California Bankruptcy Lawyer Blog

Filing Bankruptcy is not Shameful

2010-03-12T14:46:15Z

A San Jose Bankruptcy Firm Attorney lets you know that if you are facing filing bankruptcy, you are not alone...

As a San Jose Bankruptcy Attorney, I’d like discuss something personal today, San Jose. Where many of these blogs tend to explain the technicalities of bankruptcy, or report on bankruptcy news, if you’ll allow me, I’d like to get on my soap box. *Steps Up*

San Jose residents, you don’t need to feel guilty about filing bankruptcy. There I said it. Far too often I see good hearted hard working Americans in our offices who are struggling with two giant weights; the first, their mountain of debt, and the second, their mountain of guilt. Let’s be real, San Jose community. Filing bankruptcy is stressful enough as it is, you don’t need to add guilt on to that mountain of stress. Bankruptcy statutes were put into place as a means to help Americans out of tough economic times. It’s literally a lifeline for those in need. Stop feeling guilty. It’s ok. I promise.

I’m guessing there are more than a few San Jose consumers who are struggling with this very dilemma. Consequently, I hope those Bay Area consumers in debt who can identify with this struggle listen and don’t take my advice lightly. If you need Bankruptcy, there is nothing, absolutely nothing wrong, evil, or disingenuous about the process. For goodness sake, honest Abe filed bankruptcy. Look it up. *Steps Down*

Thank you for indulging my rant, San Jose. If you need Bankruptcy, stop tormenting yourself and seek help immediately. Carpe Diem.

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys. After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs. Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Jose Attorney on Credit Counseling & Debtor Education

2010-03-11T14:46:39Z

A San Jose Bankruptcy Attorney comments on necessary steps during bankruptcy...

When in the planning and implementation stages of filing for bankruptcy, San Jose bankruptcy attorneys want you to know that it is essential for the debtor to understand some of the requisites needed to file and obtain a discharge in their bankruptcy case. One thing everyone filing for bankruptcy needs to know is the relative timeline involved with their specific case as it relates to credit counseling and debtor education courses. Possession of this knowledge is specifically important for a Chapter 7 Bankruptcy. When in the process of filing for Chapter 7 one must understand that they will be eligible to obtain a discharge much faster than in Chapter 13 . When in Chapter 7, the approximate time from filing and discharge is anywhere from 90-120 days, so keep this in mind.

It is mandatory that EVERY debtor (there are few exceptions to this) take and complete two courses in order to obtain a discharge in their case. These courses have been required since the The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 which not only birthed the Means Test , but section 109(h) of this Act defines the guidelines for Credit Counseling & Financial Management Courses. (See www.usdoj.gov for more info).

One of the most frequently asked questions relating to these courses are “can I take both of these courses at once?” unfortunately the answer to this question is No, you must complete CC before you file, and Debtor Education afterwards. Most approved agencies offer both courses either telephonically or online.

On Filing Chapter 7 Bankruptcy and Payments

2010-03-10T14:46:35Z

San Jose Bankruptcy Attorney discusses Payments during a Chapter 7 Bankruptcy

San Jose Bankruptcy Attorneys notice that many times debtors are often concerned that filing for a Chapter 7 bankruptcy automatically means that they will lose their car and house. While a Chapter 7 filing is technically a “liquidation” proceeding, all is not lost. Debtors are entitled to keep their cars and homes as long as there is not significant equity in any one item. Most people do not lost their home or their car in a Chapter 7 proceeding because of state and/or federal exemptions. For example, in California, single people are entitled to exempt $50,000 of equity in their home and $75,000 of equity for married couples.

One caveat to being able to keep cars and homes is that the debtor must be able to maintain their current payments. If a debtor files for Chapter 7 bankruptcy and he/she is not current on their car payment then the car will likely be repossessed. If they are not current on their home, then the home will go into foreclosure. As a result, in order to keep a car or a home in a Chapter 7 proceeding, the debtor must be current on his/her payments at the time of filing and continue to remain current on those loans during the pendency of the bankruptcy.

More on Foreclosure

2010-03-09T14:48:03Z

A San Jose bankruptcy attorney notes foreclosure in California...

California has posted the nation’s second highest foreclosure rate. Foreclosures in California are up 50% from the same time last year. California’s default notices and schedules foreclosure auctions are up 120% and 73% respectively. A recent survey shows that 7 out the top 10 metropolitan area foreclosure rates were in California. As San Jose Bankruptcy Attorneys who deal with clients facing foreclosure everyday and the devastating effects it can have with regard to adding additional stress to the bankruptcy process, we are glad to see that San Jose was thankfully not among the top ten, but its foreclosure rates are still dramatically up from last year. The hardest hit metro cities in Northern California are Vallejo-Fairfield, Modesto, Merced, Stockton, and Sacramento.

A chapter 13 bankruptcy can help consumers stop a foreclosure on their home. The 5 year (60 month) restructuring plan allows debtors to repay any arrears on their home over 60 months, so long as the homeowner is able to make their current mortgage payment in addition to the monthly arrears repayment. The benefit of this type of repayment plan is that the arrears cease accruing interest and the stress of a pending foreclosure is lifted.

National Consumer Protection Week

2010-03-08T13:14:34Z

A San Jose Bankruptcy Attorney keeps consumers informed about Consumer Protection Week, March 7-13th...

National Consumer Protection Week (NCPW) assists consumers of all ages and walks of life be informed about and, if needed, execute their consumer rights. As San Jose Bankruptcy Attorneys, we are all for this! The theme of NCPW is how to preserve and protect your money and as an added bounus to National Consumer Protection week, the FDIC has announced their launch of a money management section on their website to further awareness to consumers. This feature will include daily tips during NCPW, followed by an ongoing "Consumer Tip of the Week." Subject matter will include saving and borrowing money to protecting money with FDIC insurance and avoiding financial fraud, according to an FDIC posted article. Consumers, consumers in debt, bankruptcy attorneys, media and anyone interested in saving money is invited to catch up on the latest and greatest in consumer information, debt resolution, and money matters.

General Growth's Chapter 11 Filing

2010-03-07T13:51:15Z

A San Jose Bankruptcy Attorney takes note of another Chapter 11 bankruptcy filing...

General Growth, the nation’s second largest shopping mall operator, owns or manages 200 properties in 44 states. Despite these numbers, however, General Growth filed for Chapter 11 Bankruptcy after incurring $27 billion in debt.

Recently, Judge Allen Gropper extended General Growth’s time to file a reorganization plan. In the interim General Growth has received an offer to purchase the company from rival Simon Property Group Inc. General Growth rejected the offer, however, as it only valued the company at $9 a share. In the meantime, General Growth has proposed a plan to exit bankruptcy with an investment from Canadian Based property manager Brookfield Asset Management Inc. Brookfield, therefore appears to be acting as a "stalking horse" for Simon.

It comes as no surprise then that Simon has begun their due diligence and has signed a non-disclosure agreement in order to gain access to General Growth’s books. General Growth remains hopeful that Simon will make another offer. Time will tell.

Short Sales and Bankruptcy

2010-03-06T14:00:54Z

A San Jose Bankruptcy Attorney on Short Sales and Bankruptcy...

Debtors in San Jose who are considering filing chapter 7 and walking away from their home may want to know whether or not a short sale is a good idea? Put simply, no. More accurately, it’s unnecessary.

There’s no point to going through the short sale process if a debtor is walking away from their home and filing chapter 7. The chapter 7 eliminates any and all liability of the debtor with respect to the home. Moreover, court approval will most likely be necessary to complete the short sale while in bankruptcy. Many attorneys probably wouldn’t consider this part of the bankruptcy process and will charge a debtor an extra fee to accomplish this unnecessary task. Thus, before a debtor begins the short sale process they should consult their bankruptcy attorney.

Sunnyvale's Vallco Foreclosure

2010-03-05T14:00:36Z

San Jose Bankruptcy Attorney discusses an example of a local large foreclosure

Many San Jose Bankruptcy Attorneys couldn't help but take note when the Cupertino Square Mall, formerly known as Vallco Fashion Park, filed for Chapter 11 bankruptcy protection in September of 2008. After months of litigation, the Chapter 11 restructuring proceeding was converted to Chapter 7 liquidation proceeding. A court-appointed trustee is overseeing the sale of the Mall’s assets and distributing the proceeds to creditors. The case was converted to a Chapter 7 proceeding as a result of the Mall’s failure to make adequate protection payments on its $195 million construction loan.

The Cupertino Square Mall apparently suffered greatly from the downturn in the Silicon Valley and expansion of Westfield Valley Fair in San Jose. High vacancy rates and the mall starting to show its age contributed to the Mall’s failure. In its heyday, the Cupertino Square Mall was one of the premium enclosed malls in the area.

Since the Mall’s conversion to a Chapter 7 liquidation, rumors have surfaced that real estate tycoon, Tram Be may be investing in the property. Any sale would require permission from the Bankruptcy court. Further resolution to the outstanding issues should be resolved at the bankruptcy court hearings on November 12 and December 17.

Comments on COLA

2010-03-04T14:51:07Z

San Jose Bankruptcy Attorney discusses Lack of COLA Increase for Social Security Recipients

For the first time since cost-of-living-adjustments (COLA) went into effect in 1975, Americans will not receive a COLA adjustment to their social security benefits. Not everyone is a San Jose Bankruptcy Attorney who deals with information like this everyday, so what that means is that the 57 million people in America receiving social security benefits, including veterans, seniors and those with disabilities, will not receive an increase in benefits. There will be no COLA adjustment this year because of the decline in consumer prices across the board as determined by the Consumer Price Index (CPI).

Due to the difficult national financial situation, many people receiving social security benefits are struggling to make ends meet. The Obama Administration has proposed a $250 per person stimulus payment for seniors, veterans, retired railroad workers and people with disabilities.

Foreclosure Happens

2010-03-03T14:50:58Z

San Jose Bankruptcy Attorney discusses singer Toni Braxton’s Foreclosure

San Jose Bankruptcy Attorneys handle all aspects in the bankruptcy process, including foreclosujre. A home foreclosure really can happen to anyone. Even superstars fall behind on their mortgages. Singer, Toni Braxton fell behind on her mortgage payment due to financial difficulties and now she has received notice that the bank is going to foreclose on her Century City, California home.

Filing a Chapter 13 bankruptcy proceeding would stop the foreclosure and allow Ms. Braxton to repay her missed mortgage payments and accrued interest over a 5 year plan. While the Chapter 13 proceeding will enable Ms. Braxton to repay the arrears over 5 years through the Chapter 13 Payment Plan, she will need to be able to continue to pay her current mortgage payments post-petition in addition to her plan payments. This is often where debtors get into trouble. They file the bankruptcy to stop the foreclosure, but their financial situation does not improve sufficient to be able to make both payments. This problem is often remedied if there is a 1st and 2nd mortgage on the home. If the fair market value of the home is less than the balance on the 1st mortgage than the 2nd mortgage can be avoided and converted into unsecured debt. Once the 2nd mortgage has been removed from the home, debtors are often in a better position to make their monthly mortgage payments on the 1st mortgage as well as make their Plan Payments to repay the arrears.

Debt Relief for Students of Silver State Helicopters

2010-03-02T16:51:24Z

San Jose Bankruptcy Attorney discusses an example of debt relief for students

Most San Jose bankruptcy attorneys will tell you its nearly impossible to have student loan debt forgiven. However, in the case of Silver State Helicopters (SSH), which filed for bankruptcy, leaving 2,300 students in the lurch with $174 million in debt, the Nevada Attorney General’s Office stepped in to obtain student loan relief. Silver State Helicopters operated 34 flight schools nationwide; however, when the financial crisis caused it to close its doors, most of its students were left with substantial debts for training and certification that were never received.

The preferred lender for students who attended SSH was Student Loan Express. Student Loan Express had lent over $174 million to SSH students and pursuant to the agreement reached with the Nevada Attorney General’s Office, agreed to forgive almost $113 million of debt. Student Loan Express has agreed to forgive 75% of the debt acquired by students who never earned a certificate. Other students who received one or more certificates will also receive some relief.

Another benefit of the settlement with Student Loan Express is the provision that Student Loan Express will be prohibited from reporting negative credit information on students who stopped making payments prior to the settlement. Twelve states are participating in the agreement, including California. The agreement is going to be presented to the Court through a class action lawsuit. If the agreement is approved by the Court, it will provide much needed relief to SSH students.

Post Bankruptcy Credit Score

2010-03-01T16:50:16Z

San Jose Bankruptcy Attorney discusses your credit score after bankruptcy

As a San Jose Bankruptcy Attorney, I know that many Bay Area debtors are worried about filing for Chapter 7 or Chapter 13 bankruptcy because they are concerned about the damage they will do to their FICO credit score. While it is true that a bankruptcy filing stays on a consumer's credit report for 10 years, it can be the best way to repair their credit over the long run.

Generally speaking, consumers considering bankruptcy have already done a significant amount of damage to their credit report, so the bankruptcy filing will at least stop the bleeding. Furthermore, after filing, consumers can begin to rebuild and repair their credit almost immediately. What a lot of people don’t know, is that 35% of a consumer’s credit report is based upon payment history. The further a debtor can get away from previously missed payments the more their score improves.

Two ways to begin rebuilding credit after a bankruptcy are obtaining new credit cards or a car loan. A standard rule of thumb is that consumers will see improved interest rates on credit cards approximately 6 months after filing for bankruptcy and better interest rates on car loans after 12 to 24 months. Car loans can of course generally be obtained sooner, but at significantly higher rates. It may be worth the higher interest rate to speed up credit repair if the consumer can afford it.

Bankruptcy & Facebook

2010-03-01T16:36:27Z

San Jose Bankruptcy Attorney discusses Debtor’s postings on Facebook...

This San Jose Bankruptcy Attorney is not denying that Facebook has become an international phenomenon, boasting millions of users posting new information everyday. However, Debtor’s contemplating bankruptcy or those who have already filed should be wary of how much information they disclose on social networking sites. Even if debtor’s limit their profiles to “Friends Only” status, they are not necessarily secure from prying eyes. It is best for all consumers, in any legal proceeding, bankruptcy included, to maintain a level of anonymity on the Internet. Posts regarding lavish trips or extravagant purchases can easily be disclosed to bankruptcy trustees by ex-spouses, ex-significant others, or nosey creditors.

It is best to error on the side of caution and limit any posts on social networking sites until all legal bankruptcy proceedings are complete. Information is power in any legal setting and debtors have to assume that any information they post about their spending habits will be used against them. Debtors should protect their private life and personal information by remaining anonymous and flying below their creditors and bankruptcy trustees’ radar.

Chapter 7 Bankrutpcy Filings are Common

2010-02-28T16:36:03Z

A San Jose Bankruptcy Attorney discusses the Increase in Chapter 7 Filings

Generally speaking, from a San Jose Bankruptcy Attorney perspective, Chapter 7 bankruptcy filings are up over 35% in Silicon Valley. An increase this dramatic has not been seen since the dot-com bust. Most attorneys in the San Jose area alone have seen their bankruptcy practices double, if not triple, over the past year. The increase in Chapter 7 filings has been driven by the increase in unemployment and the housing market crash. With the jobless rate on the rise and none of the Silicon Valley giants hiring, bankruptcy is often the only recourse. Chapter 7 filings have hit executives, professionals, and blue collar workers alike. Once a debtor falls behind on his/her payments it is next to impossible to get caught up in this economic climate. While most people have reserves to sustain themselves for a period of time, eventually those reserves run out and there is nowhere to turn.

Creditors have been ruthlessly terminating consumers’ credit lines and decreasing limits, not to mention the rampant increase in interest rates and penalty fees. It is no wonder that debtors throughout San Jose and the rest of Silicon Valley have had to turn to Chapter 7 protection.

A Word on Full Disclosure

2010-02-27T17:18:01Z

San Jose Bankruptcy Attorney discusses the Importance of Full Disclosure...

Bankruptcy Attorneys in San Jose that often work with debtors seeking protection under Chapter 7 and Chapter 13 find they inevitably want to protect family and friends from the consequences of their filing. However, all debtors are required to fully disclose all debts and assets in their bankruptcy petition. Furthermore, the bankruptcy court will review all payments made to family, friends, acquaintances, business partners, which fall under the category of “insiders” during the twelve months prior to filing. Any suspicious or “preferred payments” may be recoverable by the trustee.

Debtors should also be wary of trying to hide assets by transferring them to another party. Debtors are required to disclose all property that they have either sold or given away in the past 24 months prior to filing. Any transfers that the trustee believes was made for less than the fair market value could raise a red flag and possible dismissal of the bankruptcy proceeding. Any debtor who lies on their bankruptcy petition could also be charged with perjury, which can carry severe consequences including jail time.

As such, all debtors should be wary of transfers and the sale of property to family and friends immediately proceeding a bankruptcy. In life and in bankruptcy, honesty is the best policy to avoid case dismissal or worse potential consequences.