California Bankruptcy Lawyer Blog

San Jose Bankruptcy Attorney Discusses New Changes In Bankruptcy Law:

Under the old bankruptcy rules, people who filed under Chapter 13 had to devote all of their disposable income to their repayment plan. The new law adds a wrinkle to this equation. Although Chapter 13 filers still have to hand over all of their disposable income, they have to calculate their disposable income using allowed expense amounts dictated by the IRS – not their actual expenses. These allowed expense amounts must be subtracted not from the filer’s actual earnings each month, but from the filer’s average income during the six months before filing.

Before you can file for bankruptcy, counseling is required, even if it’s obvious that a repayment plan isn’t feasible or you are facing debts that you find unfair and don’t want to pay. You are required only to participate, not go along with any repayment plan the agency proposes. However, if the agency does come up with a repayment plan, you will have to submit it to the court, along with a certificate showing that you completed the counseling, before you can file for bankruptcy.

Toward the end of your bankruptcy case, you will have to attend another counseling session, this time to learn personal financial management. Only after you submit proof to the court that you fulfilled this requirement can you get a bankruptcy discharge wiping out your debts.

If you have a question regarding bankruptcy please contact Sagaria Law at 1-800-941-6730 for a free consultation or visit us at www.sagarialaw.com. Our team of Bankruptcy Attorneys can assist you with all aspects of your case. We have attorneys in San Mateo, Monterey, Fremont, Salinas, Sacramento and San Jose.

Sacramento Bankruptcy Attorney Discusses Chapter 13 Bankruptcy

There are many considerations and preparation when thinking about bankruptcy in terms of owning a business. Most likely, if you own a business, you will be filing a Chapter 11 bankruptcy where you will have to come up with a payment plan to pay off the debts. If you own a larger business and this constitutes a large bankruptcy, committees of creditors and stockholders typically negotiate a plan with the company to relieve the company from repaying part of its debt so that the company can try to get back on its feet. One committee that must be formed is called the "official committee of unsecured creditors." They represent all unsecured creditors, including bondholders. If the company has publicly held bonds, the "indenture trustee," often a bank hired by the company when it originally issued a bond, may sit on the committee.

Additional official committees may sometimes be appointed to represent stockholders. The U.S. Trustee may appoint another committee to represent a distinct class of creditors, such as secured creditors, employees or subordinated bondholders. After the committees work with the company to develop a plan, the court must find that it legally complies with the Bankruptcy Code before the plan can be implemented. This process is known as plan confirmation. This can take a few months or a few years.

The debtor company develops a plan with the various committees. The company or its counsel usually prepares a disclosure statement and reorganization plan and files it with the court. If it is complete (if the company is publicly held, it is reviewed by the SEC), creditors (and sometimes the stockholders) vote on the plan. The Bankruptcy Court confirms the plan, and the company carries out the plan by distributing the securities and other payments called for by the plan.

If you have a question regarding Bankruptcy please contact Sagaria Law at 1-800-941-6730 for a free consultation or visit us at www.sagarialaw.com. Our team of Bankruptcy Attorneys can assist you with all aspects of your case. We have attorneys in San Mateo, Monterey, Fremont, Salinas, Sacramento and San Jose.

San Jose Bankruptcy Attorney Talks About Ability to Pay

When filing a Petition for Bankruptcy, a Debtor must pay the filing fee. This is the fee paid to the Bankruptcy Courts to process the paperwork. If all goes well, that should be the only administrative fee that a Debtor will pay. For a Chapter 7 bankruptcy, the fee is $299.00 and for a Chapter 13 bankruptcy, the fee is $274.00. But what happens if a debtor is in such dire straights that they can not even come up with the filing fee? Is that Debtor denied a bankruptcy?

The short answer is that all is not lost. A Debtor may apply to pay the filing fee in installments. The Debtor must fill out an application (available at www.caeb.uscourts.gov) to pay fees in installments (Form EDC 2-021) and submit the forms with the Petition. If approved, the Debtor will pay the filing fee over the span of 120 days. The Debtor is allowed a maximum of four installment payments. That means the debtors can take about 3 months to pay the filing fees. There is no specific minimum installation payment requirement but the Debtor cannot take more than 4 payments to pay off the entire fee amount.

The main effect on the Debtor’s bankruptcy is that the Debtor cannot pay an attorney, a bankruptcy petition preparer, or anyone else in connection with the bankruptcy, until the fees have been paid. That means a Debtor may not be able to get additional legal help if the bankruptcy petition hits a problem.

Finally, if a Debtor is filing for Chapter 7 Bankruptcy and their income is at or below 150 percent of the poverty levels based on family size without any means to pay the filing fee, the Court may grant a fee waiver. The form (Official Form 3B) must be turned in with the Petition. If denied, then the Debtor may be allowed to pay the fees over installments.

If you have a question regarding bankruptcy please contact Sagaria Law at 1-800-941-6730 for a free consultation or visit us at www.sagarialaw.com. Our team of Bankruptcy Attorneys can assist you with all aspects of your case. We have attorneys in San Mateo, Monterey, Fremont, Salinas, Sacramento and San Jose.

Redwood City Bankruptcy Attorney Talks About the Different Trustees

After a Debtor files for a Petition for Bankruptcy, the Debtor enters a legal world where any words, called "terms of art" are used. This is the lingo or slang that the Bankruptcy Court, bankruptcy attorneys, and everybody else in the bankruptcy world are using to describe a Bankruptcy case. Some of the common terms are Debtors, Creditors, Court, and Trustee. While Debtors and Creditors are fairly self explanatory, some of the others should be clarified. When referencing the Court, the user is referencing the Judge, the Court Staff, and the Court Clerk. Therefore when the Court makes an order, the reality is that Judge made the order. Or if the papers are filed with the Court, then the papers are probably submitted to the Court Clerk or part of the official file. Finally, if the Court will provide a translator that is probably the Court Staff setting up the logistics.

When referencing the "trustee," the Debtor should be aware that there are at least 3 different kinds of trustee. There is the Panel Trustee who has the job of administering the bankruptcy estate. (As a reminder, when a Debtor files for Bankruptcy, the government "takes over" the debtors assets which is now called the "bankruptcy estate.") The Panel Trustee is supposed to try and get as much money as possible from the bankruptcy estate to make sure that the creditors get what they can. The Panel Trustees are not paid by the Court but rather get paid from the filing fees or from a percentage of the money distributed to creditors.

The Standing Trustee is a title usually reserved for Chapter 13 and Chapter 12 bankruptcies. The Standing Trustee has the job of collecting the monthly payments from Debtors and paying out the creditors per the agreed upon repayment plan. The Standing Trustee does not get paid by the Court either but does collect a percentage of the money distributed.

Finally there is the US Trustee. These Trustee's are part of the Department of Justice and are separate from the Court. They main role is to be a watchdog in the bankruptcy proceedings. They are to monitor a bankruptcy, supervise the other trustess, and identifying fraud. In practice, the US Trustee will review all bankruptcy petitions, pleadings, and will participate in hearings if necessary. The US Trustee is the one most likely to bring a motion to dismiss a bankruptcy if they find any errors.

If you have a question regarding Trustees please contact Sagaria Law at 1-800-941-6730 for a free consultation or visit us at www.sagarialaw.com. Our team of Bankruptcy Attorneys can assist you with all aspects of your case. We have attorneys in San Mateo, Monterey, Fremont, Salinas, Sacramento and San Jose.

Fremont Bankruptcy Attorney Discusses Chapter 13 Bankruptcy

A chapter 13 bankruptcy is also called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. It the debtor’s current monthly income is less than the applicable stated median, the plan will be for three years unless the court approves a longer period “for cause.” However, if the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. During this time, the law forbids creditors from starting or continuing collection efforts.

Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 as long as the individual’s unsecured debts are less than $336,900 and secured debts are less than approximately $1 million. These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership may not be a chapter 13 debtor.

If you have a question regarding Bankruptcy please contact Sagaria Law at 1-800-941-6730 for a free consultation or visit us at www.sagarialaw.com. Our team of Bankruptcy Attorneys can assist you with all aspects of your case. We have attorneys in San Mateo, Monterey, Fremont, Salinas, Sacramento and San Jose.

San Jose Bankruptcy Attorney Talks About Chapter 13 Bankruptcy

There are a few different options if you are someone who is thinking about filing for bankruptcy there are a few options. If you are unable to qualify for a Chapter 7 bankruptcy, there is a chance that you will file under a Chapter 13. Chapter 13 bankruptcy is more like a payment plan option. Instead of discharging your debts, under Chapter 13, you come up with a schedule that is feasible for you regarding when and how much you will be able to pay back. The plan has to be accepted by the creditors as well. The installment payments are over three to five years. If the debtor’s current monthly income is greater than the applicable state median, the plan is usually for five years. In no case may a plan provide for payments over a period that is longer than five years. The plus to this is that during this time the law forbids creditors from starting or continuing to collect the money. Therefore, those annoying phone calls and letters hounding you to pay will cease. For many, the silence alone is peace of mind enough to file for bankruptcy.

If you have a question regarding Bankruptcy please contact Sagaria Law at 1-800-941-6730 for a free consultation or visit us at www.sagarialaw.com. Our team of Bankruptcy Attorneys can assist you with all aspects of your case. We have attorneys in San Mateo, Monterey, Fremont, Salinas, Sacramento and San Jose.

Fremont Bankruptcy Attorney Discusses Student Loans in Bankruptcy

Being a student is always an exciting and fun time in anyone’s life. However, for some, their educations serve as a financial weight that some people cannot bear. For some, they think that filing for bankruptcy will solve their problems and discharge all the debts that were accumulated during their free-wheeling school years. However, unbeknownst to them, student loans are not dischargeable in bankruptcy unless you can show that your loan payment imposes an "undue hardship" on you, your family, and your dependents. Non-dischargeable debts are those debts that you cannot totally eliminate when you file for bankruptcy and will have to be paid by you.

It is almost impossible to show an undue hardship unless you are physically unable to work and the chances of your obtaining any type of gainful employment in the future are non-existent. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, privately funded student loans are treated the same way that loans funded and guaranteed by the federal government or nonprofit institutions. Prior to the new law, if you had a loan from a private-sector lender that was not guaranteed, it could be discharged under chapter 7. The new law gives these loans the same protection as the guaranteed loans.

If you would like to discharge your student loans under the "undue hardship" exception, you must file a separate motion with the bankruptcy court and then appear before the judge to explain your hardship. This is not an easy task, so if your student loans are the main part of your debt, you would be better off not facing the harshness of bankruptcy as courts are extremely reluctant to discharge student loans.

If you have a question regarding different debts or filing bankruptcy please contact Sagaria Law at 1-800-941-6730 for a free consultation or visit us at www.sagarialaw.com. Our team of Bankruptcy Attorneys can assist you with all aspects of your case. We have attorneys in San Mateo, Monterey, Fremont, Salinas, Sacramento and San Jose.

Sacramento Bankruptcy Attorney Discusses Chapter 11 Bankruptcy

There are many people out there who are unable to file for a Chapter 7 or a Chapter 13 bankruptcy because they own a business or corporation. Most of these people will look to a Chapter 11 in order to cope with their debts. A Chapter 11 bankruptcy is a reorganization procedure used by businesses, including sole proprietors, partnerships, and corporations. The debtor in Chapter 11 files a petition which includes a list of assets and liabilities, and a detailed statement of financial affairs. The debtor will typically act as his own trustee, called a "debtor in possession", and will remain in possession of all estate property. The court can appoint a trustee for cause shown, including mismanagement.

About one month after the filing, the debtor and his attorney attend a meeting of creditors. The debtor files monthly operating reports, showing income and disbursements, profit and loss, and a balance sheet, and pays quarterly fees to the U.S. Trustee based on the amount of money disbursed. The debtor has the exclusive right to file a plan during the first 4 months. Thereafter, creditors are permitted to file plans. The Chapter 11 plan is accompanied by a disclosure statement, which describes the debtor’s financial circumstances.

The plan places creditors holding similar types of claims into the same class. Creditors whose claims are impaired are allowed to vote on the plan. There usually needs to be a majority vote by the creditors in order for the plan to be accepted by the Court.

If you have a question regarding different debts or filing bankruptcy please contact Sagaria Law at 1-800-941-6730 for a free consultation or visit us at www.sagarialaw.com. Our team of Bankruptcy Attorneys can assist you with all aspects of your case. We have attorneys in San Mateo, Monterey, Fremont, Salinas, Sacramento and San Jose.