California Bankruptcy Lawyer Blog

San Jose Bankruptcy Attorney Talks About Schedule J

When filing out a bankruptcy petition, the debtors will fill out “Schedule J” which is lists the debtors’ expenses and calculates their monthly shortfall (or surplus in a Chapter 13). This Schedule is one of the key forms to determine if a person is eligible for a Chapter 7 bankruptcy or how much they have to pay in a Chapter 13 bankruptcy.

Since Schedule J is one of the driving factors in determining if a debtor is eligible for Chapter 7 Bankruptcy or how much to pay in a Chapter 13, there is a huge temptation for debtors to overstate their expenses. By overstating expenses, then the debtors believe they may be helping themselves.

The first problem is that a Schedule J is signed under penalty of perjury. It is illegal to make false statements on the Bankruptcy Petition including the Schedule J. Therefore, the debtors face a huge risk if their expenses are overstated. The debtors should remember that the Bankruptcy courts sees hundred of petitions a month and they can spot an unreasonable number very quickly. Once spotted then the Court will scrutinize the petition much more closely which includes asking for documents proving the high expense amounts. The ramifications can be extremely severe including sanctions.

Second, there are significant negative results on a schedule J with high expenses. For example, a debtor may have a problem keeping their car if the Schedule J is too negative. The Bankruptcy Court may believe that a debtor would not be able to make their payments and would be in default within a year. Under such a scenario, the court would rather the debtor return the car now than go into default later. Losing a car is not worth overstating the debtors; expenses.

If you have questions on properly creating a Bankruptcy Petition, then please call Sagaria Law 408.279.2288 or visit us at www.sagarialaw.com to set up an appointment.

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

Posted In: Bankruptcy Law , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy

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San Jose Bankruptcy Attorney Talks About Changing Chapters

Previously we discussed the many Chapters for bankruptcy. While most individuals go through Chapter 7 which is a discharge of debts or a Chapter 13 which is meant to be a repayment plan, the debtors are allowed to move between chapters. While changing chapters is not as easy as flipping pages of a book, it is not as hard as writing a book either.

A chapter 13 can request to become a chapter 7 bankruptcy. It is the simplest of conversions and can be granted without a court hearing. This is important because once a debtor realizes that they must convert, the chapter 7 can move very quickly. A conversion to chapter 7 from a chapter 13 can be for many reasons. The most common is that the debtors can not make the plan payments. Specifically, the debtor probably lost their job or the mortgage has readjusted to an amount over the debtor’s income. When that happens the courts full understand that the debtor now qualifies for a chapter 7 and will just give it. Of course the debtor may lose non-exempt property, such as their homes, in the process.

Moving from a chapter 7 to a chapter 13 bankruptcy is much trickier. It also requires more work by the debtor. Specifically, the debtor, through their attorney, must now calculate a plan payment that covers all priority claims. This is task is beyond some attorneys who only dabble in bankruptcy or only focus on chapter 7 bankruptcies. The change of chapters also require a noticed motion which may entail a court hearing. Therefore a debtor should be sure that they want to convert before asking for such.

If you are thinking about converting to a chapter 7 or chapter 13, please give Sagaria Law a call at 1-800-941-6730 to set up a consultation or visit us at www.sagarialaw.com.

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Posted In: Bankruptcy Law , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy

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San Mateo Bankruptcy Attorney Discusses Filing More Than One Bankruptcy

Over the course of a lifetime, a person or couple might find themselves in need to file bankruptcy more than once. For example, a person might have had credit problems in their early twenties due to youth and inexperience. This person will most likely qualify for a Chapter 7 bankruptcy since he/she has little or no assets at the time. However, this same person, at the ripe age of 50 might have suddenly become unemployed and unable to meet his bills. In that case the person may need a Chapter 13 bankruptcy to preserve his/her family residence. If you need a San Mateo Bankruptcy Attorney please call Sagaria law at 650.366.9888 for a free consultation.

The government does not limit the number of times a person can file for bankruptcy. However, the government does have specific timeframes as to when the bankruptcies may be filed. The length of time may seem like a long time but they are meant to prevent an abuse of the system. Specifically, the waiting periods between filings are necessary to prevent serial filers or the debtors who constantly file bankruptcy. Also, the waiting periods serve as a reminder to the debtor that there are consequences to filing a bankruptcy and a debtor will have to take ownership of their finances during this time period.

The most common perception is that a debtor must wait 8 years between filing chapter 7 bankruptcies. However, a debtor who filed a chapter 7 bankruptcy need only wait 4 years before filing a chapter 13 bankruptcy. Like our scenario above, the court does not want a debtor to wait 8 years before they preserve an asset like a house. The Debtor may file for a chapter 13 bankruptcy after only 4 years of filing the chapter 7.

The bankruptcy court is not as lenient if a debtor files for a chapter 13 then wants to file a chapter 7. The waiting period is 6 years if the chapter 13 was under a 70% plan.

The bankruptcy court is most lenient to a chapter 13 debtor who wants to file another chapter 13 bankruptcy. The wait then is only 2 years between filing.

If you wish to meet with a San Mateo Bankruptcy Attorney for a consult for bankruptcy, please call Sagaria Law to schedule a consultation at 650.366.9888.

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

Posted In: Bankruptcy Law , Chapter 11 , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy

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Fremont Bankruptcy Attorney Discusses Lesser known Bankruptcy

Most people are familiar with Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy but what about the other Chapters? A Chapter 7 Bankruptcy is called a “Liquidation” because the Court will seize the debtors assets and liquidate them to pay off the creditors. (Ironically, most Chapter 7 candidates don’t have any assets worth seizing.) A Chapter 13 Bankruptcy is called an “Adjustment of Debts of an Individual with Regular Income” because it is designed to restructure the debtor’s debt into a monthly payment plan that the Court approves. This type of bankruptcy will allow a debtor to keep a valuable asset like a house.

A less common bankruptcy is a Chapter 11 Bankruptcy which is called a “Reorganization.” A Chapter 11 Bankruptcy is a long process often used by commercial enterprises in an effort to continue to operate a business and repay creditors. Under the Chapter 11, the debtor can terminate contracts and leases, recover assets, and rescale it operations in order to return to profitability.

A Chapter 12 Bankruptcy is entitled “Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income.” This bankruptcy is meant for farmers and fishermen. The different Bankruptcy is needed because these businesses have their cyclical business nature, government regulations, and tax consequences.

A Chapter 9 Bankruptcy is entitled “Adjustment of Debts of a Municipality.” These bankruptcies are reserved for “municipality” or towns, villages, counties, taxing districts, municipal utilities, and school districts. These are extremely complicated bankruptcies and rare for obvious reasons.

A Chapter 15 Bankruptcy is entitled “Ancillary and Other Cross-Border Cases.” These bankruptcies are meant for a debtor or property that is subject to the laws of United States and one or more foreign countries.

If you are looking for a bankruptcy attorney or wish to find out which kind of bankruptcy you qualify for, call us at Sagaria Law for an appointment at 1-800-941-6730.

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Posted In: Bankruptcy Law , Chapter 11 , Chapter 7 Bankruptcy , Creditors and Debt

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San Jose Bankruptcy Attorney Talks About Bankruptcy Morals

Prior to filing for bankruptcy, many debtors agonize if bankruptcy is the proper course of action. Specifically, the debtors believe that since they owe the money, they should not be let off the hook so easily. There are two main problems in this line of thinking.

The first problem is believing that Bankruptcy is easy. Bankruptcy is not easy or else debtors would not need a lawyer to get them through the process. Bankruptcy, a right granted by the Federal government, is so complicated that unrepresented debtors are often given a special book of instructions and/or video instructions on how to get through a bankruptcy. The rules are so complex that a whole branch of the government (the US Trustee’s Office) is employed to verify and approve all bankruptcies before they reach the judge. Special trustees are hired to just to pursue debtor’s assets. The bankruptcy petition has over 10 schedules and an additional “means test” for qualification. Creditors are required to have notice and mandatory time limits in which they can challenge a bankruptcy. These are all real and explicit hurdles meant to prevent a debtor from obtaining a discharge in bankruptcy and weed out the people who do not qualify. Bankruptcy is not easy and was not designed to be easy. However, it was designed to be consistent which is why an experienced bankruptcy attorney can navigate the complicated waters and make it seem easy to an untrained debtor.

The second problem is believing that the debtor is being let off easy. By the time most debtors consider bankruptcy, they are tens of thousands of dollars into debt. The debtors are facing foreclosure of their homes or repossessions of their vehicles. The debtors are may have lawsuits where they have become legally liable for money without ever having been to court. Most debtors have been struggling for months if not years to pay their debts and just cannot afford to do so anymore. If a debtor is making the hard choice of paying for rent or buying food instead of paying off a credit card’s 22% interest, then there is nothing easy about the debtor’s life. While it is true that a bankruptcy may erase one’s debt, the amount of agony, stress, and anxiety that a debtor faced getting to the situation is not something anybody would want to go through. Most debtors, by the time they realize bankruptcy is their only solution, owe mainly interest on debt already paid or have property they can no longer afford. There is little reason to keep paying these debts if the debtor can never pay it back. That would be similar to indentured servitude. Therefore, for the few that are willing to ask the government for help by filing for bankruptcy, they are not getting off easy. They are ending the nightmare. If you need more information about asset protection or need bankruptcy FAQ's please contact Sagaria Law today.

If you believe you need a bankruptcy attorney, please consider calling Sagaria Law for a consultation at 1-800-941-6730.

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

Posted In: Bankruptcy Law , Creditors and Debt

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