Articles Posted in Chapter 7 Bankruptcy

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

When looking at whether you qualify for bankruptcy as a chapter 7 or chapter 13 the size of your household makes a big difference. Chapter 7 allows you to not pay any money back to creditors whereas chapter 13 requires that you do a payment plan that last either 3 or 5 years depending on whether you are above or below the median income. In the central district of california which is the local bankruptcy court for Riverside, San Bernadino County and Los Angeles County, the trustees seem to use a heads on bed approach as opposed to traditional family or what your dependents that you claim on your tax return says. Sometimes there are children that live between to households which can benefit you if you can include them in your bankruptcy even though your spouse claims them on the previous year tax returns and things like that.

In Palm Springs, many of my clients are gay which allow me to find creative ways to qualify people for bankruptcy and determining whether to include a partner or not. Some people are domestic partners, married, or just living together which all have different and varying consequences and allow me to creatively think about how to get the best result. Because bankruptcy is federal most trustees only require federal tax returns which can be helpful to gay couple that are married and file joint returns in California but as single under federal taxes since the federal government does not recognize gay marriage. This can make a big difference in qualifying for chapter 7 since an individual income can be up to 48k a year but when you are a family of two its 62k. By treating to people as single it allows the household unit to make up to 96k which can be a huge benefit.

If you are thinking about bankruptcy and have debt problems and live in Riverside County, talk with a bankruptcy lawyer who deals with our local trustees and knows the in and outs of the bankruptcy court before walking down that path without counsel.

When you have assets that are above the amounts that the california exemptions in chapter 7 are able to protect, it puts property that you have in potential risk of being liquidated. Something that most people don’t understand though is that you have the option to buy it back from the trustee typically at a discounted rate before the trustee puts it on the market. That is what an equity buy back is. In general for most of my bankruptcy clients this is extremely rare because California has extremely generous exemptions which typically allow most debtors to protect all there assets. There are two exemption models that you can use which are known as the 703 or 704 exemptions. 704 exemptions are for people with a lot of equity in there house(not so many in riverside county). Typically for people who have no refinanced in the last 15 years and are older. Most married couples can protect 100k in equity in there home so if your house is worth 300k and you owe 200k your equity interest would be exempt. If you are 55 or older with a certain income you can get 125k in equity and 65 or older can be up to 175k in equity. Since most clients of mine do not have equity we use the 703 exemptions which give you $3500 for a car, 1400 for jewelry, 23,000 as a wildcard which you can use however you want. So if your car is worth 10k and you don’t have a secured creditor through financing then you would have to borrow 6500 from the wildcard which would still leave you with 17k to use how you wish. When you go over the wildcard then the trustee will ask if you want to buy back what he could liquidate to pay your creditors. For example I had a client who owned a 30k dollar car, had an IRA for 100k, jewelry of $1000 and 10k worth of household goods. In this situation the IRA/401k etc is protected 100%. The jewelry is protected up to 1400 so its protected 100%. The household goods are in general protected so no issue. The wildcard and the car exemption equal about 27k so the trustee could send me a letter if they are interested in 3000 dollars and let me know that we need to pay 3000 or else he will sell the car and pay my client 27k and have 3k to pay creditors. For that small of an amount the trustee typically wouldn’t do it as its to much of a pain to administer an estate that small and buy the time he paid auctioneer fees, fees to pick up and store the car etc there truly would be nothing to distribute to creditors. If its closer to 10k then the letter will come for sure. If someone did not want to lose that 10k then they could file a chapter 13 and they would have to pay at least 10k back to creditors over 5 years. If that is your only reason however to file a 13 my typical suggestion would be to do a 7 and pay the 10k over 1 year if they can afford it. These are the general issues in understanding what happens to debtors with more assets than typical and the option of the equity buy back. Call a riverside bankruptcy attorney if you have questions about how a liquidation analysis would unfold in your chapter 7 bankruptcy.

Many people are under the mistaken belief that you can only keep one car in bankruptcy. While the bankruptcy code in California only give you an exemption for one car at $3550 this does not mean that you can only keep one car. I have had clients with 8 cars that have filed chapter 7 and kept them all. Because california has a wildcard exemption for 23,500 its not a question of how many cars but how much value in your cars that you can exempt. Many people have financed cars with no equity in them as they owe the banks more than the cars are worth. Under that analysis you can have as many cars as you have financed as its of no value to the estate since its your equity position in the car that the trustee cares about and not the cars that are overly financed. The wildcard exemption can be pieced and parceled however you like so if you have a car worth 10k we would use the 3500 for the car exemption and the 6500 for a wildcard exemption which would still leave 17k on the wildcard. We could then exempt 2000 dollars that you have in the bank which would leave 15k on the wild card. You could have 5 cars worth 3k a piece and then that would use all the exemption amount. So you can see by my examples its not a matter of how many cars but what the values are and if we can protect everything with the wild card exemption as well as the car exemption. Call my office if you have further questions as to what you can keep in bankruptcy.

This is a very busy time for my bankruptcy practice as many of my clients are using their tax refund to pay the bankruptcy fee that they have needed to do for a while. Having a big lump sum of cash come into your account when you have had financial issues can be a big help and rather than spending it to pay down creditors or for other personal reasons, bankruptcy might be the right decision and a good place to park that money. My fees typically start at $1000 for attorney fees for simple cases. Filing fees and pulling your credit to populate my software is $330 and the two credit counseling fees that I recommend to people and which are mandated by the bankruptcy code will end up costing you $31. So for a simple case $1367 is the total out of pocket cost for your bankruptcy. Many times people tax refunds are suffice to cover this and you can move on with your fresh start and get your financial future on track in 2012. When you are living pay check to pay check and can barely find the income to pay creditors then bankruptcy is most likely your best decision that you can make. Call my office if you are in the situation and we can discuss options to help you move forward with a chapter 7 bankruptcy.

When doing google searches about Palm Springs Bankruptcy attorney’s I seem to find more and more attorneys who are paying to advertise via the web in Palm Springs regarding bankruptcy service but do not live or practice in Palm Springs. Many of these law firms use virtual offices and have a paralegal show up once a week to do the intake process. I don’t have any issues about taking cases out of town and actually do practice in all four federal districts doing chapter 7’s in all four but 13’s only in the Northern and central District, but I do recommend that if you are going to hire an attorney for something as intimate and potentially consequential as bankruptcy that you are dealing with an attorney and not a mass marketing mill that strives to take your money with little consequence to what happens with your case. Many attorney need paralegals to do the day to day work such as correspondence, drafting letters, filing cases, entering data etc. I have heard more and more from clients who have gotten their cases dismissed that there was a lack of communication between the paralegals and the attorney managing their cases which sometimes has gotten their case dismissed. I have had at least 3 cases in the last month from people in palm springs who have filed bankruptcy with attorneys who are an hour or more drive and have had communication break downs which lead to case dismissals and in one case a house which was sold at auction because an attorney didn’t file an response for a motion for relief from automatic stay. Make sure that whoever you decide to use in your bankruptcy that they have your best interest at hand. There is some money to be made in bankruptcy these days with as many cases as we are seeing, but my belief is that if you want to make this a lasting practice you have to take a very individual approach with each client which I strive to do, even as I get busier. Call my office at 760-459-4451 and you will speak with me directly. I live and work in Palm Springs and plan on staying in bankruptcy for the long haul and you will see that in my personal service and attentiveness that I take on your case. Although we will get out of this recession and tough economic times, there will always be failed businesses, divorce, medical issues and the standard things that cause people to file bankruptcy. The mills will fade and the sole practitioner who is serious about bankruptcy will rise to the top and that is how I am building my practice.