Posts Tagged ‘unsecured debt’
February 13, 2011
Bankruptcy Means Test – Do You Pass?
Here is a good flowchart for the Bankruptcy Means Test. See whether you pass:
Tags: Bankruptcy, Bankruptcy Attorney In Los Angeles, bankruptcy attorneys, bankruptcy laws, Chapter 13, Chapter 7, Creditor, Debt, Debtor, discharge, file for bankruptcy, Income, Los Angeles Bankruptcy Attorneys, Means Test, Presumption, secured debt, unsecured debt
Posted in Chapter 7 Bankruptcy, Chapter 7 Bankruptcy / Chapter 13 Bankruptcy, Law, Los Angeles Bankruptcy Attorney and Bankruptcy Lawyer, Means Test | No Comments »
February 1, 2011
Bankruptcy Discharge!
A bankruptcy is defined as the legal process in which a person or firm declares inability to pay debts. Any available assets are liquidated and the proceeds are distributed to creditors. Upon a court declaration of bankruptcy, a person surrenders assets to a court-appointed trustee, and is relieved from the payment of previous debts. A bankruptcy discharge is an order given by the bankruptcy judge, at the conclusion of all legal steps in processing a bankrupt person’s assets and debts, which forgives those remaining debts which cannot be paid, with certain exceptions. Debts for fraudulent or illegal actions, alimony and child support and taxes are not dischargeable and remain owed.
The fair treatment of creditors and public policy both work to limit the extent of the discharge for debtors. The bankruptcy code was not designed so that debtors can take advantage of creditors for their own profit, and so various provisions of the bankruptcy code limit the debts that are discharged if they were incurred dishonestly or by fraud. This includes debts that were incurred on credit cards where the debtor entered false information on the credit application and also includes major debts for luxury goods that were incurred shortly before filing for bankruptcy. However, a creditor must challenge the discharge of these debts, and the court must notify the debtor and conduct a hearing; otherwise, the debts will be discharged.
There are debts that are discharged and others that are not allowed to be discharged. Most unsecured debts acquired by the debtor in good faith and if they cannot pay them off are allowed to be discharged under a regular Chapter 7 bankruptcy . Debts that are never discharged in a bankruptcy can include:
- Recent taxes
- Trust fund taxes
- Child or family support
- Criminal fine or restitution
- Accident claims involving intoxication
- Debts not scheduled
- Penalties payable to the government other than tax penalties
- Student loans
- Debts listed in prior bankruptcy where debtor was denied a discharge
- Taxes for years where return unfiled or filed for less than 2 years
Some of the listed debt may be discharged if the debtor can prove hardship to pay them back within a reasonable time frame.
Secured debt that is discharged is a little more difficult as the debtor might want to keep that asset such as a car, or home. The individual debtor can surrender the secured property, pay for it in a lump sum, or sign a Reaffirmation Agreement to keep it. In most cases, only prepetition debts are discharged. In an involuntary Chapter 7 case that is brought by a creditor rather than the debtor, discharged debts also includes debts incurred between when the case was filed and when the actual bankruptcy case commences, if the Chapter 7 bankruptcy is approved by the court.
An automatic stay is put once a bankruptcy process begins, this prohibits the collection of debts by the creditors. If the debtor receives the discharge of the debts, then the injunction succeeds the automatic stay and enjoins any further actions to collect the debts from the debtor. If a creditor violates the injunction and tries to collect the debts, then the courts may issue a civil contempt order. Generally, waivers of certain discharged debts are not enforceable except in specific circumstances. Waivers must be in writing and approved by the court. A reaffirmation agreement, for instance, must satisfy these and other requirements to be enforceable. A debtor may volunteer to pay a debt, but the creditor cannot harass or intimidate the debtor into doing so.
A Chapter 7 discharge is granted to an individual debtor if there have been no challenges, which is usually the case. Creditors have 60 days after the creditors meeting to challenge the discharge of its debt. If there are no challenges and if the debtor did not sign an reaffirmation agreement, then after about 3 months after the creditors meeting, the court sends the debtor the notice of the discharge. If the debtor signed a Reaffirmation Agreement and is not represented by an attorney, then the court requires the debtor to appear before it so that it can ascertain whether the debtor understands the Reaffirmation Agreement and that the debt will continue beyond bankruptcy. The debtor can either accept the agreement or cancel the agreement. Regardless, the discharge is granted at this hearing.
A Chapter 7 discharge relieves the debtor of the liability of most prepetition debts and some post petition debts, such as the claims resulting from the rejection of executory contracts or the avoidance of a transfer.
Tags: Assets, attorney, automatic stay, Bankruptcy, Bankruptcy Attorney, Bankruptcy Attorney In Los Angeles, bankruptcy laws, bankruptcy petition, Chapter 7, Child Support, Debt, Debts, discharge, Fines, IRS, Los Angeles Bankruptcy Attorneys, Student Loans, Taxes, unsecured debt
Posted in California Attorney, Chapter 7 Bankruptcy, Chapter 7 Bankruptcy / Chapter 13 Bankruptcy, Creditors, Creditors Meeting, Los Angeles Bankruptcy Attorney and Bankruptcy Lawyer, Secured and Unsecured Debt | No Comments »
August 20, 2010
Bankruptcy Stops All Collection Attempts
Julio owned a house in Woodland Hills that was about to be foreclosed on. As the sole owner of repossession company he could just barely make ends meet, and he was behind on not just his three mortgages and credit card bills, but also his auto loan. Julio had no insurance and after a serious heart attack he could no longer afford to make any further payments and his bank moved to foreclose on his home and repossess his truck. To prevent his truck from being repossessed he hid it in the garage of his home but since the home is also up for sale the truck will likely be taken right after the sale of the home. He is now in position to lose both his house and truck at the same time. This truck was not just for transportation but a tow truck he used to make his living. He found a bankruptcy attorney in Los Angeles who told him how bankruptcy could get him relief.
Filing for bankruptcy triggers an automatic stay which stops most creditors from collecting funds or property in any way. This stops foreclosure sales and if the sale is concluded after the bankruptcy filing, that transaction is reversed. In addition to foreclosures, it stops cutoffs in utilities, repossessions, wage garnishments, civil lawsuits, and bank levies. While this applies to utility bills it is not advised to
file for bankruptcy solely for an amount as small as unpaid utility bills as the bankruptcy court may see the filing as abusive. A final caveat is that a creditor can be relieved from an automatic stay if secured property is subject to unacceptable risk or the debtors appears to be unable to make future mortgage payments or pay arrearages.
Julio was used to changing homes and was not concerned about losing his home but without the truck for repossessing vehicles, or another source of income, he could not afford to have it repossessed. Bankruptcy allows a certain dollar amount of exempt items which creditors cannot take and there are special categories for items such as equipment used for work that are not counted as a part of the general exemption. Since the truck was had no equity it did not use any of his exemptions. Therefore Julio can keep things like clothing, jewelry, and some electronics, in addition to the tow truck. As his current income over the last 6 months was below the median income to qualify for a
Chapter 7 bankruptcy and his expenses were close to his income he was eligible for filing a Chapter 7 bankruptcy and could continue to keep his truck and operate his business.
Before you proceed withfiling for bankruptcy, please make sure to speak to a qualified bankruptcy attorney.
Tags: and bank levies, Assets, Bankruptcy, Bankruptcy Attorney, Bankruptcy Attorney In Los Angeles, bankruptcy laws, Chapter 7, civil lawsuits, collection, collection agencies, Creditors, Debt, file for bankruptcy, foreclosures, it stops cutoffs in utilities, Los Angeles Bankruptcy Lawyers, repossession, repossessions, unsecured debt, wage garnishments
Posted in California Attorney, Chapter 7 Bankruptcy, Foreclosure, Uncategorized | No Comments »
Bank Levy – You Can Get Your Money Back By Filing For Bankruptcy
Bank Levy – You Can Get Your Money Back By Filing For Bankruptcy
Santos is a student in Los Angeles who has been out of work for nearly a year. Last year both of his cars were repossessed in addition to a boat. The cars that were repossessed were financed and Santos thought he no longer had to worry about that debt. Just recently he has learned that the finance company he used to buy the cars now has a levy on his bank account. Since Santos is out of work, his wife Rose is the only one with any income. As they were already struggling with bills, the bank levy has resulted in thousands in overdraft fees.
Santos first considered debt consolidation. After searching online he found a debt consolidation company in Los Angeles that guaranteed he would be debt free in no time. Debt consolidation is not for everyone, since the amount owed is reduced and payments are made by a 3rd party, this negatively impacts your credit score sometimes to the point where it is seen by creditors as the same as bankruptcy. Therefore you get all of the burden of bankruptcy without the benefit of no longer paying the unsecured debt. In addition, you should be aware that there are many debt consolidation companies that are illegitimate and want to scam you. Unlike bankruptcy attorneys, to become a debt consolidation company there is no requirement for certification or training, which puts few barriers to crooks setting up a debt consolidation company. Even if the debt consolidation went smoothly there may be unforeseen future events that may force you to eventually declare bankruptcy anyway, but only after you’ve spent thousands paying the debt consolidation service fees and unsecured debts that could have been discharged earlier. To compound the problem, any debt that is forgiven by the lender will be considered income on your tax return that you will have to pay taxes on, while in bankruptcy debts discharged are not treated as income.
He then came to his senses and found a bankruptcy attorney in Los Angeles. Their expenses were already exceeding their income so they were eligible for a chapter 7 bankruptcy. Filing for bankruptcy allows you to recover any funds taken from you through bank levies or wage garnishments up to 10 days before filing. Therefore in these situations it is in your best interest to file quickly. Since Santos and Rose filed quickly, they were not only able to discharge there credit card debts and overdraft penalties they could also recover the funds that were taken from their account through the bank levy.
Tags: Assets, bank, bank levy, Bankruptcy, Bankruptcy Attorney, Bankruptcy Attorney In Los Angeles, bankruptcy laws, collection agencies, debt consolidation, debt settlement, discharge, file for bankruptcy, Los Angeles, los angeles bankruptcy attorney, repossessions, unsecured debt, wage garnishments
Posted in California Attorney, Chapter 7 Bankruptcy, Chapter 7 Bankruptcy / Chapter 13 Bankruptcy, Creditors, Law, Los Angeles Bankruptcy Attorney and Bankruptcy Lawyer, Uncategorized | No Comments »
July 4, 2010
Chapter 7 Bankruptcy versus Chapter 13 Bankruptcy – Client Example
Rita Geraldo is a single mother with 3 children who lives in a small home in Los Angeles. Rita works as a dental assistant in Beverly Hills but could just make her payments and was nearly drowning in debt. However after a change in the interest rates on her adjustable rate mortgage these payments have doubled and reluctantly she cannot afford to pay her credit card bills. Missed payments have caused the interest rates on her credit cards to skyrocket in only a few months and this is on top of the penalty fees for failing to pay. As her debt grew even larger her credit card companies turned over Rita’s accounts to various debt collection agencies. Before only the fear of debt was keeping her up at night but now the collection agencies are making her phone ring off the hook with threats of lawsuits, garnishments of wages, and levying of bank accounts. Rita knew it was now time to take charge of her debt problems.
Rita had heard of bankruptcy before but was embarrassed and was not sure where to start. Rita found an attorney in Los Angeles near the office where she worked and he walked her through the process of filing for bankruptcy. Most individuals will either file for a Chapter 7 or Chapter 13 bankruptcy. Filing for a chapter 7 would allow her to eliminate all of her unsecured debt such as credit card bills and doctors bills. While filing a chapter 13 puts all of your debt both secured and unsecured on a 3 to 5 year payment plan based on your excess income. In certain circumstances, a Chapter 13 bankruptcy can be used to get rid of a second mortgage entirely. A chapter 7 will only allow you to keep exempt assets which for most will be every asset you own. A Chapter 13 bankruptcywill allow you to keep both exempt and nonexempt property but takes more time and is more complex.
Rita really wanted to keep her home and even if her credit card bills were eliminated she could not afford her 2 mortgages so she decided to file for a Chapter 13 bankruptcy. Filing a Chapter 13 bankruptcycreates the opportunity for a lein strip. A lein strip allows a second mortgage which is generally classified as secured debt to be reclassified as unsecured debt like her credit card bills.
She then told the attorney of all her debts, creditors and collection agencies. After starting the process with the attorney Rita had to take a short Debt Management course online. At the attorney’s Los Angeles office, they took care of the mountains of paperwork involved in the process.
The process still had a few steps left as Rita had to take part in a meeting with the bankruptcy trustee. At the meeting she had to answer questions from the trustee which she answered honestly. The meeting with the trustee includes you, your bankruptcy attorney and your creditors. Most of the time the creditors don’t show up. After it was determined that she was not hiding any assets a payment plan was established using the excess income she had after paying her expenses. This calculation excludes any payments to unsecured debt as expenses (i.e., credit card debt). The payment plan goes to a confirmation where a judge decides if the payment plan is satisfactory. Now as a part of the payment plan she only needs to pay her excess funds over the next 5 years while the rest of her debt is eliminated.
Rita is now living comfortably and can afford to pay her mortgage and all her other bills without living in fear of harassment from debt collection agencies.
To learn more about bankruptcy, feel free to contact Mr. Darvish at (619)324-9529. He is truly an attorney that cares and places great effort in making sure his clients understand the process thoroughly.
Los Angeles Bankruptcy Attorney | Los Angeles Bankruptcy Attorneys
Los Angeles Bankruptcy Lawyer | Los Angeles Bankruptcy Lawyers
Tags: attorney, Bankruptcy, Bankruptcy Attorney, bankruptcy attorneys, Chapter 13, Chapter 7, collection agencies, Credit Card, Creditors, Debt, los angeles bankruptcy lawyer, mortgage, secured debt, unsecured debt
Posted in Chapter 7 Bankruptcy / Chapter 13 Bankruptcy, Creditors, Los Angeles Bankruptcy Attorney and Bankruptcy Lawyer, Secured and Unsecured Debt | No Comments »