California Bankruptcy Lawyer Blog

Sacramento Bankruptcy Attorney discusses the Pitfalls of Pursuing Voluntary Loan Modifications

It has been predicted that there will be over 8 million foreclosures in the United States over the next four years. Thousands of people are trying to negotiate voluntary loan modifications with their lenders to prevent themselves from becoming a statistic. Unfortunately, the most recent data shows that less than 10% of the consumers who participate in voluntary loan modification programs actually receive a modified loan that results in a reduced principal loan balance. Current data also reflects that approximately 45% of strapped consumers who participate in voluntary modifications actually end up with higher monthly payments as a result of the modification. Consumers who modify their loans may also end up capitalizing their unpaid interest and fees, which get placed on the back end of the loans, and ultimately increases the consumer’s overall debt.

Even with all of the programs to incentivize lenders to make meaningful loan modifications to struggling consumers, the execution of these programs is falling short. Consumers are often given the “run around” or told to get further behind on their payments in order to receive assistance. Asking well intentioned consumers to intentionally fall behind on their payments or further damage their credit just to be given the time of day is patently unfair. Furthermore, many consumers voluntarily attempt to modify their loans for months before they are finally told that relief will not be granted. A serious restructuring of the voluntary loan modification process needs to take place in order to adequately protect consumers and provide much needed relief.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs. Please feel free to complete our free bankrupcty evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

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

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

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San Jose Bankruptcy Attorney Speaks About GM Bankruptcy

Just a few months ago, Chrysler filed for Chapter 11 Bankruptcy. On Monday, June 1, 2009, General Motors (GM) followed suit. From a historical perspective, GM has been a carmaker for about 100 years and was the largest carmaker for 77 years (until last year) The stark picture today has GM with $172.8 billion in debt with only $82.3 billion in assets. The US government has already “loaned” GM about $50 billion dollars which will be mostly converted into equity into the new company that GM will become.

Under the US Bankruptcy protection, GM plans to do many of the initiatives that were always recommended but impossible due to contracts, laws, and shear audacity of the plans because the other options (if the actions were not taken) would be to liquidate the entire company. Some of the actions to be taken within the next 60-90 will be the sale of unprofitable divisions like Saturn and Hummer. One of GM’s idle plants will be retooled to make smaller and more fuel efficient cars to meet the surge in demand for a greener lifestyle. Other countries are moving forward to aid GM’s foreign divisions like Saab and Opel. These actions normally would have rocked the company headlines and, if the stock reacted negatively, could have lead to proxy fights or corporative executive terminations that may have killed the initiative.

It is unclear how the new GM will do but Bankruptcy gives GM the chance to find out. While not every business needs to be as drastic as GM, even small business owners may discover that Chapter 11 Bankruptcy can provide them with the breathing space to implement the deepest most necessary changes to make their business profitable.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs. Please feel free to complete our free bankrupcty evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

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Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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San Mateo Bankruptcy Attorney Talks About Loan Modification Attorneys

Due to the sub-prime mortgage crisis, millions of hard working consumers are facing problems paying their mortgages. With many of the adjustable loans about to “adjust” upwards, their difficulty in paying for mortgages will only get worse. As the fear of missing mortgage payment grows, consumers become desperate in their panic to save their homes. The confusing information coming from the government only adds fuel to the fire as there are daily messages that the government is releasing credit or passing laws that order lenders to work with their customers. From this mass confusion arises a new brand of unsavories preying on the uninformed.

The latest trend of mis-advertising is the “loan modification specialist.” These advertisers promise that lenders can have their loan modified to lower interest rates, place missed payments onto the back end of the loan, or even lower of principle. Although there are legitimate programs out there to help lenders modify their loans, the unscrupulous usually ask the nervous homeowner for money upfront then do little or no work on the case. The homeowner usually falls further behind because their precious mortgage money was paid to the specialist only to find out a foreclosure was started instead of a loan modification.

Lawyers are not immune to the lure easy money as well. Crafty loan modification scammers have been trying to “partner” with bankruptcy attorneys to get more money. The bankruptcy attorney is asked to put their name on the advertisement or even onto the loan modification service contract. Then the bankruptcy lawyer does no work while leaving it all to the “specialists.” These actions can be extremely unethical because the bankruptcy lawyer is fee sharing with non-attorneys, collecting fees upfront, or allowing the unauthorized practice of law, which are all not allowed. If a consumer hires a bankruptcy lawyer to do a loan modification then the lawyer is expected to make a good faith effort to provide actual legal services. Simply turning over the case to non-lawyers is not enough because the lawyer has no control over the quality of work being provided.

Therefore, any consumer considering hiring an attorney to do loan modifications should inquire who is actually doing the work. The consumer should also assume that any money they put forward will never be recovered. At the very least, consider consulting with a bankruptcy attorney to understand those options before paying somebody $3,000.00 for an unknown loan modification.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs. Please feel free to complete our free bankrupcty evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

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

Posted In: Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Loan Modifications

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San Jose Bankruptcy Attorney discusses the Importance of Work Life Balance

The Sagaria Law bankruptcy team attended a 2-day conference in Chicago, Illinois this past week. The theme of the conference was “Get a Life.” At first, the title seemed a bit abrasive. As bankrupcty attorneys, we are constantly striving to reach new goals and better serve our bankruptcy clients. We have massive amounts of deadlines and our actions have serious consequences for our clients. Telling us to “Get a Life” seemed a bit unfair.

However, after listening to the speakers over the course of the conference, it became exceedingly obvious that we all, in fact, do need to “Get a Life.” In any profession or career, a balance of work and personal time is critical to continued success. The speakers motivated us to streamline our processes and provided us with added tools to increase customer satisfaction and retention.

At Sagaria Law, we pride ourselves on our commitment to excellence in providing bankruptcy services to consumers, and in every area of our practice. With our new arsenal of strategies and techniques for improved customer service and greater efficiency, all of the bankruptcy attorneys and staff here believe we are on our way to “Getting a Life.”

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs. Please feel free to complete our free bankrupcty evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

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

Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt , Loan Modifications

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Fremont Bankruptcy Attorney discusses GM’s historic Chapter 11 filing

Last week, General Motors (GM), once the United States largest private sector employer, filed for Chapter 11 bankruptcy. The United States government invested $30 billion to support GM through its restructuring process. The Government now owns approximately a 60% stake in the automobile company.

The goal of the Chapter 11 restructuring is to allow GM to cut its under-producing dealerships, unprofitable plants, and other dead weight liabilities. GM intends to emerge from bankruptcy leaner and with only its most profitable brands, dealerships and contracts. GM, with the assistance of the Obama Administration, has been negotiating with the United Auto Workers (UAW) union to decrease its labor costs and the high cost of its current benefits’ plan.

The GM filing comes on the heels of the Chrysler filing in April. The Chapter 11 bankruptcy filings for these two car companies will allow them to emerge stronger and more efficient to help them reclaim market-share. These bankruptcy filings should be viewed as a positive step towards the companies’ future of sustainable growth and profitability.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs. Please feel free to complete our free bankrupcty evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

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

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

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San Jose Bankruptcy Attorney Discusses G.M. Bankruptcy

Now that sister company Chrysler has filed for Chapter 11 Bankruptcy, the US is waiting to see what General Motors will do. The question everyone is asking is will GM file for bankruptcy too? GM released their first quarter results which stated that GM lost $5.9 billion (excluding special accounting items) for the first three month period ending in March. GM had a 47 percent drop in revenue compared to the same quarter in 2008. GM built 903,000 fewer cars than it did for the same quarter of last year. This makes GM look less likely that it will survive instead of more viable because it is doing worse now than it did last year. All this is after GM had received almost $15.4 billion in federal loans as government bailout. At this time, GM has about $11.6 billion dollars in cash which should be just enough to keep operating and paying bills. GM spent $10.2 billion dollars of its cash reserves in the quarter which amounts to about $113 million dollars a day.

GM would be expected to file a Chapter 11 Bankruptcy to allow it to continue operating while trying to restructure its debt. GM would have to come up with a payment plan or restructure of debt to its creditors for approval. The Bankruptcy Court is unlikely to require an 100% requirement for the plan. This would create a very ugly battle for GM’s creditors as they would not have to be all treated equally. If enough of the creditors are wooed by a favorable plan, the “holdout” creditors may end up with pennies on the dollar. As a side note, GM bondholders are being offered GM stock in an effort to reduce the its debt load although very few people realistically believe GM will get enough converts to reached a manageable level of debt.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs.

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

Posted In: Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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Sacramento Bankruptcy Attorney discusses the Phoenix Coyotes Chapter 11 Bankruptcy Filing

The Phoenix Coyotes recently filed for Chapter 11 Bankruptcy protection much to the chagrin of the NHL. The team has accumulated approximately $73 million in debt over the past 3 years. As part of the Coyotes’ chapter 11 reorganization plan, the Coyotes’ owner Jerry Moyes has proposed selling the team to James Balsillie, the Co-CEO of Research In Motion (RIM) Ltd. Balsillie has offered to pay $212.5 million for the team, which would pay 100% of the teams secured debt and $95.5 million to unsecured creditors. However, as a condition of the sale Balsillie wants to be able to relocate the team to Ontario, Canada.

This case is interesting because, as a member of the National Hockey League, the Coyotes would normally need the permission of the NHL and the other 29 team owners to sell and relocate the team. Moyes has attempted to circumvent this process by going directly to the Bankruptcy Court and proposing that the team be sold to Balsillie. The NHL is investigating the propriety of the Coyotes’ bankruptcy filing and vigorously contesting the sale of the Coyotes to Balsillie. Statements from the NHL have made it clear that the NHL intends to keep the team in Glendale, Arizona. The NHL intends to keep the sale of the Coyotes out the jurisdiction of the bankruptcy court and return the issues of relocation and sale to the League’s purview.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs.

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

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

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San Jose Bankruptcy Attorney discusses Lien Stripping in a Chapter 11 bankruptcy or a Chapter 13 bankruptcy

Debtors filing for Chapter 11 bankruptcy or Chapter 13 bankruptcy protection have the option to avoid junior secured liens on their property if their property is underwater. For example, if a debtor’s home has a first mortgage of $100,000 and a second mortgage of $30,000 but the property is only worth $80,000, there is no equity in the home to secure the lender’s second mortgage. Bankruptcy law permits debtors to “strip off or lien strip” the $30,000 second mortgage and convert it to unsecured debt. Once the loan has been “stripped” the debtor’s property will solely be secured by its first mortgage of $100,000.

The Obama Administration proposed a plan that would give bankruptcy courts the authority to “cram down” a debtor’s first mortgage to the fair market value of the property. In the example above, since the property is only worth $80,000, the first mortgage would “cram down” from $100,000 to $80,000 to reflect the property’s current value. That proposed legislation is currently stalled in Congress, but debtors remain hopeful for future relief.

Debtors who have already filed for bankruptcy protection and had their cases discharged are not precluded from this benefit. A debtor can petition the court to reopen their bankruptcy case in order to exercise their right to bring a motion to avoid a lien.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs.

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

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

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Fremont Bankruptcy Attorney discusses the benefits of a Chapter 11 bankruptcy filing as demonstrated by Z Gallerie

Z Gallerie, the 30 year old home furnishings chain, filed for Chapter 11 bankruptcy in April of this year. The filing allowed the company to voluntarily reorganize its operations to increase its bottomline by closing under-producing stores and relieving itself from liability on those leases. Z Gallerie also closed a distribution center to cut away additional dead weight. The company has sought the court’s approval for use of “cash collateral” to continue paying its vendors and employees during its reorganization process.

The company has not announced any additional store closings since its initial purge in March, and should be able to continue operating its remaining stores, website sales, and honor existing company programs. Z Gallerie’s revamping of its organization by disposing of poor performing stores will likely enable it to triumphantly emerge from Chapter 11 bankruptcy.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs.

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

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

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San Jose Bankruptcy Attorney discusses Requirements and Restrictions for Chapter 7 and Chapter 13 Bankruptcies

If you are considering filing for Chapter 7 bankruptcy (liquidation) or Chapter 13 (repayment plan) bankruptcy protection there are a few requirements and restrictions that you should be aware of. While this is not intended to be an exhaustive list, it highlights some of the critical factors that all consumers should know.

1. Credit Counseling Requirement:

a. Prior to filing his/her petition for bankruptcy under any chapter the debtor must complete a Credit Counseling Course. The cost for these classes can range from $30.00 to $50.00 and must be completed prior to filing for bankruptcy.

2. Timing Requirement:

a. A debtor who has previously been discharged in a Chapter 7 must wait 8 years to file another Chapter 7 petition.

b. A debtor who has previously been discharged in a Chapter 13 must wait 4 years to file a subsequent Chapter 7 bankruptcy petition.

c. A debtor who has previously been discharged in a Chapter 13 bankruptcy must wait 2 years to file a subsequent Chapter 13 petition.

3. Residency Requirement:

a. A debtor must reside in a state for a period of 2 years prior to filing the bankruptcy petition to qualify for that state’s exemption laws. This law is intended to prevent people from moving to another state for the sole purpose of obtaining more favorable exemption laws.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs. Please feel free to complete our free bankrupcty evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

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

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

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Sacramento Bankruptcy Attorney discusses Chrysler, Vick and Cram Downs in Bankruptcy

Some creditors are balking at Chrysler’s Chapter 11 reorganization plan. They believe they would receive more in a Chapter 7 liquidation plan. In order for Chrysler’s reorganization plan to be approved by the bankruptcy court over the objections of a creditor class, the plan must “crammed down.” Meaning the bankruptcy court will have to tell the impaired classes that have refused to agree to the reorganization plan that they are out of luck. Recently, the Court refused to “cram down” Michael Vick’s reorganization plan because the Court did not believe the plan was feasible, without a guarantee that Vick would be making a high figure salary as a professional football player.

However, Vick didn’t have the backing of the U.S. Government. The Obama administration has proposed to finance Chrysler’s restructuring with $10.5 billion in loans. Canada would contribute $2.4 billion of that loan amount, but the rest would come from the taxpayers’ coffers. In addition to receiving another $10.5 billion in loans, Chrysler would also likely be relieved of its responsibility to repay the $4.0 billion loan previously made by the federal government.

The intent of the plan is to get Chrysler in and out of bankruptcy as quickly as possible. With the continued assistance of the federal government, the Court will likely approve Chrysler’s reorganization plan over the creditors’ objections.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs. Please feel free to complete our free bankrupcty evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

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

Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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San Francisco Bankruptcy Attorney Talks About Life After Bankruptcy

One of the biggest fears by any debtor is that once bankruptcy is filed, it will lead to a life of horror. Debtors believe that if they file bankruptcy their names will carry a scarlet letter to be shunned by all reputable lenders. Debtors often believe they will be stuck going to shady characters who will charge outrageous interest rates with horrendous consequences equivalent to the fabled leg breaking stories from loan sharks if the file for bankruptcy. Aside from very good fiction, these stories are hardly ever the truth.

Most debtors feel a sense of relief and cautious optimism after the bankruptcy is completed, but it takes time. Sometimes it is hard for debtors to believe that the Bankruptcy court can wipe away tens of thousands of debt without ever speaking to the debtors. There is no “big showdown” where the creditor comes and preaches fiscal irresponsibility while pointing a finger of righteousness. The bankruptcy judge will not wave his gavel demanding to know how the debtors could let this happen. After months (sometimes years) of receiving “certified” letters demanding money with threats of lawsuits or phone calls from credit collectors who will name the debtor’s employers, friend and family as people they will call, the debtors receive a simple letter from the Bankruptcy court stating that their bankruptcy is complete and a discharge was granted. The phone calls stop and mail is just regular junk mail. Debtors have been known to call their bankruptcy lawyers repeatedly asking if there is anything else they can do to help bankruptcy, as if they wanted the nightmare to continue.

After the discharge, a very peculiar event happens. The Debtors begin to receive credit card applications. Their credit scores begin to rise. Some even start to save money. Now that the debtor does not have any more debt, they no longer have missed payments or higher than average debt. They factors would have normally lowered their credit scores are gone and, instead, they have positive events like paying their car loans on time. Credit card companies love giving bankruptcy debtors credit cards because bankruptcy cannot be filed again for another 8 years. The debtor can even purchase a new car within the first year of bankruptcy.

Bankruptcy was meant to give debtors a fresh start which is what happens. It is unfortunate that the media makes bankruptcy sound like such a scary thing. If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs.

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

Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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San Jose Bankruptcy Attorney Talks about the Chrysler Bankruptcy

On April 30, 2009, Chrysler’s filed for a Chapter 11 Bankruptcy. The Chrysler Bankruptcy would be a huge undertaking because the company is one of the big three automakers in the United States. To see how this bankruptcy will work, it is helpful to look at a different large bankruptcy. In late 2008 and early 2009, the Circuit City Bankruptcy rocked the retail world because it signaled the shut down a major player in products that consumers purchase on a regular basis. Circuit City filed for Chapter 11 bankruptcy which is what Chrysler would do. Under the Chapter 11 bankruptcy, Circuit City was able to continue business including selling during the holiday season and pay their employees for the work. Circuit City was given protection against creditors while it looked for a new source of capital or a buyer. Neither could be found so Circuit City had to be shut down.

In Chrysler’s case, they have Chapter 11 creditor protection while it looked for solutions to its problems. Based on reports, Chrysler had to file for Bankruptcy so that it could close the investment from Fiat of Italy. Fiat had previously been identified as a potential buyer ranging from a 20 percent to 35 percent stake in the company. Chrysler owes $6.9 billion to lenders and once a few begin collections, could cause the whole company to shut down. (A car cannot be sold unless it has all the parts, like the wheels) The Chapter 11 protections are needed because Chrysler needs to continue operating while the deals are being worked out.

The straw that broke the camel’s back and forced Chrysler into bankruptcy is being blamed on a small minority of creditors. The lenders originally wanted 65 cents to the dollar with a 40 percent equity stake in whatever company Chrysler becomes. The government wanted the lenders to get 22 cents on the dollar with 5 percent of the new company. The key note was that government came to the table with money to help finance any deals but wanted to spend as little as possible while the lenders want as much as possible. The risk for the lenders was that the deal fell apart and Chrysler was liquidated similar to Circuit City where they could receive much less than 22 cents on the dollar and only after items have been auctioned off. (One can imagine that there are few buyers of car building plants in the US) The other risk was that under Chapter 11 laws, Fiat (or any other buyer) can choose which assets to keep and which to get rid. This pits the lenders against each other as the owners marquee property can command a premium while the undesired debts are left with hats in hand asking for bail outs.

In the end, most of the major lenders agreed to the government’s proposal prior to bankruptcy but a few minority lenders held out. The final group of lenders who withheld approval were called “speculators” by President Obama. Many of the lenders were hedge funds and boutique investment funds who alleged that the big banks were yielding to the government’s proposal because of prior bailout money. Now that bankruptcy is filed, the decision as to whether Chrysler’s plan is accepted or not will lie with the Bankruptcy Judge instead of the lender’s hands.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs.

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

Posted In: Bankruptcy Law , Bankruptcy Trustee , Business Formation , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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San Francisco Bankruptcy Attorney Discusses Loan Modifications

There are many different variations of “loan modifications” being used in the market today. The most traditional loan modification is one where the lender changes the terms of the loan to accommodate the borrower. This usually occurs when the borrower is in a financial bind and has defaulted on their loan. The borrower does not have the funds to fix the situation by paying their arrears or they cannot make their current payments due to a financial hardship. The lender then modifies the loan (which is different from a refinance) to accommodate the borrower. A loan modification is discretionary and need not be approved by the banks. The modifications can include a reduction of interest rate, decrease in principal of the loan, or adding any arrears to the principal and extending the loan. Recently, President Obama released several billions of dollars to the banks to encourage them to modify certain loans.

Alternatively, many debtors have contacted “loan modification specialists” who often advertise late at night promising substantial reductions of a mortgage. Behind the lofty promises, these specialists often work in two ways. The first is a person who will basically negotiate with your lender on your behalf. Their goal is to try and get you the best loan modification possible. These “specialists” are usually people who have very good connections with the lenders and leverage their knowledge of the industry to get you to fill out the proper forms and get the best deal they can. These “specialists” need not be attorneys. The second type of “specialist” is a person who will go through your loan documents looking for errors. When a debtor borrows money for a mortgage, there is a substantial amount of paperwork involved which requires many levels of accurate and truthful disclosures. During the past 8 years, there have been several lenders who were less than experienced which resulted in non-compliant mortgages. Any mistakes present due to the need for quick mortgages give these “specialist” a bargaining chip to force the lender into a better deal on the debtor’s mortgage. Rumors are that certain mistakes can result in hundreds of thousands of dollars of reduction in home loans. These specialists usually want money upfront and the debtor should expect that money to be non-refundable regardless of the outcome. Since the money would basically be non-refundable, the debtor should be very careful as to who they select as their specialist. Luckily for the debtor, if these specialists do not succeed, bankruptcy is still an option for them.

Generally speaking loan modifications and bankruptcy are like oil and water. The two concepts do not work well together. If a debtor is in the middle of loan modification then any subsequent bankruptcy filing will put a stop to the process until the bankruptcy is finished. Also, if a debtor is in bankruptcy, the bankruptcy court must approve any loan modifications.

A loan modification and a bankruptcy can co-exist but it requires a lot of extra paperwork and many more hoops to jump through. It is better for a debtor to actually finish one before starting another. Technically speaking, if a debtor does a loan modification and then immediately files for bankruptcy, then the debtor’s transaction may fall into the presumption of abuse. The presumption of abuse is important because if the debtor pulled out money or paid down some balance then the debtor may have to return the money or reverse the transaction. However, most lenders will not cry foul unless the debtor intends to renege on the new deal.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are 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 needs.

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Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt , Loan Modifications

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Sacramento Bankruptcy Attorney discusses when it may be appropriate for a corporation to file for Chapter 7 Bankruptcy

For individuals, filing for bankruptcy under Chapter 7 means a fresh start and a discharge of nearly all debts. Unfortunately for a corporation, a Chapter 7 bankruptcy filing does not provide the same relief because its debts will not be discharged. This means for many struggling corporations that it is in the officers and majority shareholders’ best interests to just sell the remaining assets (if any), close the doors, and walk away. However, a Chapter 7 bankruptcy can be helpful under the following circumstances:

1. If there are a significant number of assets to be liquidated, officers may want to file for a Chapter 7 bankruptcy in order to benefit from the services of a Court appointed trustee. The trustee will then be responsible for liquidating the assets and relieving the corporate officers from the burden of finding buyers and organizing sales.

2. Filing for Chapter 7 bankruptcy can also protect officers and shareholders who have personally guaranteed the corporation’s obligations, such as leases, certain types of taxes, etc., from creditors who are looking to levy or put liens against assets that could be sold to pay off debts.

3. Creditors may also try to pierce the corporate veil and name officers and/or shareholders in lawsuits to obtain payment, even though they are not personally liable to repay the corporation’s debt. If the corporation believes it is likely to be facing numerous lawsuits from litigious creditors, a Chapter 7 filing will generally protect the officers and shareholders from personal liability.

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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy attorneys in San Mateo, Fremont, Sacramento, Roseville, San Francisco, Salinas and San Jose.

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Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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San Jose Bankruptcy Attorney Discusses Bankruptcy Statistics and the Economy

The current state of the economy has caused many people to turn to bankruptcies to rid themselves of debt. In March 2009 alone there have been 131,000 bankruptcies of all types filed in Bankruptcy Court. This number represents the most bankruptcies filed for any month since 2005. With every passing month, it seems that more and more people are filing. There has been a 9.2% in increase in March 2009 from February 2009. Since March last year bankruptcies rose 38% and have risen 79% from 2007. It is projected that 1.5-1.6 million people will file bankruptcy in 2009 which would exceed 2008 by 45%. The high percentage of bankruptcies comes off the heels of March's unemployment rate climbing to its highest since 1983 with 663,000 people losing their jobs. The unemployment rate is now 8.5%. Almost 1.1 million people filed for bankruptcy in 2008, 32 percent more than the 827,000 filed in 2007 and 86 percent higher than the 590,500 filings in 2006. So far this year, bankruptcy filings total 323,500.

However 2005 still holds the record for most filings from the 630,000 Americans sought bankruptcy protection in the two weeks before revisions to federal bankruptcy laws in October made it more difficult for individuals to erase debts. At this rate, more and more people who find themselves unemployed will seek the cover of bankruptcy in order to wipe out their debts and let go of their homes.

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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy attorneys in San Mateo, Fremont, Sacramento, Roseville, San Francisco, Salinas and San Jose.

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Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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Sacramento Bankruptcy Attorney discusses Cash Collateral

While filing for Chapter 11 bankruptcy may protect your business from creditors through the Automatic Stay, debtors need to be aware that filing the petition for Chapter 11 automatically creates a bankruptcy estate. This estate includes all of the property owned by the business at the time of filing which includes cash. What debtors may not be aware of is that the cash generated by the business post-filing is also likely to be considered property of the estate. The problem with this scenario arises when the business goes to pay its monthly bills, utilities, vendors, etc. Bankruptcy Code section 363(c)(2) specifically prohibits debtors from spending cash collateral without the consent of all interested parties to the bankruptcy. That means debtors must have permission from either all of its creditors, or a court order, before it can pay any bills using cash collateral.

Unauthorized use of cash collateral can have severe consequences for debtors, including hefty monetary sanctions, as well as possible dismissal of the bankruptcy proceeding. As such, it is recommended that an Emergency Motion for use of cash collateral be filed in conjunction with the debtor’s Chapter 11 petition. The Court can then make orders “carving out” cash collateral for the business’s use to enable it to remain operational during the bankruptcy proceeding.

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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy attorneys in San Mateo, Fremont, Sacramento, Roseville, San Francisco, Salinas and San Jose.

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Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Creditors and Debt

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San Jose Bankruptcy Lawyer Talks about Bankruptcy in Other Countries.

Bankruptcy is not a concept unique to the United States, almost every modern country has some form of bankruptcy. The laws vary from country to country and it is interesting to note the subtle differences. For example, in the United States, the US Trustee’s Office is the government’s branch to analyze and control much of the bankruptcy process, although the Federal Bankruptcy Court makes any final decisions. In Australia, the US Trustee counter part is called the Insolvency and Trustee Service Australia (ITSA). People filing bankruptcy in Australia may have certain restrictions placed on them such as a need for official permission to travel overseas.

In Canada, the US Trustee counterpart is called the Superintendent of Bankruptcy. In Canada, a debtor can, in the alternative to a bankruptcy, offer a “proposal” for paying off their debt. This sounds very similar to a chapter 13 plan except because the debtor pays a “Proposal Administrator” and the creditors are barred from taking further legal action as long as the proposal is honored.

In the United Kingdom, only individuals and partnerships can file for bankruptcy, corporations must file for a liquidation or administration. In Scotland, a bankruptcy is called a sequestration. The US Trustee counterparts are called an Official Receiver or a licensed insolvency practitioner.

In Hong Kong, a bankruptcy process starts when a creditor files a Creditor’s Bankruptcy Petition against the debtor as a means to collect a debt. A debtor would have to file a Petition against themselves to start a bankruptcy on their own. A debt can also propose an Individual Voluntary Agreement which is a negotiated payment plan to avoid a 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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy lawyers in San Mateo, Fremont, Sacramento, Roseville, San Francisco, Salinas and San Jose.

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Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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Redwood City Bankruptcy Attorney Grandmother of California Octulpets Filed for Bankruptcy Last Year

Following all the publicity regarding the birth of the octuplets in Southern California last month, it has been revealed that the mother of the children is single, divorced, and resides with her parents and her six other children. It also became known that in March 2008, the grandmother filed for bankruptcy claiming nearly $1 million in liabilities. It has been further revealed a history of financial woes, including tax liens and a foreclosure. These financial woes likely prompted the bankruptcy filing.

There are two main kinds of bankruptcy for individuals: Chapter 7 bankruptcy and Chapter 13 bankruptcy. (There are other kinds but those are reserved for special circumstances). It is unclear whether the grandmother filed for a Chapter 7 or Chapter 13. However, both types allow a debtor to stop a foreclosure, even if the ultimate solution is for the property to be surrendered in the bankruptcy.

Additionally, certain types of tax debts can be discharged in a bankruptcy. Even in a Chapter 13 payment plan, creditors (including the IRS) can take less than the total owed. Bankruptcy may be a good option for a family in financial distress, even if it does not result in a complete discharge but a payment 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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy attorneys in San Mateo, Fremont, Sacramento, Roseville, San Francisco, Salinas and San Jose.

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Posted In: Chapter 13 Bankruptcy , Chapter 7 Bankruptcy

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Fremont Bankruptcy Attorney discusses Student Loans in Bankruptcy

The current financial crisis has caused unemployment rates to skyrocket all over the country and bankruptcy filings have increased. The national unemployment rate is currently around 8% while California has recently reported unemployment statistics of 10.1%. That means that one in ten people in the state of California is unemployed. It also means that thousands of people with tens of thousands and sometimes even hundreds of thousands dollars in student debt are unemployed.

Under the current Bankruptcy code, educational loans are generally not dischargeable in bankruptcy. Unfortunately these rules apply regardless of whether the debt was acquired directly by the student. This means that parent borrowers are subject to the same standard and cannot obtain bankruptcy relief from the student loans incurred on behalf of their children, even though their bankruptcy proceeding may in all other aspects be completely independent of their children. However, there is a provision in the code under § 523(a)(8) which permits discharge of a student loan where the debt “would impose an undue hardship on the debtor and the debtor’s dependents.” This relief can be obtained by filing a petition with the court for undue hardship. It is ultimately up to the bankruptcy judge in each case to determine whether the debt will be discharged. However, in cases where student loans are crippling a person’s finances it can be well worth the effort.

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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy attorneys in San Mateo, Fremont, Sacramento and San Jose.

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Posted In: Bankruptcy Law , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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San Jose Bankruptcy Attorney discusses Chapter 13 Eligibility

Are you the owner of an LLC or LLP and trying to avoid the high cost of a Chapter 11 bankruptcy by filing a Chapter 13? Unfortunately you’ll have no such luck. Chapter 13 bankruptcy filings are limited to individual debtors. While LLCs and LLPs are separate “entities,” they do not meet the “individual” requirement for a Chapter 13 bankruptcy. This means that while the debtor may file for a personal bankruptcy under Chapter 13, and place his/her personal debts into a 5 year repayment plan, the debtor’s LLC or LLP must file separately under Chapter 11.

The rules are less strict for individuals who are self-employed or operate an unincorporated business. In that situation, the individual can obtain relief under Chapter 13 as long as the individual’s unsecured debts are less than the statutory limit. But again, this does not apply to partnerships and corporations.

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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy attorneys in San Mateo, Fremont, Sacramento and San Jose.

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Posted In: Bankruptcy Law , Chapter 13 Bankruptcy , Creditors and Debt

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Sacramento Bankruptcy Attorney Talks About Winery Bankruptcy

The current economic climate is affecting all types of industries besides banks such as Washington Mutual or consumer electronics, such as Circuit City. Even local wineries as close as El Dorado County are feeling the effects of this down economy. MC2 Wines, which has does business under Conti Estate/Charles B. Mitchell Vineyards, filed for Chapter 11 bankruptcy in early February of this year. The Winery believes it has less than $50,000.00 in estimated assets and millions in liabilities, including multimillion dollar agricultural loans as would be expected for a winery.

As a reminder, a Chapter 11 does not automatically mean that MC2 Wines will close its doors. The Chapter 11 gives MC2 Wines a chance to reorganize its debts to create a plan to become more profitable. In this case, MC2 Wines will probably negotiate a payment plan to certain lenders, try to discount certain debts to a payoff amount, or try to find an alternative source of capital.

This is a slow and complicated process. For example, MC2 Wines obtained grapes from other wineries in order to produce different types of wine. (A common practice in the industry) Now that MC2 Wines filed for bankruptcy, it cannot afford to pay those other wineries for the grapes. The other wineries now want to halt the sale of the wines produced with their grapes because the other wineries would probably fair better if they sold the actual wine than taking a reduced amount or a long term payment plan.

If MC2 Wines is unable to come up with a plan or find alternative capital then the government will move to liquidate MC2 Wines. This would mean closing the doors on MC2 and may put the actual winery up for sale.

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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy attorneys in San Mateo, Fremont, Sacramento and San Jose.

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Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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San Francisco Bankruptcy Attorney discusses the Impact of the Obama Administration’s Plans for Mortgage Relief

Many families are eagerly awaiting further details regarding President Obama’s plan to provide foreclosure relief to nearly 9 million people. The guidelines for President Obama’s $75 billion plan are scheduled to be released in early March. The plan is intended to help consumers by offering financial incentives to lenders that will motive them to negotiate loan modifications with debtors and delay foreclosures. While loan modifications and further negotiations with lenders will help millions of debtors, it has been reported by MSNBC that only 8% of the $1 trillion in residential mortgage losses will be affected by the plan. This means that there will still be millions of people that are unable to obtain relief from foreclosure through the plan.

For those people who do not qualify or are unable to participate in the Obama relief plan, filing Chapter 7 or Chapter 13 bankruptcy may be the only option to prevent foreclosure. It is critical to contact a bankruptcy attorney as soon as you realize your home may be in jeopardy. You and your bankruptcy attorney will be able to have a real discussion about your financial situation and help you position yourself to give you the best opportunity to keep your home, regardless of whether you qualify for relief under the Obama 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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy lawyers in San Mateo, Fremont, Sacramento and San Jose.

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Posted In: Bankruptcy Law , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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San Jose Bankruptcy Attorney discusses the Benefits of the Automatic Stay

If creditors are hounding you day and night you can rest assured that you are not alone. However, knowing that there are plenty of other people in your same position is a small comfort compared to the headaches and stress caused by constant harassment from your creditors.

Filing a Chapter 11 or Chapter 13 Bankruptcy may be the solution to your problems and provide your sanity with much needed relief. Upon filing your bankruptcy petition, an automatic stay will immediately go into effect which will prevent your creditors from taking further action against your property or making any more distressing phone calls. The automatic stay will be one of your best friends throughout the bankruptcy process.

In the event a creditor violates the automatic stay and continues to hound you with irksome phone calls, the Bankruptcy Code empowers you to obtain legal remedies against them. Not only may you be entitled to recover any legal fees associated with prosecuting the creditor for violating the automatic stay, you can also receive damages for the emotional distress the creditor caused you. In exceptionally serve cases, punitive damages may also be awarded against the creditor.

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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy attorneys in San Mateo, Fremont, Sacramento and San Jose.

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Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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Sacramento Bankruptcy Attorney discusses the Impact of Divorce on a Bankruptcy proceeding

You’re in the middle of a divorce, and just when you think things can’t get any worse, the economy crumbles and you are forced to consider filing for bankruptcy. If you are considering filing for a Chapter 7 or a Chapter 13 bankruptcy proceeding, it is important to understand the impact filing will have on your financial obligations resulting from the divorce proceedings. A divorce generally creates two categories of financial obligations: the obligation to support your children and your former spouse; as well as the obligation created by the division of your marital property. The bankruptcy court primarily only deals with debts that you have at the time you file your petition for bankruptcy. Marital settlement agreements often create financial obligations that mature at some point in the future, which may be after the date you file for bankruptcy. If you are the higher wage-earner, filing for bankruptcy will not discharge your obligation to pay your child and spousal support obligations, but you may be able to discharge some of your financial property obligations. By the same token, if you are the spouse receiving spousal and child support and are considering bankruptcy, you are still entitled to receive payment from your former spouse. Most likely, all of your support payments would be off-limits or “exempt” from your creditors. You should also be aware that if you are going to be receiving a property settlement as a result of a divorce within 180 days of filing for bankruptcy, that your property settlement may become property of the estate.

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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy attorneys in San Mateo, Fremont, Sacramento and San Jose.

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Posted In: Bankruptcy Law , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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San Jose Bankruptcy Lawyer Talks About the Circuit City Bankruptcy

The current recession is not just hurting the Wall Street stockbrokers. Businesses that the consumers visit on a regular basis are also being hit, hard. Well known Circuit City has been in Chapter 11 Bankruptcy since November 2008. As a reminder, the goal of a Chapter 11 Bankruptcy is to give the Debtor a chance to “reorganize’ their debt. This could be redefining the terms of the loan or finding alternative funding.

Circuit City, when it filed bankruptcy in 2008, had over $2.3 billion dollars in debt with declining sales. The top 30 unsecured creditors were owed over $600 million dollars. Therefore, Circuit City really had no easy way to reorganize a debt of that magnitude. For example, even if the top 30 creditors agreed to a 25% debt reduction of debt, that would still mean $450 million dollars was owed. Furthermore, the top 30 creditors included big named vendors such as HP, Samsung, and Sony. A reduction of Circuit City’s debt would mean each of those creditors would have to record a loss as well. How do these companies justify the loss to their shareholders just to keep Circuit City open? Therefore the reorganization of debt was both massive and complex.

Circuit City tried to find a buyer as alternative funding. A buyer could have infused capital into the company with some sort of payment arrangement on the debt. A buyer could have given the creditors hope that Circuit City would keep selling inventory so that they could pay off the debts they owed. Unfortunately, nobody was willing to purchase Circuit City in this kind of market.

The failure to find alternative funding or any realistic reorganization of the debt meant liquidation was the only option. In the Bankruptcy world, the liquidation means that Circuit City would close all of its stores. They have hired liquidation specialists who will help each store sell their inventory at a controlled pace then close the stores. The lesson to learn is that not every Chapter 11 Bankruptcy is a successful reorganization. However, Circuit City’s liquidation through the bankruptcy court was transparent enough that there was no wide scale panic by consumers or creditors. That should considered a win for the bankruptcy court.

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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy attorneys in San Mateo, Fremont, Sacramento and San Jose.

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Posted In: Bankruptcy Law , Business Formation , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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Fremont Bankruptcy Attorney Talks About Celebrity Financial Woes

Ever watch those people on Extreme Makeover: Home Edition and think "they are so lucky?" Well, getting an extreme makeover does not mean their problems go away. There is quietly growing number of people who were lucky enough to get the extreme makeover finding themselves in financial troubles which may lead to foreclosure of their homes or bankruptcy. The Vardons with the blind, autistic son are having problems for a refinance they took, Sadie Holmes who ran a charity from her home office is facing foreclosure for code fines for code violations, and the Harpers faced foreclosure for defaulting on a loan (as a reminder, they also got enough money to pay property taxes for 25 years). How is this possible?

As any non-Extreme Makeover: Home Edition person can attest, one still has to live within their means. A person cannot take on more monthly debt than they can handle, even if they live in a 7,000 square foot mansion. For example, the Harper's took out a $450,000.00 loan with their house as collateral which meant a monthly payment of about $2,700.00 per month. Assuming they were not doing well in the first place (in order to qualify for Extreme Makeover: Home edition) that monthly payment easily exceeding their income after living expenses. If the monthly payments cannot be made then default and eventual foreclosure will soon arise.

Each of the now unlucky winners could file for bankruptcy relief. If done correctly, then the debtors may be to keep their homes. But if that happens, it won't be because Ty Pennington showed up to save them.

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 Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 13 bankruptcy, lien stripping, discharging debt, etc. we can help! We have bankruptcy attorneys in San Mateo, Fremont, Sacramento and San Jose.

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Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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Sacramento Bankruptcy Attorney Discusses 2005 Bankruptcy Law Revisions

On October 17, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) went into effect. This legislation was the biggest reform to the bankruptcy laws since 1978. The legislation was enacted after years of lobbying efforts by banks and lending institutions and was intended to prevent abuses of the bankruptcy laws. The changes to Chapter 7 were extensive.

The most noteworthy change brought by the 2005 BAPCPA occurred within 11 U.S.C. § 707(b). The amendments effectively subject more debtors who make above a certain income, as calculated by the Code, above the debtor’s state’s median income to an income based test. This test is referred to as the “means test.” The means test provide for a finding of abuse if the debtor’s income is higher than a specified portion of their debts. If a presumption of abuse is found under the means tests, it may only be rebutted in the case of “special circumstances.” Debtors whose income is below the state’s median income are not subject to the means test. Notably, the Code calculated income may be higher or lower than the debtor’s actual income at the time of filing for bankruptcy. This has led some commentators to refer to the bankruptcy code’s “current monthly income” as “presumed income.” If the debtor’s debts are not primarily consumer debt, then the means test is inapplicable.

Another major change to the law enacted by BAPCPA deals with eligibility. §109(h) provides that a debtor will no longer be eligible to file under either chapter 7 or chapter 13 unless within 180 days prior to filing the debtor receives an individual or group briefing from a nonprofit budge and credit counseling agency approved by the United States trustee or bankruptcy administrator. The new legislation also requires that all individual debtors in either chapter 7 or chapter 13 complete an instructional course concerning personal financial management. If a chapter 7 debtor does not complete the course, this constitutes grounds for denial of discharge.

If you have questions regarding bankruptcy and credit issues, 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 bankruptcy attorneys in San Mateo, Monterey, Fremont, Salinas, Sacramento and San Jose.

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

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Sacramento Bankruptcy Attorney Discusses Chapter 13 Bankruptcy

When faced with a Chapter 11 bankruptcy or a Chapter 13 bankruptcy there are some questions that have to do with liens. Liens can be stripped off of the debtor's assets in Chapter 11 or Chapter 13 when there is not enough equity in the asset. This is determined after deducting senior liens from the property's current market value, to secure the unsecured in whole or in part, where the lien exceeds the value of the debtor's property. Section 506 of the Bankruptcy Code acknowledges that a lien is only a secured claim to the extent there is value in the asset to which it attaches. To the extent that the claim exceeds the value of the collateral, that portion of the claim is unsecured. In Chapter 11 or Chapter 13, even voluntary liens, such as mortgages and security interests, can be stripped down to the value of the collateral, with the exception of voluntary liens secured only by the debtor's residence.

Lien stripping happens a lot with vehicles where there will be a reduction of car loan liens to the present value of the car. Thus a lender holding a $12,000 claim secured by a car now worth $10,000 has a secured claim of $10,000 and a unsecured claim for $2,000. Two thousand dollars of the lien may be stripped off the car in a reorganization. The plan must provide for payment in full of the secured portion of the debt; the unsecured portion can be paid little or nothing along with other unsecured claims.

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.

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Posted In: Bankruptcy Law , Chapter 11 Bankruptcy , Chapter 13 Bankruptcy , Creditors and Debt

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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.

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Posted In: Bankruptcy Law , Chapter 13 Bankruptcy

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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.

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Posted In: Bankruptcy Law , Chapter 13 Bankruptcy

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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.

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Posted In: Bankruptcy Law , Chapter 13 Bankruptcy , Creditors and Debt

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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.

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

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San Jose Bankruptcy Attorney Discusses the Chapter 7 Means Test

It is inevitable if you are considering filing bankruptcy that you will hear about the Means Test. Before the bankruptcy laws were changed, a person who wanted to file for bankruptcy could file for a Chapter 7 or Chapter 13 based on their preference. However, under the new laws, the first step in determining if you can file for Chapter 7 bankruptcy is the amount of income you make. It is a measurement of your current monthly income against the median income for a household of your size in your state. If your income is less than or equal to the median, you can file for Chapter 7 bankruptcy. If it is more than the median, however, you must pass the Means Test in order to file for Chapter 7.

The purpose of the means test is to figure out whether you have enough disposable income, after subtracting certain allowed expenses and required debt payments, to make payments on a Chapter 13 plan. To find out whether you pass the means test, you subtract certain allowed expenses and debt payments from your current monthly income. If the income that's left over after these calculations is below a certain amount, you can file for Chapter 7. IF you do not pass the Means Test, you’re unable to file for Chapter 7 bankruptcy, where your debts are discharged, and you may have to file a Chapter 13 bankruptcy where you will have to come up with a payment 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.

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

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Fremont Bankruptcy Attorney Talks About Chapter 13 Plan Payments

Debtors in a Chapter 13 bankruptcy have agreed to a repayment plan to their creditors. Specifically, in the bankruptcy petition, the debtors propose a Chapter 13 payment plan. The plan will pay off certain secured and priority creditors in full and then, if feasible, unsecured creditors will get none, some or all of their claims paid off. The amount that unsecured creditors receive varies based on the debtors’ income and expenses. This amount is calculated by a formula that was created by the US Government which severely limits the type of expenses that debtors can claim.

Once a plan payment is proposed in the Chapter 13 Bankruptcy Petition, the US Trustee and court must approve it. There are a few levels of review but, ultimately, a plan is approved for a term of either 36 months or 60 months. Once approved, the Debtors are expected to pay this amount each month, on time, in either a cashier check or money order.

If Debtors cannot make the payments make the payments for any reason, it is much better to be proactive than reactive. The Debtors should contact the Trustee’s office by phone or letter to explain why the payment shall be late. Specifically, the Debtors should explicitly outline when the payment will be made or how the late payment will be repaid at a later date. For example, if the payment will be 1 week late, then a phone call and letter stating that it will be 1 week late is acceptable communication. However, if the Debtor needs to miss a month and wants to make up the payment over a series of payments, the US Trustee should contacted and the repayment plan approved. Finally, if the Debtors can no longer make the payments due to a change in circumstances, such as injury or loss of employment, the US Trustee needs to be contacted so that they can consider their options. The options include permanent modification of the plan, conversion to a chapter 7 bankruptcy, or dismissal of the chapter 13 plan all together.

If you have a question regarding your Chapter 13 Plan 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.

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

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Sacramento Bankruptcy Attorney Discusses General Banrkuptcy Procedures

With the economy taking such a fall these days, many people are finding it more and more difficult to pay their bills and keep up with the expenses that living in California demands. Many of these people are turning to bankruptcy in order to start over. The most common filings are for chapter 7 bankruptcy, chapter 13 bankruptcy and chapter 11 bankruptcy. The first steps to bankruptcy starts when the debtor files a petition with the court. The petition consists of financial information about their assets, debts, income, and a list of the assets the debtor claims as exempt. The petition is then filed with the court.

Next, about one month after the initial filing of the petition, the debtor is asked to attend a meeting of creditors. The debtor is put under oath, and the creditors have the right to ask the debtor about the debtor's assets and expenses. The meetings are usually limited to the debtor confirming that the bankruptsy papers contain a true and accurate listing of all of their assets and debts. If complications arise, such as litigation with a creditor or the trustee, the debtor may have to attend a court hearing or additional examintations, and he will receive such notice from the court or his attorney.

Discharge Notice

If there are no objections to the debtor's discharge, then the debtor receives a written notice from the court, stating that he has been discharged of all of his dischargeable debts.

If you have a question regarding bankruptcy, please contact our office at 1-800-941-6730 for a free consultation or visit 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.

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

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Sacramento Bankruptcy Attorney Discusses Bankruptcy Facts:

Chapter 7 Bankruptcy, sometimes called a “straight bankruptcy”, is basically a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to creditors. The debtor receives a discharge of all dischargeable debts usually within 3 to 4 months. In the vast majority of cases, the debtor has no assets that he would lose so Chapter 7 will give that person a relatively quick “fresh start.”

Chapter 13 bankruptcy is also known as a “reorganization bankruptcy”. Chapter 13 bankruptcy is filed by individuals who want to pay off their debts over a period of 3 to 5 years. This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep. It is also only an option for individuals who have predictable income and whose income is sufficient to pay reasonable expenses left over to pay off their debts.

The most common reasons for filing bankruptcy are: unemployment, large medical expenses, seriously overextended credit, and marital problem. A Harvard Study reported that half of the US bankruptcies were caused by medical bills (50.4% of the 1,458,000 personal bankruptcies in 2001).

Bankruptcy gives a person who is hopelessly burdened with debt, a fresh start by wiping out their pre-existing debt.

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

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Posted In: Bankruptcy Law , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Creditors and Debt

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Sacramento Bankruptcy Attorney Talks About Chapter 13 Bankruptcy Eligibility

There are two common bankruptcies for individuals, Chapter 7 bankruptcy and Chapter 13 bankruptcy. The difference between the two is based both on the financial situation of the debtors as well as the solution the debtor is searching for. While everybody can ask for a Chapter 7 bankruptcy (although negative ramifications can apply) not everybody can apply for a Chapter 13 bankruptcy.

As a reminder, a Chapter 13 bankruptcy is a request to the court to allow the debtor to repay their debts on a payment “plan.” The plan can be 36 or 60 months in length. The amount of the plan is based on the debtor’s income, expenses and the debts to be paid. The court is very specific about the order of debts to be paid, which debts can be paid, and how much each debtor gets. A Chapter 13 plan is useful and favored by creditors because a creditor will usually get some of their bills paid, even if they have to wait 60 months to get it. A Chapter 13 plan is useful and favored by debtors because it will allow a debtor a payment plan more attuned to their income and certain assets can be preserved. For example, if possible, debtors can keep their family residence or car much easier in a Chapter 13 than in a Chapter 7 due to the fact that any late or missed payments on the house or car may be “repaid” through the plan instead of all at once. (exceptions apply).

To qualify for a Chapter 13 bankruptcy, a debtor must have a regular source of income so that they can make the plan payments. This must be income and cannot be from unreliable sources (for example, third parties like parents cannot agree to pay the plan for you). The income must be high enough to cover the debtors own living expenses (such as mortgage) with enough left over to make the plan worthwhile. Please note, the term “worthwhile” is not a legal term but a descriptive term because any plan needs to be approved by the court. The court will not approve a plan that fails to repay certain creditors. Finally, there are certain limits for debts that be covered in a Chapter 13 bankruptcy. Secured debts such as real estate cannot exceed $1,010,650 and unsecured debt such as credit cards, cannot exceed $336,900.00. (As of April 1, 2007) Please note, this is a total of debts and not a limit for a single creditor.

If you have further questions or wish for a consult for a chapter 13 bankruptcy, please contact Sagaria Law at 1-800-941-6730 or www.sagarialaw.com for an appointment.

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

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Sacramento Bankruptcy Attorney Talks About The New Bankruptcy Seeker

Few years ago, bankruptcy was a means for homeowners to preserve their property. Specifically, a homeowner could use the bankruptcy protections to realign their finances into a structure that they could handle which included a payment plan to pay off any missed payments in a Chapter 13 Bankruptcy and keep the house. Alternatively, the debtors could discharge their unsecured debt which allowed them to pay for secured debt such as the family residence in a Chapter 7 Bankruptcy. However, due to the subprime mortgage practices, a new kind of bankruptcy story has become common.

Today, which reflects the hangover from easy credit, bankruptcy has become a finite way for debtors to shed properties they no longer can afford (as opposed to keeping the properties). For example, a middle class family who were enticed into real estate speculation now has 2 investment properties that have no equity (or negative equity) due to dropping housing prices with an adjustable mortgage set to increase within the year (or already has). Such a couple cannot afford the new monthly mortgage payments and they cannot sell their property since there is no equity. Over the next two years, such a couple has no choice but to file bankruptcy or risk years of financial oppression that should never had happened to them. The key is how soon such a couple will realize that bankruptcy will help them.

The usual pattern is that the couple will begin to deplete their savings to make up the mortgage payments. There is hope that the market will turn or that somebody will bail them out which never materializes. Once the savings are gone, the couple may cannibalize their retirement accounts which destroys their future savings and then begin to heavily use credit cards for quick cash which locks them into a cycle of servitude to the credit card companies. Eventually, the higher debt begins to negatively affect their credit score which may cause the interest rates on their credit cards to skyrocket. Sometimes the interest will be over 20% a year. During all this time, the couple is paying out more than 50% of their income to lenders of one sort or another. Two years later, the couple still owes the mortgage, still has no equity, and no has incredible credit card debt.

Finally, when all the savings is gone, their retirement evaporated, and credit cards maxed out, the couple will look into bankruptcy. At which time they will discover that bankruptcy will allow them to surrender the bad investment homes, discharge the credit card debts, and save whatever retirement funds they have left. Could this couple have avoided this scenario by looking into bankruptcy sooner? Contact Sagaria Law at 1-800-941-6730 or www.sagarialaw.com for a consultation to find out.

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

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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.

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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.

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

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Fremont Bankruptcy Lawyer Discusses U.S. Supreme Court Says Businessman Has Lost The Right To Convert From Chapter 7 To Chapter 13 Bankruptcy

The U.S. Supreme Court says that a Massachusetts man lost his right to convert from one bankruptcy chapter to another because he did not reveal all of his assets. In a 5-4 ruling in Marrama v. Citizens Bank of America, the Court reached its decision because Robert Marrama, who runs a flooring company, did not disclose that he had placed a Maine vacation house in a trust. Marrama had listed that the value of his interest in the property was zero. A bankruptcy trustee, who found out about the home, however, wanted to recover the real estate to help pay back Marrama’s creditors. Marrama then tried to change his bankruptcy case from Chapter 7 liquidation to Chapter 13, which lets a debtor pay their debts over a period of time will keeping their property.

Justice John Paul Stevens, in writing for the majority, stated that while honest debtors were entitled to convert their Chapter 7 cases to Chapter 13, a court is entitled to take away that right because of “fraudulent conduct.” Justice Samuel A. Alito, Jr. in his dissent, however, said that the U.S. bankruptcy code was unambiguous in its provision and that the debtor possesses a “broad right” to make the conversion to Chapter 13. Previous to the Supreme Court ruling, a bankruptcy judge had denied Marrama's request to convert to Chapter 13, with a bankruptcy appellate court supporting the ruling.

Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also called liquidation bankruptcy, allows a debtor to have his or her debts become liquidated. Essentially, a bankruptcy discharge under Chapter 7 frees the debtor from being personally liable for discharged debts while preventing creditors from collecting payments or taking other action against the debtor, such as eviction, foreclosure, or shutting down utilities. A court-appointed bankruptcy trustee then liquidates certain assets owned by the debtor.

In order to qualify for personal bankruptcy under the Chapter 7 bankruptcy code, a debtor must pass the means test- meaning that their current income must be less than or equal to the median in their state. If a debtor does not pass the means test, he or she may have to file under Chapter 13 bankruptcy instead.

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Posted In: Chapter 13 Bankruptcy , Chapter 7 Bankruptcy

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Monterey Bankruptcy Attorney Discusses Phony Attorney’s Bankruptcy Conviction Reversed By Ninth Circuit In California

The bankruptcy fraud conviction of John Milwitt, a California man who pretended to be an attorney and stole money from a number of tenants who were about to be evicted, has been reversed by the Ninth U.S. Circuit Court of Appeals. According to the panel, in a 2-1 ruling, even though prosecutors proved that Milwitt deliberately tried to defraud the renters, they were unable to prove that he intentionally defrauded the landlords, which is what he is charged with in the indictment.

Milwitt published a deceptive ad in a phone book, saying that he was with a company named “AP Assistance.” The advertisement attracted the attention of a number of tenants who needed help to defend themselves from unlawful detainer actions. According to witnesses, Milwitt convinced the tenants that he was a lawyer—even though he had never gone to law school—and he told the renters that they were legally allowed to withhold their rent from the landlords. The tenants paid him fees, in exchange for him appearing in court on their behalf. Milwitt would then list them in court documents has having appeared in pro per. He did not represent any of them in court, which led to default judgments in favor of the landlords. Milwhitt had given a mailbox at a public mail service as an address, and this made it impossible for the tenants to immediately find out that he had not appeared in court for them. He filed for Chapter 13 bankruptcy protection for six of the renters—all of them claim that they did not know or even authorize the petitions, which named the six tenants’ landlords as creditors. Because of the petitions, automatic stays were immediately enacted. This prevented the landlords from collecting the rent owed to them.

Milwhitt, Under 18 U.S.C. Sec 157, was indicted on six counts of bankruptcy fraud. According to the indictment, "he fraudulently obstructed the creditors’ legal right to collect back rents, and repossess the properties” by filing the fake petitions. He was found guilty of five of those counts by a jury.

The Ninth Circuit overturned the conviction, saying that the specific intent to defraud the victim or victims—in this case, the landlords—was not identifiable.

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Posted In: Bankruptcy Fraud , Chapter 13 Bankruptcy

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Monterey Bankruptcy Attorney Discusses California Court Official Predicts More Bankruptcy Filings In 2007

Richard Heltzel, chief executive officer of the U.S. Bankruptcy Court for the Eastern District of California, said he thinks that bankruptcy filings will increase again. The number of bankruptcies filed in the last fiscal year had dropped after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Following the enactment of this law in October 2005, courts in Modesto, Sacramento, and Fresno only took in 8163 cases over the next year—a 79% drop from the year before.

Hetzel believes bankruptcy filings will increase because of a stalled housing market and rising interest rates.

In the Eastern District of California—due to the new bankruptcy law—people who wish to file for bankruptcy must pass a means test in order to file under Chapter 7. If they exceed the median income for this district—$43,107 for a single person or $57,237 for a married couple—they are encouraged to file for Chapter 13 bankruptcy. While Chapter 7 erases debt, Chapter 13 requires that filers repay their debts over a period of time.

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Posted In: Chapter 13 Bankruptcy , Chapter 7 Bankruptcy

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Fremont Bankruptcy Attorney Discusses Chapter 13 Bankruptcy Filers Can Tithe, Votes U.S. Congress

The U.S. House of Representatives voted “Yes” on a bill that protects a person’s rights to continue making reasonable charitable contributions, such as tithing, even while under consumer bankruptcy protection.

The bill was sponsored by Senator Barrack Obama (D-IL) and Senator Orrin Hatch (R-Utah). According to Hatch, “this bill clarifies the law so that those who tithe can continue to live their faith while in bankruptcy.

The Hatch-Obama bill, S. 4044, was drafted after a bankruptcy judge ruled that Chapter 13 filers could not tithe while still in the process of repaying their debts under bankruptcy protection. Under this new bill, all individuals regardless of income can continue to tithe to a religious organization or make charitable donations. To tithe is to give 10% of your income first before even paying bills.

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Posted In: Chapter 13 Bankruptcy

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Redwood City Bankruptcy Attorney Discusses Tithing Debate Asks Question Of Whether Chapter 13 Bankruptcy Protection Should Make Room For Religious Donations

A recent bill passed in the U.S. Senate earlier this fall protects a debtor’s right to tithe to a religious organization, even while this person is under bankruptcy protection. The bill was drafted by Senator Orrin Hatch and Senator Barrack Obama, after New York Bankruptcy Judge Littlefield’s ruling in August that a couple under Chapter 13 bankruptcy could not continue paying their parish $100 a month while they were under this protection before repaying creditors.

Since October 2005, debtors filing for bankruptcy have had to first undergo a means test, and if their annual incomes were above their state’s median income, they could only file for Chapter 13 protection (and repay their debts over a period of time) instead of Chapter 7 (which wipes out most of their debts).

Under a Chapter 13 filing, only certain reasonable expenses are allowed. Anything else must be used to repay creditors. Before the new bankruptcy law went into effect, and under the Religious Liberty and Charitable Donation Protection Act, debtors were allowed to exempt up to 15 percent of their annual income from creditors during Chapter 13 bankruptcy proceedings for tithing and charitable contributions.

The new bill must still be reviewed by the House of Representatives.

Continue reading "Redwood City Bankruptcy Attorney Discusses Tithing Debate Asks Question Of Whether Chapter 13 Bankruptcy Protection Should Make Room For Religious Donations" »

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Posted In: Chapter 13 Bankruptcy

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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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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.

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Posted In: Chapter 13 Bankruptcy

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