California Bankruptcy Lawyer Blog

San Jose Bankruptcy Attorney Discusses According To U.S. Courts' Administration Office, There Are Less Chapter 13 Bankruptcy Filings In 2006

Just a little over one year after the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) went into effect, the number of Chapter 13 Bankruptcy filings has decreased.
For example, According to statistics released by the Administrative Office of the U.S. Courts, Chapter 13 filings fell 19.5 percent to 355,756 in March 2006 from 441,838 in March 2005.

According to the National Foundation of Credit Counseling, however, this does not mean that people are handling their financial affairs better. In fact, there was actually a rush of people who filed for Chapter 7 bankruptcy prior to the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act because there was a possibility that they would not meet the new requirements for filing for Chapter 7 protection.

Initiatives of the BAPCPA include:

•Implementing the new “means test” to determine whether a debtor is eligible for chapter 7 (liquidation) or must file under chapter 13 (wage-earner repayment plan).
•Supervising random audits and targeted audits to determine whether a chapter 7 debtor’s bankruptcy documents are accurate.
•Certifying entities to provide the credit counseling that an individual must receive before filing bankruptcy.
•Certifying entities to provide the financial education that an individual must receive before discharging debts.
•Conducting enhanced oversight in small business chapter 11 reorganization cases.

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Posted In: Bankruptcy Law , Chapter 13 Bankruptcy

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Fremont Bankruptcy Attorney Discusses Curon Medical Inc. of Fremont, California Shuts Down And Files For Chapter 7 Bankruptcy

In California, Fremont-based Curon Medical Inc. has shut down its operation, fired all of its employees, and filed for Chapter 7 bankruptcy.

In the bankruptcy statement that the East Bay life sciences company filed with the SEC on Wednesday, Curon said that their board had met Monday and decided to voluntarily file for bankruptcy protection. This decision led to the firing of all 32 employees and the resignation of the entire board.

When a company files for Chapter 7 bankruptcy, this generally means that the company has agreed to cease operations and shut down its business. An appointed trustee will then sell, or liquidate, the bankrupt company’s assets to pay off the company’s debts.

Secured creditors, meaning the investors who’ve taken the least risk, are paid first. These are creditors whose credit is usually backed by collateral and who know they will be paid first should a company go bankrupt.

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Posted by Scott Sagaria | Permalink | Email This Post | Comments (0)

Posted In: Chapter 7 Bankruptcy

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Redwood City Bankruptcy Attorney Discusses US Supreme Court Considers Question Of When A Debtor Can Convert To Chapter 13

Last week, the U.S. Supreme Court heard oral arguments in Marrama v. Citizens Bank of Massachusetts. The case asks the question of whether a debtor can convert their Chapter 7 Bankruptcy filing to a Chapter 13 Bankruptcy filing.

Marrama had initially filed for Chapter 7 Bankruptcy, but he tried to change his filing to Chapter 13 to preserve $85,000 worth of interest in a piece of property. Citizens Bank of Massachusetts opposed the conversion and a bankruptcy court agreed with the bank. Citizens Bank said that by purposely trying to hide the trust that held this piece of property, Marrama shouldn’t be allowed to convert his petition now to save the asset. The bankruptcy panel agreed with the court’s decision, as did the U.S. Court of Appeals for the Fifth Circuit.

Chapter 7 Bankruptcy (also called Liquidation Bankruptcy):
· Cancels the debtor debts; generally, the court will have to liquidate certain assets if it benefits the creditors.
· To qualify for Chapter 7 Bankruptcy, the debtor’s current monthly income (your average income over the last six months before you file) must not be higher than their state’s median income; they must also prove that they cannot pay back at least $6,000 of their debt over a five year period (In California, the median for a single earner is $43,107. The median for a family of four is $70,172).
· Costs $299 in filing and administrative fees, and commonly requires only one trip to the courthouse.

Continue reading " Redwood City Bankruptcy Attorney Discusses US Supreme Court Considers Question Of When A Debtor Can Convert To Chapter 13 " »

Posted by Scott Sagaria | Permalink | Email This Post | Comments (0)

Posted In: Chapter 13 Bankruptcy

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