Riverside County Bankruptcy Lawyer Blog

September 25, 2023

What happens if I default on my SBA loans?

What happens if I default on my SBA loans?

Covid-19 hit small businesses hard, leading the U.S. government to initiate several programs aimed at supporting struggling American businesses. As part of the U.S. Small Business Administration’s (SBA) Disaster Assistance program, these efforts included the Paycheck Protection Program (PPP), which played a central role within the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. The PPP was designed to provide vital resources to small businesses, enabling them to sustain their payrolls, rehire laid-off employees, and cover essential overhead costs during these challenging times. The CARES Act, along with the subsequent Coronavirus Response and Consolidated Appropriations Act of 2021, swiftly delivered direct economic assistance to American workers, families, small businesses, and various industries in need.

What was the plan?

September 5, 2023

Subchapter 5 Offers Small Businesses Debt Relief

by Christopher Hewitt

Introduction

The COVID-19 pandemic brought unprecedented challenges to the United States, with small businesses being hit particularly hard. Recognizing the urgent need to provide relief to these struggling enterprises, Congress introduced a new bankruptcy option known as the Small Business Reorganization Act of 2019, commonly referred to as Subchapter 5. This groundbreaking legislation aimed to offer a lifeline to small businesses grappling with mounting debts during one of the most significant financial crises since the 2008 housing bubble burst. Prior to Subchapter 5, Chapter 11 bankruptcy was the primary mechanism for debt reorganization, but it proved to be complex, costly, and inaccessible for many small businesses lacking the financial resources to navigate its intricacies. Subchapter 5 offers small businesses debt relief by being an efficient, affordable, and accessible alternative, providing a ray of hope for struggling entrepreneurs.

The Genesis of Subchapter 5

August 29, 2023

China’s Evergrande files for Chapter 15 Bankruptcy

by Christopher Hewitt

China’s Evergrande files for Chapter 15 Bankruptcy

In breaking financial news, China’s troubled developer Evergrande has just filed for Chapter 15 bankruptcy in a New York Court yesterday. In this article we will explore both what a Chapter 15 bankruptcy is and how this bankruptcy is showing the cracks in the Chinese financial system.

What is Chapter 15?

February 15, 2015

Overpayment of Unemployment and Bankruptcy EDD and Bankrputcy

by Christopher Hewitt

You can put overpayments of EDD or Unemployment in to a chapter 7 bankruptcy and discharge the debt. EDD overpayments happen when people are collecting unemployment when possibly working or other issues that allow the EDD to come after you. They can garnish wages to recoup the overpayment. These overpayments by the EDD are absolutely dischargeable in Chapter 7 bankruptcy. If you make too much money to file chapter 7 bankruptcy 50k for an individual, 63k if you are married, then you can discharge them in a chapter 13 bankruptcy as well.

February 15, 2015

HOA’s Bankruptcy Past due Payments Foreclosure

by Christopher Hewitt

I have been seeing more and more people with HOA issues. HOA’s can foreclose against a property. HOA attorney’s like Fiore Racobs and Power do exclusive HOA work and rack up very large attorney fees on behalf of HOA’s when people are in default. Filing Chapter 7 bankruptcy will wipe out your personal liability against an HOA but they typically still have a secured aspect on there ability to collect against the property. I have seen HOA’s foreclose on people post bankruptcy because although the can’t collect on pre-petition HOA’s against the person, they do collect on HOA’s that become due after the bankruptcy.

One issue that a lot of people are facing with HOA’s is that although they file bankruptcy the bank doesn’t take back the property for a long time. Filing bankruptcy isn’t necessarily surrendering the property back to the bank. The bank still has to foreclose before you are taken off title. HOA’s are able to collect on the property based on who is on title. The benefit of the HOA goes to the title owner so even though you may have abandoned the property if you are still on title the HOA’s can collect against you. I have had clients that have left a property filed a bankruptcy case only to get sued for $5000 dollars two years after the bankruptcy. Because the banks didn’t foreclose my clients are still legally on the hook for post-petition HOA dues. I use the metaphor to explain this as HOA’s are like utilities, if you don’t pay your power bill for a few months, and then you file a bankruptcy case, you can get rid of the money you owed for the benefit of using the power before the bankruptcy. Any utilities that come due after the bankruptcy must be paid.

September 18, 2013

With house prices rising in California you want an experienced bankruptcy attorney to understand how to protect your asset

by Christopher Hewitt

California has had some decent growth in property values lately with the lowering of interest rates, investors buying homes, and some people trying to get into a hot market before interest rates go up. This has been somewhat a good thing for housing prices. If you are considering filing bankruptcy for other debt related issues you may want to jump in before the market continues to rise. I have had two clients in the last month who have come to me from Cathedral city and haven’t paid there mortgage in over a year. One wanted to file a chapter 7 as he was divorced, the ex-wife was living in the house and he just had too much debt to manage. Amazingly he didn’t realize that his house was an asset. Last year the house was probably worth 150 and his not was about 160. Since he had no intention of saving his house and couldn’t pay the arrears with a now split family I decided to recommend a realtor to him before we filed. He was able to put 20k in his pocket within a month and we have delayed the filing of the bk for him. Once the money is out of escrow and in his account I can file using the 703 exemptions and protect the money with the wild card. So without the bankruptcy and a good lawyer spotting the value in the house he could of either lost the house and let the bank capitalize on that or we could have just filed the bankruptcy quickly and the trustee might have sold the house and paid the 20k to unsecured creditors. Having someone on your side with your interests and not a person who is just trying to file a million cases allows these kinds of insights to manifest into truly starting over with a fresh start.

My other client is in the same boat but wants to try to save the house as the mortgage is reasonable and renting would be just as expensive. We will pay back her arrears through a chapter 13 and if when she decides we can sell the house with court approval during the process. This might allow her to capitalize even more if the housing prices start to go up.

The other thing an experienced bankruptcy lawyer will look out for and make motions should he need to is that when you file a case your house might be worth what you owe and you use the 703 exemptions with the wild card to protect cash, cars, toys etc. You feel that is the better route since the property doesn’t really have equity. The thing is the trustee could keep the case open and even though you get a discharge he doesn’t file the no asset report and the case is not closed. If in 6 months the property has gained 5 % and its got 20k in equity the trustee could make a motion to sell and meanwhile you and bankruptcy attorney were asleep at the wheel thinking you got the discharge case closed. If a no asset report is not filed at the time of a discharge I will make a motion to the court to abandon assets. You don’t want the trustee buying the benefit of time and potentially selling one of your assets. In this market its something you have to be aware of.

August 11, 2013

Filing chapter 7 bankruptcy before house prices rise further

by Christopher Hewitt

If you are struggling with Debt and on the fence about filing bankruptcy and you own a home, now might be the time to really consider the window. In California an individual gets an exemption of 75k or 100k for a married couple. Once you get above that equity your home becomes an asset that is too much to protect in chapter 7. Therefore the trustee would liquidate the home and give you the check for 75 or 100k and pay your creditors the remaining proceeds. That means unsecured creditors collect in a chapter 7 which is unusual but as prices go up the more that scenario becomes a reality. The cost of sale is taken into consideration as well. Usually a fair number for cost of sale analysis is 8-10% with 8% being more common. The reason for this is brokers, escrow and other costs that go into the sale of a house. I’ll do an example with numbers to make it more clear. If you are married you get an exemption of $100k dollars. So lets say you owe the bank 200k as a note against your house. Lets say the house is worth 325. As I mentioned the the exemption is 100k and the cost of sale would be 24k at 8% Under this analysis the trustee would not be enticed to sell your house. The trustees job is to sell assets that are non-exempt to pay unsecured creditors aka credit cards medical bills etc. If they pay realtors and costs 24k that does nothing for them and then they owe the bank 200k on the note and the debtors would get a check for there exemption at 100k since they are entitled to that as a priority before unsecured creditors get paid. I would assume 340k would be the price that would entice them but it doesn’t stop them from strong arming you to pay 15k to not sell it. Therefore since housing prices are going up at least temporarily, if you have equity in a home now might be a good time to get a bankruptcy analysis. I am a riverside country bankruptcy attorney specializing in bankruptcy. I live in Palm Springs and work in Palm Desert but serve all Riverside country and surrounding areas. Feel free to call to speak with an attorney about your debt and home matters as they apply to bankruptcy.

May 13, 2013

Student Loans Bankruptcy discharge Options

by Christopher Hewitt

Tallk to an experienced chapter 13 bankruptcy attorney who practices regularly in Riverside County.

December 26, 2012

Using tax refund to pay for bankruptcy

by Christopher Hewitt

Tax refunds for many chapter 7 clients become the tool that allow them to straighten out there financial affairs. For more and more people straightening out their affairs means discharging unsecured debts and wiping out minimum monthly fees that can strangle a budget. Getting the lump sum money in February or March for those that file early allow them to pay what most bankruptcy attorneys will charge to file a chapter 7. Over the years I have had more and more people who are on payment plans tell me that once they get there tax refund they will finally be able to pay the fees and service fees associated with a bankruptcy. The costs of filing bankruptcy with the court is $306 and most attorneys who use sophisticated software download there credit reports from the 3 bureaus to capture all creditors and get the updated bankruptcy addresses where notices need to be sent. That fee is typically $30 for an individual or $50 for a joint filing(Aka husband and wife). Along with those two fees there are two required credit counseling classes which charge at least $15 and $15 for each although some charge up to $50. As a qualified bankruptcy attorney in Riverside County filing 20 cases a month typically I will direct you to the cheapest and best sites to do the classes. So at a minimum there are $400 dollars in outgoing costs to various vendors to file. I typically charge $1100-$1500 depending on the complexity of a chapter 7 case. Things that make cases more complex are the income that people make if significantly higher than median, analyzing profit and losses for self employed people. Typically though, the type of consumer who is using there tax refund to file are wage earners who are employed and get a w2 and make less than the median income which is 48k for an individual 60k for a couple with each child adding about 6k to the equation. For those people its typically a simple case and I can potentially do it for $1400 which includes all the filing fees and costs that I mentioned above. If you are going to be receiving a refund and are struggling with debt issues, talk with a qualified bankruptcy attorney. I have been practicing law for 10 years and the last 5 have been solely focused on bankruptcy cases with chapter 7 and chapter 13 cases for individuals and businesses. I know all the trustees in Riverside and know what to look for and how to put together a case to sail through the process a smoothly as possible. Wishing you the best in 2013.

Chris Hewitt

November 24, 2012

Have you been sued by Raymond Lee for Zwicker and Associates, I CAN HELP

by Christopher Hewitt

Raymond Lee sues a lot of people in southern california and in Riverside county where I typically practice. Most cases in my jurisdiction are heard in Indio and are often brought by American Express who sends a lot of there accounts to Zwicker and Associates. You have many options in how to deal with the law suit that you have recently been served but first thing you need to do is speak with a competent lawyer to examine those options. When you have been sued you have 30 days to answer or you could face a default judgment which essentially says you agree to everything and allow them to collect against you through a judgement. Remember a judgment is good for 10-20 years with a renewal and collects 10% interest plus when they win they tack on attorney fees, costs for bringing the suit etc so now is not the time to put your head in the sand. Many times I negotiate these cases down to 50% of what you owe. Sometimes we have to answer the law suit, other times I call them directly and work on a settlement prior to answering to save money. If they won’t come to the right number then we answer to make them realize they are going to have to work and expend money to get potential money. This often brings them back to the negotiating table quicker. Another option that I have and they realize is that I file chapter 7 or chapter 13 bankruptcy cases which either means they get paid nothing or what you can afford over either three or five years. All of a sudden a settlement sounds good to them. Raymond Lee is located in Pasadena so sending someone out to fight this case with someone that fights them every step on the way in Indio is not cheap. This is done for clients that might not be perfectly situated to file a current bankruptcy. Sometimes filing a bankruptcy case is all about timing depending on where you income is or certain financial things that you have done too recently to filing a bankruptcy case which necessitate waiting. Filing an answer to buy time in these types of cases is critical. Also, sometimes bankruptcy isn’t necessary depending on how old other debt that you have is, if you are about to meet the statute of limitations on your other debt and make above the median income, filing a 13 might not make sense so answering and negotiating becomes advantageous. If you have debt and have been served and wonder your options, call a knowledgeable riverside county bankruptcy attorney who looks at things from all angles before sending you down a one road solution.