November 10, 2011
What Happens After Filing Bankruptcy?
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.
October 27, 2011
Timeline of a Bankruptcy Filing
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.
October 20, 2011
Alternatives To Bankruptcy
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.
October 13, 2011
What Is Included in a Bankruptcy?
October 6, 2011
Bankruptcy & Foreclosure
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.
September 29, 2011
Is Filing Bankruptcy Worth the Money?
Obviously, if you’re considering filing for bankruptcy money in your household is probably tight. You may be struggling to come up with gas money to get to work or buy groceries let alone coming up with money to pay a bankruptcy attorney. People often ask me whether it worth the money you pay a bankruptcy attorney to file your bankruptcy case. Seeing that I am a bankruptcy attorney my answer may be biased, but usually when I lay out what you get for the fees you pay, most people see that it is a pretty good deal.
Before you can know whether it is worth it or not, you need to know what your bankruptcy is going to cost you. If you have called around to ask bankruptcy attorneys what they charge you were likely surprised to learn that many won’t tell you what they charge. I know this is very frustrating for clients. Imagine going to the store to buy a new TV only to have the store clerk refuse to tell you what the purchase price of the TV is! It is a little different when it comes to legal work. The main reason is without sitting down with you and going over all of the facts of your case it is difficult to determine how much work is going to be required and what the corresponding price will be. Plus there are court filing fees and some other costs which add to the total price.
So what does your money get you? Firstly, the bankruptcy process is much more complex than many people understand (even some attorneys). There are many pitfalls that can cost you big time if you don’t understand the law or the process. Hiring a bankruptcy attorney helps you to avoid the problems that can arise in a bankruptcy case. Further, hiring an attorney will put a buffer between you, your creditors, and the bankruptcy trustee. Instead of you having to deal with legal issues that will arise in your bankruptcy case, your attorney will handle all of that for you. And finally, you get legal counsel to assist you for the entirety of your case. In a Chapter 7 bankruptcy you will have counsel for approximately 6 months.
Often bankruptcy is cheaper than settlement. Many of my clients have tried to settle their debts prior to resorting to a bankruptcy filing. They find that most credit card type debts will agree to take less than what is owed, or “settle” the debt. Usually the credit card company will want 45% up to 75% of the total amount owed to settle the debt. So if you owe $30,000 in credit card debt, you would need to pay $13,500 up to $22,500 to settle these debts.
In a Chapter 7 bankruptcy case you can eliminate credit card completely. However, you have to pay an attorney to help you through the process. Though, this is usually significantly less than what a settlement amount would be. I realize that it is a sacrifice for many people to put together the money to pay an attorney to assist them through the bankruptcy process. At the same time, when compared to other ways of reducing your debt, hiring a bankruptcy attorney is a bargain.
If you would like more information on what filing bankruptcy costs and if this is the right solution for you, I offer a free 30 minute telephone consultation, where you can get all you questions answered.
September 16, 2011
More College Graduates are Filing For Bankruptcy
September 8, 2011
Do’s and Don’ts Prior to Filing Bankruptcy
When you have made the decision that it is necessary to file for bankruptcy the next step is to plan out when you are going to file your bankruptcy and all the steps that lead up to that day. Almost daily I meet with people who really need to file bankruptcy but have put themselves in a difficult position because of recent pre-bankruptcy transfers or failure to pay the “right” bills. Along those lines, I thought I would put together a list of Do’s and Don’ts for those preparing to file for bankruptcy.
Do’s
#1 Make your house payment. If you plan on keeping your car or your house through the bankruptcy process it is important that you continue to pay the monthly house or car payment. Even in bankruptcy you are required to make these payments if you want to keep the car/house. In a Chapter 7 bankruptcy failure to make your monthly payments will result in the bankruptcy court giving permission to foreclose on your home or repossess your car.
#2 File your taxes. If you have not filed your taxes, your bankruptcy case can be dismissed before it really even gets going. If you have tax returns that you have not filed, take the time to get them filed prior to filing your bankruptcy case. It will save you time, money, and aggravation.
#3 Prepare to meet with your attorney. The bankruptcy system is based upon your voluntary disclosure of all of your assets, income, expenses, etc. It is highly unlikely that someone will come to your house and check to see what you do and don’t have, but if it is discovered that you have not been truthful you will likely lose your discharge (the entire reason you filed for bankruptcy), and could face fines and even jail time. Along those lines, it is important that you are prepared to disclose everything needed to file your bankruptcy.
To get all this information it may require you to find old tax returns, pay-stubs, titles or registrations to vehicles, bank statements. Be prepared to meet with your attorney by having a good idea what your assets, debts, and expenses really are.
Don’ts
#1 Don’t pay a debt to a family member. I understand that thought process that goes into this one. You are going to file bankruptcy. You are going to eliminate your debts. Prior to doing that you want to make sure that the $5,000 you loaned from your mother is paid back so you find some money and pay her in full. In bankruptcy world this is a bad idea and could result in your mom getting sued. Here’s why. You will be required to disclose any payments of more than $600 you have paid any of your creditors in the last six months, and if you have made payments to a family member, you will be required to list any payments in the last year!
Payments to your relatives to the detriment of your other creditors are known as preferences and sometimes as fraudulent transfers. If you give money or assets to a family member, or if you repay them and no one else, you run the risk that the bankruptcy trustee will go to your family member and demand that they give the money back. If they don’t, they will sue them, take the money, and divide it among your creditors. If you owe a family member, just let them know that you can always voluntarily pay them after your bankruptcy.
#2 Don’t continue to use your credit cards. If you are looking to file bankruptcy you should stop using your credit cards. Any charges on your credit card totaling more than $600 within the 90 days prior to your bankruptcy case are presumed to be nondischargeable. This means that they don’t go away in your bankruptcy case. And when I say “totaling more than $600,” I don’t mean a single purchase of more than $600, I mean that the total of all your charges within that 90 days are more than $600.
The bankruptcy code does state that these charges are only nondischargeable if they are for “luxury goods or services.” While luxury goods or services is not defined, the bankruptcy code does tell us that good or services that are reasonably necessary for support and maintenance of your household do not fall into this category. While I will not advise you to incur new debt, I can tell you that in my experience that if you have bought a new big screen within the 90 days prior to filing that you may get an objection by the credit card company. If you bought gas for the car and diapers, you probably won’t get an objection.
Also, if you take out more than $875 in cash advances off your credit card in the 70 days prior to filing your bankruptcy case, those charges will not go away.
#3 Don’t transfer assets out of your name. Like paying a family member, I understand the thought process to this one. You are filing bankruptcy; you would really like to keep your truck, so you decide to transfer it in to your brother’s name while you go through the bankruptcy. Problem is, the drafters of the bankruptcy code thought of this too, and decided that it wasn’t fair to your creditors to allow you to do this. So, if you transfer your truck into your brother’s name prior to filing bankruptcy, the bankruptcy trustee will be able to go to your brother and undue that transaction and it is usually undone with a federal lawsuit (which makes Sunday dinner with the family really awkward from that point on!).
All transfers of assets – whether sold or given away – within the last two (2) years must be disclosed. Rather than taking that asset out of your name, talk with your bankruptcy attorney. Often it is not even an asset that is at risk, is exempt, or there is a deal that can be reached with the bankruptcy trustee and the transfer only makes things worse. Don’t transfer assets.
If you have come to the conclusion that bankruptcy is necessary to help you with your debt problems, give me a call and we can go over your situation in detail. I offer a free 30 minute telephone bankruptcy consultation where you can get all your questions answered.
September 1, 2011
Bankruptcy – Should I file Now or Later?
If you’re in financial trouble, its very easy to try and ignore the problem and hope that it will go away. Though many people come to realize that filing bankruptcy is one of the best options for wiping out your debt and getting a fresh start. If you are considering filing for bankruptcy one of the hardest decisions to make can be when is the best time to file – now or later? Here’s some top reasons why it’s a good idea to file now.
You received a notice scheduling a foreclosure sale. Once a foreclosure sale takes place, in most states, it is next to impossible to do anything to get your property back. Don’t delay, file your Bankruptcy before that sale takes place!
You would like to eliminate your 2nd mortgage or home equity loan(s) while the real estate market is down. If real estate prices go up, you may miss this opportunity to eliminate a 2nd mortgage or home equity loan through the lien stripping process if you’re filing Chapter 13 bankruptcy.
You have had a foreclosure, and now the company holding the 2nd mortgage or home equity loan is after you for payment. It is unusual for a company holding a second mortgage or home equity loan to try to collect once someone has lost their property in a foreclosure. So if they start to bug you for payment, it means you have been selected as a target and may be facing a lawsuit. Filing Bankruptcy will prevent any lawsuit from going forward & can save you a lot of grief.
Your income is stable or is going up. Bankruptcy law requires that your income be an average of what you earned past 6 months. If your income goes up, you may qualify to file now but you may not qualfy if you wait. If you need to make payments in your Bankruptcy, your payments will be higher if you wait. Let Bankruptcy work for you & file before Bankruptcy is not an available option for you.
A creditor has sued you. If you wait to file Bankruptcy, your wages may be garnished, your bank account can be attached, and liens canl be placed on your property. Do you really want to lose more money because you put off filing Bankruptcy?
You can’t stand any more creditor harassment! Those annoying calls from creditors can really ruin your day, adding stress to an otherwise difficult situation. Isn’t it time to bite the bullet & just get the whole thing past you by filing Bankruptcy? Once you file Bankruptcy, creditors are prohibited from calling you and have to work within the Bankruptcy Court, something they almost never do. What happens when a creditor calls after you file Bankruptcy? All you have to do is say “I filed Bankruptcy, and my case number is…” The calls will stop within 10 days or so!
You want to prevent more damage to your credit so that it is easier to repair and rebuild your credit once a Bankruptcy is over. The longer you go not paying your bills, the worse your credit will be when it is time to file. Every month you are late, are over your limit or pay only the minimum payment, the lower your credit score will be. Once your Bankruptcy is over, you can begin to restore your credit and increase your score. Restoring your good name is a process that takes time, and you can’t begin to do this until your Bankruptcy is completed.
The IRS or child support authorities are after you. You need legal protection from the IRS or the child support authorities. Bankruptcy can provide you with that legal protection. Although Bankruptcy cannot eliminate many kinds of taxes or child support, filing bankruptcy can make these debts manageable by eliminating other debts like credit card bills. You might be surprised that you can eliminate some of your tax debt in Bankruptcy.
You have plans for a better life, but your past debts are stopping you. If you plan on getting married or getting a new job, your past debts may prevent you from implementing these plans and having a better life. You only live once, so why deny yourself a better life by delaying filing?
The stress of dealing with debt prevents you from thinking clearly, causes you overwhelming emotional distress, depression, or even medical problems. Under these circumstances, you can’t afford to wait to file Bankruptcy. If you can resolve the debt problem, you can begin to focus on what is really important, your health and your family’s well being!
If you would like more information about how bankruptcy may be the best option for you. I offer a free 30 minute telephone bankruptcy consultation where you can get all your questions answered.
August 26, 2011
A-Z of Bankruptcy Errors
Helping clients prevent heartache during bankruptcy filing is important to me. Many clients are embarrassed about certain areas and are reluctant to discuss them or perhaps certain things are forgotten about because they don’t seem important. But I’ve been in the difficult situation of helping a client file for bankruptcy and some important piece of information comes up that wasn’t disclosed early on and this has forced us to back-pedal. It’s really important to know before you go in any area of life, especially with a life changing experience like filling for bankruptcy. With this in mind I decided to compile a quick A-Z of common bankruptcy filling errors, that can even be used as a checklist to make sure we’ve covered all the bases when proceeding with a bankruptcy filling.
The A to Z of bankruptcy filing errors.
a. Not disclosing all your income.
b. Not disclosing all your debts, including family debts.
c. Not disclosing all major transactions in the past 4 years.
d. Not completing both financial courses when required.
e. Not showing up for appointments or the required Meeting of Creditors.
f. Leaving your money in a bank which will “freeze” it for 60 days.
g. Leaving money in a bank which will keep it to pay your credit card.
h. Not handling your car loan properly (there are alternatives).
i. Going on a spending spree before filing.
j. Buying luxury goods or services 90 days or less before filing.
k. Taking cash advances within 70 days of filing.
l. Not telling your attorney of prior bankruptcies.
m. Not telling your attorney about prior out-of-state addresses.
n. Paying off your car loan (or any other debt) before filing.
o. Thinking a living trust (that’s less than 10 years old) will protect home equity
p. Not bringing your drivers license and Social Security Card to the hearing.
q. Not disclosing all lawsuits you’re involved in.
r. Not disclosing a business you own in full or in part.
s. Not disclosing property if you are on title.
t. Not disclosing if you used a second social security number.
u. Letting your home be foreclosed before the filing.
v. Letting your car be repossessed before you file.
x. Letting a creditor or the government seize your business before you file.
y. Not disclosing money paid to other professionals within the past 4 years.
z. Believing you can do it yourself.
LA Family Law 