Riverside County Bankruptcy Lawyer Blog

I get phone call after phone call where people want to file for bankruptcy and continue to work with their lender on obtaining a loan modification. The problem is that once you file the lender has to stop directly working with you because they are a creditor and to continue on negotiations during the bankruptcy process for three months in a chapter 7 is a violation of the automatic stay.

Should this prevent you from filing bankruptcy? In my opinion, absolutely not.

Getting a loan modification of any substance for most people is a fairy tale. I can tell you more people that I know who have had to re-file paperwork a million times because the bank lost important documents, than the number of people that have got meaningful loan modifications. In my mind, its just a way for the banks to prevent house values to plummet further during this crisis. They keep your foreclosure at bay by tricking you into believing that they will be working on your loan modification. I have had clients that I tried to get loan modifications for over a year ago and still nothing has come of it. I would never take a loan modification again in my life and to advise a client to wait on filing for bankruptcy for the bank to modify your loan, I think should be negligence per se. I understand people wanting to keep their homes and you can in a 13 even if you have several back payments that you need to make good on. In a 7 you can keep your home but only if you remain current so that is part of the problem with this whole loan modification debacle. You have to be behind on your payments to get a loan modification typically so to file chapter 7 and keep your home, you are going to have to get caught up quick. Many people can't so they will lose their home but remember you wouldn't be modifying your loan unless your house was completely underwater. The bank would never do it. In my opinion we should make the bank show their hand and get through this housing crisis quicker. All the banks are doing is stalling a lot of people out so that house prices can artificially rise for a short period of time and then they will unload all this shadow inventory for higher prices. I think the likelihood of you getting a loan modification is close to 10%, the rest of you are holding your breath for something that will most likely never be realized.

Maybe I'm jaded from my own experience in dealing with the banks and the number of clients that I see long after the loan modification process started and never worked. I've seen banks offer loan modifications to clients after their bankruptcy as they'd rather have them in the house then have to sell it at such a loss.

Don't let a potential loan modification stall you from filing bankruptcy which I guarantee will give you the results that you need within 4 months.

Don't feel guilty about filing for bankruptcy.

When forced into dealing with overdue bills and financial problems, many of us bury our head in the sand, stop opening bills and feel anxiety and guilt about the situation that we are in.
Don't allow those feelings to stop you from finding out your options and your rights before its too late. There are many things that you can do during hard times that sound like the right thing to do but actually could backfire as far as your rights under the bankruptcy code go.

I have seen people take huge distributions from their IRA's and try to survive when in the long run they end up in my office either way. An IRA is 100% protected in bankruptcy and should not be taken out before hand as it can lose its protection and therefore becomes nonexempt property just from your distrubtion.
I have seen people take on extra jobs, work dubious overtime hours only to put themselves in a position where they cannot do a chapter 7 and are forced into a Chapter 13 and will therefore have to keep working overtime and harder for 5 years to pay off a chapter 13 plan when had they spoke with me 3 months in advance we could have discharded their debt in a chapter 7 in a 3 month process.

If you are someone that wants to pay your creditors back and feel a moral obligation to do so, nothing is stop you from paying them back after filing. Its just going to be on a voluntary basis and won't be through a wage garnishment, a lien on your house, and the continuing harrassment that you are likely facing at this juncture.

Seeking the input from a qualified attorney is something you should do before things get too bad so that you understand your options and we can do some pre-bankruptcy planning to get the best result for you. Remember. IT'S NOT YOUR FAULT.
I understand this more than anyone as I have seen a wide variety of cases and know that its not deadbeats that file for bankruptcy. If you weren't managing your money well and doing the right things you would have never got enough credit in the first place to put yourself in over your head currently. The majority of cases that I see are from job loss, medical bills, divorce, failed business, the drastic changing of interest rates. These are not things that you controlled. Do not let shame or guilt get in the way of you moving forward. The bankruptcy laws exist for people like you and you can become productive and move past this point in your life. Business often come back stronger through bankruptcy and it's the same for people. Once you can stop worring about the past you can move forward quicker to a brighter future. The bankruptcy laws are written for both debtors and creditors. They are there for a reason. Its important to be responsible for your debts but filing bankruptcy can also be the responsible thing to do as well. Collectors spend a lot of money going after people they will probably never get it from.

Bankruptcy allows you to move forward and the credit card companies to cut their losses.

CALIFORNIA BANKRUPTCY FAQs

Question: Can I still file bankruptcy after I've been sued or after a creditor has a default judgment against me?
Answer: Yes. You can almost always still file bankruptcy and a judgment creditor will be in the same postiion often times as your other unsecured creditors. A bankruptcy will stop a wage garnishment so if you are about to get garnished or a lien is about to get filed on your property, now is the time to file for bankruptcy.

Question: What is the automatic stay?
Answer: The automatic stay is put in place upon the filing of a bankruptcy case. It stops all creditors from continuting to try to collect while your case makes its way through the bankruptcy court. If you have a legal case in court against you, it will stop that case as well. Its an extremely powerful tool and creates an injunction from any creditor moving forward. The bankruptcy court is charged with equally distributing any non-exempt assets to creditors so to allow one creditor to move forward or try to collect would stop the purpose of the trustees role in a bankruptcy case.

Question: Where is my case filed?
Answer: Your case is file where you have lived for the previous 90 days. That is your domicile. The exemptions that you use are dependent on various factor, but you are typically entitled to use California exemptions if you have lived in California over the last two years. You still file in California sometimes but you use another states exemptions if you do not meet the residency requirements.

Question: Do I have to list all my debts?
Answer: Many clients think they should not include debts that the do not want to file bankruptcy on. AKA the assets they want to keep. This is not the case. You have to list everything. You list all your assets and all your debts which is required by the bankruptcy code. The things you want to keep, you either do so by reaffirming or if they are exempt. Sometimes you can also just retain and pay for example on a car that was financed more than 910 days ago. You do not have to reaffirm debts and sometimes its better not to as it becomes a new contract and obligation.
For example if you wreck your car after you file and you've reaffirmed then you owe on it. Or if you can't pay your bill 6 months after filing, as long as you haven't reaffirmed then you can turn it in and they won't be able to come after you for a deficiency. Also, don't leave creditors out. Even though you plan on paying back a friend or family member back you list them and then you voluntarily pay them back.

Question: Are all my debts discharable in bankruptcy?
Answer. No. Some debts will not go away such as alimony, child support and student loans.

I now serve clients through the Coachella Valley with a more permanent structure law office in order to help people file for bankruptcy.

I was running a virtual practice out of San Francisco but would take clients all over California. The majority of my clients were coming from the inland empire and I was spending a lot of time at the court in Riverside for trustee hearings.

I have decided to open in a office in the Palm Springs and Palm Desert area so that I can help people who are struggling to pay their bills and having foreclosure problems more directly with easy access to the Riverside Court. My practice is one that allows me to work from afar and gather all your documents that are necessary to file a bankruptcy petition and with fax, internet, scanner technologies all of this can be done very easily, however I think that having a local office can better assist certain clients at times so I will be doing a direct local marketing campaign in Indio, Rancho Marage, Cathedral City, Palm Desert, Redlands, Desert Hot Springs, Blythe, and other desert cities in the Coachella Valley in order to assist one of the hardest hit areas in the country for bankruptcy filings, foreclosures, and high unemployment.

Riverside county has close to 15% unemployment and that doesn't even count the underemployed and people who have given up on finding a job.

My office will be in Palm Springs starting on August 1, 2010 and I will be traveling there frequently between now and then.

Continue reading "Chapter 7 and Chapter 13 bankruptcy in Palm Desert" »

I am now a local Bankruptcy Attorney for Riverside County.

I have been filing cases here for over three years but have recently decided to move my family to be able to service more bankruptcy clients. The riverside bankruptcy court is the busiest bankruptcy court in the country. In 2009 there were close to 120,000 cases filed here. The second largest was in Florida with 60,000 cases. Most of my business has come from this area for quite some time, but I also handled cases in Oakland, San Jose, San Francisco, San Diego, Los Angeles, Modesto, Sacramento. I will still take cases in the Northern and Eastern District and either fly there for the 341 hearing or pay a special appearance to do so.

My new focus will be serving the people of Riverside County and will occasionally drive to San Diego or L.A. for cases that I take on there. I have an a great relationship with many of the trustees in Riverside and have already built trust in the cases that I have been filing in Riverside court for 3 years.

Bankruptcy can be very predictable if I have all the facts and I have never had a client who did not get a discharge or have their case go in the direction that I predicted.

It's best to talk to a bankruptcy attorney before allowing your situation to get worse. There are a lot of things we can do to protect your assets and prepare for a case and I can advise you on pitfalls not to take and make sure you keep things that are exempt currently in that position. It troubles me to see people who have cashed out retirement funds and other exempt items and ended up filing for bankruptcy anyways.

Continue reading "Chapter 7 and Chapter 13 bankruptcy attorney Palm Desert Coachella Valley" »

Advising a debtor on who to settle with first can be a daunting task, but with the right advice from an experienced attorney, I can make the choices easier for you.

I find that Bank of America is a good creditor to take care of first, once you are 90-120 days behind as they usually give one of the better settlement offers from the beginning. I have settled many accounts with BofA with settlements of 20-35% and will usually not advise a client to pay any more with them.

Other accounts such as Discover, Capital one, Target can be higher amounts and I see settlements in the range of 50% more often than not. I also know who is likely to sue and when and am able to give you a clear timeline as to how much you'll need to save to make this work. Debt settlement companies are loathe to explain all of this to clients and would rather take your money and have you drop out and file bankruptcy with no regard to the position that it leaves you in. I will be clear with you from the start and if you cannot afford debt settlement or I don't believe that it will work for you based on your assets, ability to pay in a reasonable time etc., then I will give you other options and am always willing to allow $500 dollars that you pay towards debt settlement to go as a credit toward filing bankruptcy.

Get sound advice and don't let the allure of false promises lead you to the wrong debt settlement company. There is a reason that the FTC and attorney generals have been suing these companies and as a consumer attorney I will give you clear advice and I have a fiduciary duty to you and you can go to the California Bar with any complaints that would put me out of business.

Put your trust in someone that has your best interest in mind.

The bankruptcy process starts with the filing of a petition. In the petition you list all your assets as well as your liabilities. I typically pull a credit report from all three credit bureaus and then review with my clients to ensure that all debts are in there since some creditors don't necessarily list them with the credit bureaus(personal debts, pay day loans etc, medical debts that aren't too old etc). In the petition we have to be thorough to be sure that we listed any kind of financial transactions that the trustee would be interested in knowing about. This could include paying back preferred creditors, selling a home within a year and other important financial events. You have to take a mandatory credit counseling class which you can do online before you can file. Most importantly is the pre-bankruptcy preparations that I go through with my clients to make sure all their property is protected and that they are filing at the right time. We have to calculate your income for the last six months to make sure that you qualify for a chapter 7 and if you are well over the median income then we have to do a 13 or some pre-bankruptcy planning to squeeze you into a chapter 7. If you have any questions please call me or fill out your name and I will get back with you to see whether filing for bankruptcy is your best solution.

The first question that I want to answer is that filing for bankruptcy will not stop you from being able to get federal student loans in the future. If somehow(although unlikely) your federal student loans got discharged in a previous bankruptcy then you might have to reaffirm those loans in order to get new loans. What is more important is how you have handled credit after your bankruptcy. As long as your student loans that you currently have(if any) are not in default, then getting federal loans should not be an issue at all. Private loans are different. Its hard to say how easy it will be to get private loans after a bankruptcy because there are many different types of bankruptcy which makes it a complex issue. If you have filed bankruptcy and need private loans for school you might need to find a cosigner. If you filed a chapter 13 and fulfilled your payment plan even if not 100% then you will most likely be a better candidate and qualify for private student loans. A chapter 7 where you liquidated and didn't pay any unsecured creditors will obviously make it harder to get a private student loan without a cosigner.

Transferring non-exempt property to exempt property is one way to protect value in your estate prior to filing for bankruptcy. There are rules in regarding whether you did so with the intent to hinder, delay or commit fraud on creditors, but these can be overcome. There must be some evidence in the facts or circumstances which are extrinsic to the mere facts of conversion of non-exempt assets into exempt and which are indicative of such fraudulent purpose. It is permissible under the threat of being sued to convert non-exempt assets into exempt assets. Typically this involves paying your mortgage down, but it can also be selling a cheap car and buying a car closer to the exemption value in order to protect cash in the bank. Things you want to stay away from are taking large sums of cash and putting them into IRA accounts on the eve of bankruptcy if you don't have a history of putting too much money on a regular basis into that protected account. If you put money into another IRA on the eve of bankruptcy the court will most likely find you did so with the intent to hinder, delay or defraud. Things like Section 529 accounts unfortunately are considered to be part of bankruptcy estates even though they are for the benefit of your children.

Medical Debt can be disguised as credit card debt so its hard to get a true hold on whether clients are facing insurmountable credit card debt or medical debt when they file for bankruptcy.
Even in my personal situation I can vogue for this fact. I have three children and my wife lost her job at the end of 2007. We elected not to take COBRA coverage because it was too expensive. Two months later before she was employed again, she got pregnant and we therefore become non-insurable until after we had the baby. This put us in debt close to 20,000 dollars. I put a good portion of this on credit cards as it was easier to negotiate a reduced payment to the hospital if they were paid before check out. If we were put in the position of having to file bankruptcy, the schedules would show that we have credit card debt when in actuality its medical debt.
Fortunately both are unsecured so it wouldn't be as bad as taking out a second mortgage on the house(who can do that anymore anyways), but nonetheless tracing what is medical debt and what is credit card debt can become hard when credit cards can mask what payments were made on.

Don't let a false negative stigma of bankruptcy keep you from reaching financial stability and a fresh start.

I believe that the negative stigma of bankruptcy is starting to change.
Maybe it's the 1.4 million people that have found relief in 2009 through filing bankruptcy.
Maybe it's the fact that business and the government seem to be bailing out financial institutions and companies that made far riskier descions than most of my clients could ever imagine.

Most people that I have found in need of bankruptcy are not deadbeats or people that want to defraud creditors and get out of contractual obligations, but are rather people who have fallen on hard times or been put in a postion where interest rates have risen to levels that making paying back creditors not feasible for their economic position.
You have to remember that people who have the advantage of filing bankruptcy and utilizing its benefits are people that have made good ecomomic decisions for most of their lives.
This is the reason they were able to get credit in the first place. I would say half of my clients have between 30k and 150k in unsecured debt at the time of filing. If you are behind on your payments you can imagine that paying 30% in interest on this kind of debt is going to keep you from ever reaching your economic goals and freedeom. Also, you wouldn't have been able to get this kind of credit had you not made the right decision for a long time in your credit history.

There is no need to feel that you are taking advantage of a system or any other stigma that some people allow themselves to feel about filing bankruptcy. The decision can be hard to make, but everything after that comes easy and is only based on disclosure. Many people feel the need to justify why they are filing, but really it only comes down to whether you meet the requirements and if it's a practical solution to your debt problems.

I find more people nowdays are looking at this as a business decision. Its like walking away from an underwater house when you know that renting would be cheaper and its going to take years before you build any equity. Until the banks realize that writing down principal on a mortgage is necessary for all of us to get out of the housing market mess we are in. I feel the same way about consumer credit card debt.
If these companies would reduce interest rates back to 10% or something reasonable, many of my clients would probably pay, but when forced you have to view this a a business decision to help your family and not let your emotions get the best of you.

We are part of a system and you do not have control of a lot of the factors.

Bankruptcy helps you regain control, get your fresh start and move forward to better days.

Consumers these days cannot help but be tempted by companies that are constantly advertising that they can save you 50% on the dollar for the debts that you have.
Debt settlement companies have multiplied like ants over the past few years and although some can get good results for their clients, many are just offering false promises. Some things that they might not tell you or you'll find in the small print.
Your credit card balances won't necessarily settle at 50% of what you owe currently. You will continue to get finance charges, late payments, potentially over the credit limit charges etc while you are falling behind on your monthly bills and waiting for a settlement. These charges can add up quickly.

Even on small debts the costs can be astronomical.
For example I had a client that had a Capital one card that was around 5000 in October and by April the account was 7500. They settled at 3200 but that is above 60% of what was owed and a good offer from Capital one who is notoriously stingy in terms of their settlements. The debt settlement companies would like you to believe that this is a 40% offer while in my mind its not. I have a fiduciary duty to my clients to explain how the process works and guide them through it or its my license on the line.

The same thing goes with putting your money in an escrow account with a debt settlement company. If they spend too much money on employees, advertising etc and you don't get any benefit from their program, well your fees have been eaten up and your unlikely to get them back.

With me, you are putting your money in an attorney/client trust account, the majority of the money I make is once we settle your debt so you can rest assured that your getting the benefit of the bargain. Also, with an attorney client trust account, if anything is managed right with that money, once again its my license on the line. As an attorney I have a lot more fiduciary duties and responsibility to my clients and the amazing thing is I can charge less then most debt settlement companies and yet offer you a much better service. Why a bankruptcy attorney will be more versed in dealing with your creditors for debt settlement. Knowing the bankruptcy laws is extremely important in dealing with creditors during debt settlement negotiations.

Many times a creditors tactics is to have you make a payment immediately(many times that day or within a few days in order to take advantage of a settlement). They know that it will bring you to the table quicker than paying another creditor as well as other benefits they receive from these tactics. I never play these games, although it is typically true that you have to make at least one payment in the month you make a settlement, most times it just has to be there by the end of the month, every once in a while I'll see the 15th, but its not typical. Here is one instance where I have used the bankruptcy code to help a debt settlement client. I had a client miss a payment (I give ample warnings, but it happens).

So what happens when you miss a scheduled payment? The money you've been paying towards your settlement goes to the principal balance and the settlement is void. I had a creditor try to strong arm me into paying a higher amount for the settlement because of the mishap on my clients end. I let him know that my client would be filing for bankruptcy and that all the payments that were made would be considered preferential payments to them and taken back by the trustee and redistributed equally amongst all the unsecured creditors. In a bankruptcy petition any payment over $600 within 90 days of filing bankruptcy is considered preferential and the trustee can take it back and equalize the playing field by redistribution.

That is the whole point of certain bankruptcies is to make sure unsecured creditors are paid equal portions. The creditor didn't like that option so much so they reinstated the settlement on the original terms. This is just one way that I have used the bankruptcy code on behalf of my debt settlement clients .

Debt Settlement vs. Bankruptcy

There are a lot of factors to consider when trying to determine whether settling your debts would be more advantageous than filing bankruptcy.

As a Bankruptcy Attorney my first inclination is to say that bankruptcy is usually the better route although it does depend. There are quite a few clients that I have helped and have been successful in negotiating principal on their outstanding debts. The things that I look for in a potential debt settlement client is the ability to pay the debt at a somewhat expedited pace. This is why most people who are broke are not great candidates for debt settlement. If you had trouble meeting your minimum payments, unless you are seeing a fast recovery bankruptcy is probably a better solution. I have seen great success in candidates who have a family member, friend, business colleague etc who will loan them money within 180 days of being behind on there debts.

The best time to settle debts for a lot of people are between 90-180 days after the pay the last payment. Credit cards will not negotiate on principal debt owed until the cardholder is behind. Therefore debt settlement will obviously have a negative effect on your credit score. For someone who is paying 30% interest on a good amount of debt, your credit score should not be your first concern as you are probably sinking in a hole that will be very hard to climb out of. Debt settlement can also work for people who what I call execution proof. Sure you can get a court judgment against someone but can you collect it.

Creditors are not going to waste their time and money filing court cases against someone with no assets to collect.
That doesn't mean they don't sometimes. There are certain things that would make a creditor think twice about suing you and the cost that it take to do so.
1. You don't own any property that they could put a line on
2. You don't make W2 wages, if you are self employed, independent contractor etc., it is more difficult if not impossible to get a wage garnishment against you.
3. You are on social security or some kind of pensions that can not be garnished by law.

DEBTS ARISING OUT OF DRUNK DRIVING CASES ARE NOT DISCHARGEABLE UNDER THE BANKRUPTCY CODE

If you have been sued for operating a motor vehicle while under the influence of drugs or alcohol, or another substance as a result of injuring another person, then your debts for this obligation will survive the bankruptcy and not be discharged. Section 523(a)9 of the bankruptcy code excepts from discharge debts from personal injury cases where the debtor was under the influence.
Any kind of willful or malicous conduct by the debtor to another person will not be discharged. Another one that comes up criminal restitution fines, child support orders. These are debts that you will live with after your bankruptcy is discharged, so if these are your reasons for filing, I would advise against it.