California Bankruptcy Lawyer Blog

San Jose Bankruptcy Attorney Talks About Ability to Pay

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

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

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

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

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

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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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Fremont Bankruptcy Attorney Discusses Student Loans in Bankruptcy

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

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

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

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

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San Jose Bankruptcy Attorney Discusses Pre-Bankruptcy Credit Counseling

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 now requires people who plan to file for bankruptcy protection to get credit counseling from a government approved organization within 180 days before they file. They also must complete a debtor education course to have their debts assigned and discharged.

As a rule, pre-bankruptcy credit counseling and pre-discharge debtor education may not be provided at the same time. Credit counseling must take place before you file for bankruptcy; debtor education must take place after you file.

A pre-bankruptcy counseling session with an approved credit counseling organization should include an evaluation of your personal financial situation, alternatives to bankruptcy, and a personal budget plan. A typical counseling session should last about 60 to 90 minutes, and can take place in person, on the phone, or online. The counseling organization is required to provide the counseling free of charge for those consumers who cannot afford to pay. If you cannot afford to pay a fee for credit counseling, you should request a fee waiver from the counseling organization before the session begins. Otherwise, you may be charged a fee for counseling which will generally be about $50, depending on where you live, the types of services you receive, and other factors.

Once you have completed the required counseling, you must get a certificate as proof. Check the U.S. Trustee’s website to be sure that you receive the certificate from a counseling organization that is approved in the judicial district where you are filing 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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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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San Jose Bankruptcy Attorney Talks About Dismissal

When a debtor files a petition for bankruptcy, the debtor may go for several weeks without hearing anything about their papers. This is typical because once filed, the US Trustee’s office must review the petition for accuracy and completeness and creditors get a chance to object, file proof of claims, or file adversary proceedings. During this time, the debtors can usually voluntarily dismiss their bankruptcy petition.

Why would a debtor dismiss their petition? There can be many reasons. The most common one is that their major creditor, who had previously refused to even to answer phone calls, suddenly has an interest in settling. For example, a mortgage lender who had declared that no relief could be given, may suddenly decide that the debtor’s do qualify for a drop in interest rates or are willing to extend the loan on more favorable terms. Alternatively, a credit card company may decide that they only want half of their bill paid. In those cases, the debtor may not be able to agree to such a deal without first dismissing the bankruptcy.

Another common reason is that the debtor’s situation has changed. For example, the debtors may have lost their job or just had a baby. The debtors may have come into money or found a new job. Either one of these situations may affect their bankruptcy and the debtor may be better served to dismiss their current case so that they may refile later.

Finally, the US Trustee may want the debtors to dismiss their case. The Trustee, upon review of the papers, may believe that the debtors do not qualify for bankruptcy and may file a motion to dismiss. To avoid a court hearing, the debtors may decide to dismiss their petition rather than have a judge decide the outcome.

If you are in the middle of bankruptcy and wish to dismiss so that you can refile, please consider contacting Sagaria Law for a consultation 1-800-941-6730 or www.sagarialaw.com.

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Fremont Bankruptcy Attorney Discusses Lesser known Bankruptcy

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

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

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

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

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

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

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

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San Jose Bankruptcy Attorney Talks About Bankruptcy Morals

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

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

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

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

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Fremont Bankruptcy Attorney Talks about Reaffirmations

There is a common misconception in bankruptcy. Many people believe that if they file bankruptcy, they will have to lose all their assets including cars. Of course, without a car, the debtors (as they are called by the Bankruptcy court) will probably lose their jobs and fall into the more debt. This problem has been well anticipated by the lawmakers, the Bankruptcy Court, and even the creditors. For more information on bankruptcy FAQ's and understanding your bankruptcy rights, please visit Sagaria Law.

The lawmakers created a procedure called “reaffirmation” of debts or an order by the Bankruptcy court stating that a certain debt will survive the bankruptcy and remain in effect. A common reaffirmation is where the Bankruptcy court reaffirms a car debt so that the debtors can keep a car by continuing payment on it.

In order to get such a reaffirmation, the debtor and creditor both must sign a contract stating that the exact terms of the reaffirmation including total amount reaffirmed, monthly payments, and interest rate. The Bankruptcy court is very worried about debtors getting in over their heads again so the agreement has at least three areas for the debtors to sign that they want this reaffirmation.

Furthermore, the Bankruptcy court requires the debtor to state if the monthly payments will be a “hardship” or not. A hardship is found if the debtors living expenses will exceed their income before they account for the new monthly payments. The debtors have to give a statement as to how they will pay the additional monthly amount if they have such a hardship. This is not an easy thing to prove and the Bankruptcy court is likely to deny a reaffirmation if the debtors cannot give a good explanation how they will overcome the reaffirmation.

Fortunately for the debtors, creditors really want reaffirmations of debts and may be very accommodating in order to get one. For example, a creditor which had previously refused to alter the terms of a car loan may decide to lower the loan amount, the interest rate, and/or monthly payments in a bankruptcy because they want to encourage the debtor and Bankruptcy court to accept. The reason for the sudden willingness to accommodate is because the creditor’s other choice is to take a car in an unknown condition that they will have to sell. The creditors would rather get the debtor’s money. If the creditor asks for too much money, then the Bankruptcy Court will deny the reaffirmation. Therefore a reaffirmation can be a silver lining in a bankruptcy for the debtor.

If you have questions about asset protection please contact Sagaria Law for an experienced bankruptcy attorney to answer your questions. If you are considering bankruptcy or reaffirming a debt, please consider scheduling a free consultation with Sagaria Law 1-800-941-6730.

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