some money from joint accounts into an account in your own name if you have little or no funds in your individual accounts. This ensures that you have money for groceries and other necessities in the event your spouse removes funds or limits your access to joint accounts. This is especially important if your credit cards and other accounts are all held jointly, as your spouse might close them in retaliation for you seeking a divorce. Make sure you talk to your attorney first before making this decision, however.
3. Consider whether you need to close joint accounts. If your partner is spending money wildly on drugs or indulgences, consider closing or canceling your joint accounts so your spouse cannot run up unpaid balances.
4. Try to talk constructively with your spouse. See if you can have a logical, thoughtful, and constructive conversation with your spouse about your lives after divorce, especially if you have children. Go to your attorneys with any ideas you have for moving forward.
5. If you’re a victim of domestic violence, file a domestic violence complaint to document what’s been happening at home. You can go to the clerk’s office at the courthouse to file or after hours you can call the police or go to the magistrate’s office. The judge or magistrate can sign a temporary restraining order removing your spouse from the home and protecting you until the matter can be heard with all parties present. If the judge then believes the allegations of abuse, he or she can sign a protective order that is in effect for one year.
6. Do not let verbal arguments get out of hand. I see good people who wouldn’t be inclined to domestic violence end up there. If you start having a heated argument, walk away before there is any shoving, grabbing or physical contact whatsoever. Don’t say things you’ll regret later.
7. Avoid arguments with your spouse in front of your children. What you say about your marriage or spouse in front of the kids could damage them for a lifetime. If you love your children, keep your adult problems adult and don’t involve the kids.
8. Sometimes, litigation is not the answer. Consider alternative ways of resolving disputes, such as mediation or collaborative law. These methods lessen the pain for you and your children. Hire an attorney who will help solve your problems and get results, someone who sincerely wants to help you resolve the case without painful and expensive litigation if that is possible.

If you’d like more information on the best way to proceed. I offer a free initial consultation where you can get your questions answered.

October 6, 2011

Bankruptcy & Foreclosure

Posted in Bankruptcy, Forclosure tagged , at 9:23 am by demetriagraves

The other day in the Wall Street Journal there was an article about home owners who have lost their homes through foreclosure only to then be sued by the bank for the balance owed. Unfortunately, I often hear of families that have lost their home to foreclosure and now they are being hounded by the bank, often for very large sums of money over $100,000. If a home sells at auction and the purchase prices is less than what you owe on it, an unpaid balance remains. This is known as a deficiency. In 41 states the banks are allowed to then sue their prior customer for the balance owed.
California is one of the 9 states that has an anti-deficiency statute. This law essentially prohibits the bank from suing you after the home has foreclosed so long as certain criteria exist. In a nut shell, so long as your home was a single family residence or condo, on less than 2.5 acres of land, the home was actually occupied at some point, and the loan on the home was used to actually purchase the home (“purchase money”), then in most cases the bank will not be able to pursue you after the foreclosure sale. However, if not all the criteria are met, then the bank can sue you after the sale.
The most common scenario I see where the bank actually files a lawsuit is when there is a second mortgage or home equity line of credit (HELOC) that was used to pay off other debt or buy a boat, etc. Such loans are clearly not purchase money and the bank can go after that money after the foreclosure sale. Often when the bank files suit in these scenarios the result is an immediate bankruptcy filing. Bankruptcy, and particularly a Chapter 7 bankruptcy, will eliminate any deficiency that may be owing and will further stop any lawsuit that has been filed. Even if the bank has pursued the case all the way to a judgment, the bankruptcy filing will eliminate the debt.

If you have been through a foreclosure and are now receiving collection calls or have even been sued your prior bank, give me a call and we can go over your options. I offer a free 30 minute telephone bankruptcy consultation, where you can get all your questions answered. Sometimes the bank is pursuing you despite the protections provided by California’s anti-deficiency laws and a simple letter will clear up the problem. For others bankruptcy may be the only way to avoid a large judgment and potential garnishment of wages.

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