4 hours 19 min ago

Sunny, star-studded California is an iconic piece of the American dream, a place where entrepreneurs come to transform ideas into realities. While some of the world’s most successful businesses call Hollywood and Silicon Valley home, other companies — including a few familiar brands — have been challenged by chronic financial difficulties that led to filing for bankruptcy. Read on to learn about four of the biggest California companies to declare Chapter 11, ranked by our Roseville bankruptcy lawyers.

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4 of the Biggest California Businesses to Declare Chapter 11 Bankruptcy
Though occasionally used by individuals, Chapter 11 bankruptcy is almost always utilized by businesses. Large corporations are more likely to use Chapter 11 than smaller, family-owned businesses, simply due to the time and complexity involved in Chapter 11 cases. However, every business owner is strongly encouraged to compare all of their filing options with a Roseville Chapter 11 attorney before making a decision about which chapter to utilize. The “best” option for each business will ultimately depend on:

  • How much debt the business owes
  • How the business is structured
  • What assets and resources are available to the business
  • Why the business is filing for bankruptcy

The following companies determined that Chapter 11 was the right filing option. It could be the best option for your business as well. We encourage you to contact our small business bankruptcy attorneys with any questions you may have, no matter how minor, about how bankruptcy could work to your advantage.
#4: American Apparel
Founded in Montreal in 1989, clothing retailer American Apparel later set up headquarters in Los Angeles. With edgy cuts and bold colors nodding to the styles of the eighties, the brand initially achieved popularity among Millennials and young adults. But in 2015, after six years without making a profit, the company filed for Chapter 11 in the United States Bankruptcy Court for the Central District of California. Unfortunately, sales fell by 33% after the initial bankruptcy, worsening the company’s financial problems. After filing for bankruptcy once more in November 2016 — this time in a Delaware bankruptcy court, with debts and assets listed in the $100 million to $500 million range — American Apparel’s assets were purchased by Gildan Activewear for a figure reported between $66 and $88 million.
#3: BCBGMaxAzria
In a story similar to American Apparel’s, retail company BCBGMaxAzria was also founded in 1989, also became a fashion fixture in the Los Angeles area, and also filed for Chapter 11 bankruptcy, even around the same time as American Apparel — February 2017. The clothing company’s bankruptcy documents were filed in the U.S. Bankruptcy Court for the Southern District of New York. The company was reported to have $485 million in secured debt, meaning debt secured by collateral. Chapter 11 bankruptcy can enable businesses to reduce their operating costs by allowing them to pay the value of the collateral — for example, the value of a company vehicle or piece of equipment — instead of the amount which is actually owed.
#2: Quiksilver
Headquartered in Huntington Beach, Quiksilver carved out a niche manufacturing surfwear, surfboards, and other gear designed for surfers. However, the company filed for bankruptcy in 2015, with assets of $337 million and debts of $826 million, after a 2013 financial plan failed to repair the damage from a six-year streak without profits. The surfwear company’s Chapter 11 plan was primarily managed by Oaktree Capital Management, which is now the majority shareholder.
#1: Avaya
While the other names on our list may sound more familiar to you, Avaya’s bankruptcy was far larger in scope, restructuring approximately $6.3 billion in debt. The Santa Clara-based telecommunications company filed for Chapter 11 bankruptcy in January 2017, but its financial difficulties reached back to 2007, a decade earlier, when Avaya agreed to an acquisition by Silver Lake Partners and TPG Capital. Avaya received a loan of $725 million from an affiliate of Citigroup to continue business operations during the Chapter 11 reorganization plan.
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Sacramento Chapter 11 Bankruptcy Attorneys for Business Owners
Though not always the appropriate solution, Chapter 11 has helped many businesses emerge from debt to become more profitable and successful. In other situations, it makes more sense to file for Chapter 7, which is another bankruptcy option for S corporations, C corporations, and limited liability companies. If you are a sole proprietor who owns a small business, Chapter 13 bankruptcy could also be a potential filing option. The bottom line is that bankruptcy can be a viable strategy for strengthening your business, mitigating your losses, and achieving other professional goals.
To discuss your business bankruptcy options with an experienced California Chapter 7 attorney or Chapter 13 lawyer, contact the The Bankruptcy Group at (800) 920-5351 for a free legal consultation. We assist corporations, LLCs, partnerships, and sole proprietors with business bankruptcy cases in the Sacramento area, including Folsom and Roseville.
The post 4 of the Largest California Companies to File Chapter 11 appeared first on The Bankruptcy Group, P.C..

2 days 22 hours ago

Several bankruptcy options may be available to debtors in California. Depending on your disposable income and your reasons for declaring bankruptcy, it may make the most financial sense to file Chapter 7, Chapter 13, or in rare cases, Chapter 11. Our Roseville bankruptcy attorneys compare the different types of bankruptcy and explain how each works. When you contact our law offices for your free consultation, we can help you decide which bankruptcy chapter is right for your needs.

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Options for Filing for Bankruptcy in California
There are many different types or “chapters” of bankruptcy, each named after its corresponding chapter in the U.S. Bankruptcy Code. While debtors have some flexibility when choosing which chapter to file under, the choice can be limited by means testing, a process that measures a debtor’s disposable income to determine whether he or she has adequate income to cover a Chapter 13 plan. The Chapter 13 plan, and other important aspects of Chapter 13, 7, and 11, are explained in the sections below.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is also called “straight bankruptcy” or “ordinary bankruptcy” because it is the simplest, fastest, and most commonly used type of bankruptcy, not only in California but nationwide. According to U.S. Bankruptcy Court for the Eastern District of California, which has jurisdiction over Placer and Sacramento Counties (among many others), nearly 15,000 people filed for Chapter 7 in 2015, with a peak of nearly 45,000 filings in 2010.
Chapter 7, which generally takes about four to six months to complete, is also called “liquidation” because of the process involved. When a debtor files for Chapter 7, his or her non-exempt assets are sold by a trustee to various creditors, which helps pay off the filer’s debts. Filers in California can choose between two sets of exemptions, which are simply named System 1 and System 2. Your Chapter 7 bankruptcy lawyer can evaluate which system of exemptions will protect more of your property.
After the trustee has distributed sale proceeds among the debtor’s creditors, the bankruptcy court grants the debtor a discharge. The discharge has the effect of eliminating the debtor’s liability for most of his or her debts. Debts that are discharged in Chapter 7 bankruptcy include medical debt, credit card, certain tax-related debts, and debt from personal loans. While the debts continue to exist, creditors can no longer pursue the debtor for repayment.
Chapter 13 Bankruptcy
Chapter 13 is also called “reorganization” bankruptcy, or a “wage earner’s plan.” That is because, unlike Chapter 7, Chapter 13 requires filers to propose a reorganization plan, which must be approved by the bankruptcy court before the case can continue. The debtor’s creditors may object to the initial proposal, which is one of the reasons it is important to be represented by an experienced Chapter 13 bankruptcy attorney.
The reorganization plan is a three- to five-year plan under which the debtor makes monthly payments on various debts. The nature of each debt determines the order in, and extent to which, debts must be paid off. All of the debtor’s disposable income, or income left over after necessary living expenses have been accounted for, must be funneled into the reorganization plan.
The benefit of the reorganization plan is that it allows the debtor to keep his or her property, even without exemptions. By filing Chapter 13, a debtor can protect his or her vehicle from repossession, and even save his or her home from being repossessed. In short, the plan gives the debtor extra time to catch up on missed payments.
As long as the debtor stays on track with the plan, he or she can retain property that would otherwise be seized or repossessed. If the debtor misses too many payments, he or she may be forced to convert the case into a Chapter 7 bankruptcy. Once the Chapter 13 plan has been completed successfully, the bankruptcy court will grant a discharge, and, as in Chapter 7, the debtor will no longer be liable for debts that were addressed by the plan.
Because of the reorganization plan, Chapter 13 is more suitable for debtors with higher income, whereas Chapter 7 is usually utilized by debtors who have fewer assets and resources to draw upon. Chapter 13 is fairly common, but less widely used than Chapter 7, with about 3,000 filings in 2015.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is typically used by businesses. Chapter 11 for individuals is exceedingly rare, with just over 50 filings documented in 2015, but occasionally proves to be the most sensible filing option for individual debtors.
Chapter 11 is a complex process, but may be the right filing option if you have too much income to file for Chapter 7, and too much debt to file for Chapter 13. The process is similar to Chapter 13, and may require several years for completion. Our Chapter 11 bankruptcy attorneys can assess your debt and income levels to determine whether Chapter 11 is the most appropriate chapter for you.
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Roseville Bankruptcy Lawyers Handling Chapter 7, 13, and 11
Obtaining a discharge in Chapter 7, Chapter 13, or Chapter 11 depends on your ability to comply with court rules and federal bankruptcy regulations. If you fail to pay filing fees, fail to attend mandatory debtor education or credit counseling courses, attempt to conceal assets, or make any other errors, your case could be dismissed instead of discharged, which means you will still be liable for the debts you are trying to eliminate.
It is in your best interests to consult with an experienced California bankruptcy lawyer before making a decision about which chapter you should use. The Bankruptcy Law Group assists individual filers, married couples, and businesses with personal and business bankruptcy in the Roseville, Sacramento, and Folsom area. To set up a free legal consultation with a Folsom Chapter 11 attorney, Folsom Chapter 13 attorney, or Sacramento Chapter 7 lawyer, contact our law offices at (800) 920-5351 today.
The post The Types of Bankruptcy in California: Chapter 7, 11, and 13 appeared first on The Bankruptcy Group, P.C..

3 days 4 hours ago

debt lawyerUnless you’re a debt lawyer, the interplay between bankruptcy and your income taxes can be confusing. However, it is important to understand how income tax debts and refunds impact your bankruptcy claim. A single mistake can be costly.
Chapter 7 Bankruptcy and Income Taxes
In a Chapter 7 bankruptcy, you can discharge some types of income tax debt.  Tax debts are dischargeable if all of the following are true:

  • The debt is for unpaid income taxes (not payroll taxes or fraud penalties),
  • You did not file a fraudulent tax return or willfully evade a tax obligation,
  • The debt is at least three years old,
  • You filed the tax return at least two years ago, and
  • You pass the “240-day rule.”

However, income tax liens cannot be discharged through bankruptcy.
Even if your tax debt cannot be discharged, Chapter 7 may still offer some benefits. For example:

  • Chapter 7 will get rid of most of your other debt. This may leave you with more financial ability to pay off your tax debts through an IRS installment plan.
  • If you have assets that are liquidated by a bankruptcy trustee, these proceeds can help pay off some of your tax debt.

While Chapter 7 bankruptcy has many benefits, it is not always the best solution. Before filing, speak with an experienced debt lawyer. A lawyer can help you understand your options, including Chapter 13 bankruptcy or an IRS installment plan.
Chapter 13 Bankruptcy and Income Taxes
If you have significant income tax debt that cannot be discharged, a Chapter 13 bankruptcy may be your best option. Under Chapter 13, your debt is restructured and you enter into a payment plan. Over a period of three to five years, you will pay off your debts, while keeping your house and other property.
With the help of a skilled debt lawyer, you may be able to negotiate a Chapter 13 payment plan that is more advantageous than the IRS’ repayment system. And, you may be able to stop tax liens, wage garnishment, and additional interest and fees when you file for bankruptcy.
Bankruptcy Stays and Tax Debt
When you file for bankruptcy, you should list the IRS and other tax agencies as creditors in your bankruptcy filing. Once a bankruptcy is filed, debt collectors (including tax agencies) must stop collection efforts. This automatic stay applies to both Chapter 7 and Chapter 13 proceedings.
However, the automatic stay does not stop a tax audit or prosecution for tax evasion or fraud. And, you still have an obligation to file tax returns. Finally, once your bankruptcy is completed, the IRS can restart collection activities on any remaining tax debts.
What Happens to my Tax Refund?
If you receive an income tax refund, it is considered an asset. Your bankruptcy trustee can take any part of your tax return that is not exempt. Depending on your financial resources and where you live, all or most of your income tax refund may be exempt.
Income Tax Strategies
A debt lawyer can help you implement strategies that protect your assets and discharge most of your debts. For example:

  • Once you file for bankruptcy, try to avoid tax refunds by reducing your withholdings,
  • If you are anticipating a large income tax return, consider filing a partial-year return before you file for bankruptcy, and
  • Hold off on bankruptcy until most of your tax debt is dischargeable.

An experienced debt lawyer can help you understand these strategies and incorporate them (and others) into a comprehensive debt solution.
Speak With a Debt Lawyer Today
Without the guidance of a debt lawyer, you may make costly mistakes in your bankruptcy filing. At the Northwest Debt Relief Law Firm, we provide our clients with customized debt reduction strategies and compassionate, detail-oriented advice. Contact us for a consultation today.
 The original post is titled Debt Lawyer: What Happens to Income Taxes in Bankruptcy? , and it came from Portland Bankruptcy Attorney | Northwest Debt Relief .

1 week 1 day ago

By Ben Leubsdorf

The total debt held by American households reached a record high in early 2017, exceeding its 2008 peak after years of retrenchment in the face of financial crisis, recession and modest economic growth.

The milestone, announced Wednesday by the Federal Reserve Bank of New York, was a long time coming.

Americans reduced their debts during and after the 2007-09 recession to an unusual extent: a 12% decline from the peak in the third quarter of 2008 to the trough in the second quarter of 2013. New York Fed researchers, looking at data back to the end of World War II, described the drop as “an aberration from what had been a 63-year upward trend reflecting the depth, duration and aftermath of the Great Recession.”

In the first quarter, total debt was up 14.1% from that low point as steady job gains, falling unemployment and continued economic growth boosted households’ income and willingness to borrow. The New York Fed report said total household debt rose by $149 billion in the first three months of 2017 compared with the prior quarter, or 1.2%, to a total of $12.725 trillion.

“Almost nine years later, household debt has finally exceeded its 2008 peak, but the debt and its borrowers look quite different today,” New York Fed economist Donghoon Lee said. He added, “This record debt level is neither a reason to celebrate nor a cause for alarm.”

The pace of new lending slowed from the strong fourth quarter. Mortgage balances rose 1.7% last quarter from the final three months of 2016, while home-equity lines of credit were down 3.6% in the first quarter. Automotive loans rose 0.9% and student loans climbed 2.6%. Credit-card debt fell 1.9%, and other types of debt were down 2.7% from the fourth quarter.

Americans' debt has returned to levels last seen before the recession in nominal terms, but the makeup of that debt has changed significantly. Change in total debt balance, by type, since its previous peak in 2008: The data weren’t adjusted for inflation, and household debt remains below past levels in relation to the size of the overall U.S. economy.

In the first quarter, total debt was 66.9% of nominal gross domestic product versus 85.4% of GDP in the third quarter of 2008. Balance sheets look different now, with less housing-related debt and more student and auto loans. As of the first quarter, 67.8% of total household debt was in the form of mortgages; in the third quarter of 2008, mortgages were 73.3% of total debt. Student loans rose from 4.8% to 10.6% of total indebtedness, and auto loans went from 6.4% to 9.2%.

Mortgages continue to account for the majority of overall U.S. household debt, though student and auto loans represent a growing share of the total.  Mortgage lending to subprime borrowers has dwindled since the housing crisis in favor of loans to consumers considered more likely to repay. In the first quarter, borrowers with credit scores under 620 accounted for 3.6% of mortgage originations, compared with 15.2% a decade earlier. Borrowers with credit scores of 760 or higher were 60.9% of originations last quarter, versus 23.9% in the first quarter of 2007. Auto loans have remained relatively available to subprime borrowers, helping fuel the record vehicle sales of recent years as interest rates have been low. Some 19.6% of auto-loan originations last quarter went to borrowers with credit scores below 620, down from 29.6% a decade earlier. The median credit score for auto-loan originations in the first quarter was 706, compared with 764 for mortgage originations.

The share of debt considered seriously delinquent — at least 90 days late — is down from recession-era levels, but varies widely by type of loan. Some 4.8% of outstanding debt was delinquent at the end of the first quarter, little changed from late 2016, with 3.4% at least 90 days late, known as seriously delinquent. Seriously delinquent rates have climbed recently for credit-card debt, 7.5% in the first quarter, and auto loans, 3.8% last quarter, and remained high—11% last quarter— for student loans, according to Wednesday’s report.

Copyright 2017 Dow Jones & Company, Inc.  All rights reserved.

1 week 2 days ago

While it is possible to change bankruptcy attorneys in the middle of the case, it often will not make a difference in the outcome of the case. The relationship between a client and a bankruptcy attorney is one of trust, confidence, respect, diligence and communication. If there is a breakdown in any one or more+ Read More
The post Changing Bankruptcy Attorneys Mid-Case: Does It Ever Make Sense? appeared first on David M. Siegel.

1 week 1 day ago

In a recent decision, the Bankruptcy Appellate Panel of the Sixth Circuit (the “Court”) considered the issue of asset “abandonment” in a Chapter 7 case[1]. The Court reversed the bankruptcy court’s decision to allow the Chapter 7 trustee to compromise a claim that the debtor argued the trustee had abandoned. [1] In re: Wayne L. Wright, Docket No. 16-8019 (6th Cir. BAP, April 17, 2017). Read More ›
Tags: 6th Circuit Court of Appeals, Chapter 7

1 week 2 days ago

It’s that time of year again: tax season. While the 2017 tax filing deadline has already passed, thousands of Californians who applied for extensions are still sorting through their financial paperwork. Some of them – perhaps yourself included – are probably wondering whether they can discharge (eliminate) income tax debts by filing for Chapter 7. This is a common bankruptcy question, but the answer can be complicated. Our Roseville bankruptcy attorneys explain whether you can discharge income tax debt by filing Chapter 7 in California, and discuss how other tax-related debts are treated in liquidation bankruptcy cases.

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Can Income Tax Debt Be Discharged in Chapter 7?
Thinking about filing a tax return leads many Californians to think about filing something else, too: a Chapter 7 bankruptcy petition. But when can Chapter 7 help with income tax debt? And is filing for bankruptcy a potential solution for other tax-related debts as well?
To answer these questions, we need to start by explaining the difference between dischargeable and non-dischargeable debt. Put simply, a dischargeable debt is any debt for which the filer will no longer be liable when his or her case is discharged. The debt itself continues to exist, but the filer can no longer be pursued by the creditor or debt collectors. Common examples of dischargeable debts in a Chapter 7 bankruptcy include medical debt, credit card debts, and debt from personal loans.
In contrast, non-dischargeable debts are debts for which the filer remains liable, even after his or her case has been discharged successfully. In other words, the filer will still be responsible for paying the debt, regardless of the discharge.
Income tax debts are generally non-dischargeable in Chapter 7 bankruptcy, but there are also a few exceptions that allow for certain tax-related debts to be eliminated. The standards you will need to meet in order to eliminate income tax debts are explained in the next section.
5 Requirements to Eliminate Tax Debt in Bankruptcy
You might be able to discharge tax debt if all five of the following facts are true:
1. The debt is an income tax debt. Federal income tax debt is the only type of tax debt that can be discharged in Chapter 7 bankruptcy. For example, you cannot discharge debts related to payroll taxes. But the nature of the debt isn’t the only important factor; the age of the debt is also critical. You can only discharge income tax debt if…
2. The debt is from at least three years ago. If the debt is less than three years old, it cannot be discharged.
3. The debt meets the 240-day requirement. In addition to being due at least three years prior to the date on which you intend to file for bankruptcy, the debt must also be able to pass another time requirement called the “240-day rule.” This rule requires that the IRS assessed the debt at least 240 days before the date you file for bankruptcy. (For quick reference, 240 days is just under eight months.) Having prior bankruptcies in your past can affect the 240-day rule, as well as other critical aspects of bankruptcy (such as the duration of the automatic stay), so it’s particularly important to review your situation with a Chapter 7 bankruptcy lawyer if you’ve filed for bankruptcy on a previous occasion.
4. You already filed a federal income tax return. The third time requirement is that you filed a tax return for the debt you want to discharge a minimum of two years before the date on which you plan to declare bankruptcy. Meeting this requirement is more complicated if you filed your tax return late–in which case, you are strongly advised to discuss your filing date with a Folsom Chapter 7 lawyer from The Bankruptcy Group.
5. You did not commit tax evasion or other forms of fraud. If you committed tax evasion, concealed income in offshore bank accounts, or committed or attempted to commit any other types of tax fraud, the bankruptcy court will not grant you a discharge.
Again, you must be able to meet all five of these criteria in order to eliminate income tax debt in Chapter 7 bankruptcy.
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California Bankruptcy Lawyers Serving Roseville, Sacramento, and Folsom
The Sacramento Chapter 7 lawyers of The Bankruptcy Group can help determine whether you may be able to wipe out your tax debts, and if so, how to time filing your bankruptcy petition strategically. We can also discuss with you the potential effects of filing under Chapter 13 as an alternative; though, in many cases, Chapter 7 is the more suitable option for eligible debtors who seek to eliminate tax-related debt. Our experienced attorneys will take the time to assess the entire financial picture, including your debts, assets, and disposable income, to aid you in a decision about filing for bankruptcy in California.
To review your legal options in a free and confidential bankruptcy consultation, contact The Bankruptcy Group today at (800) 920-5351. We serve residents of the Sacramento, Folsom, and Roseville area.
The post Can You File Chapter 7 on Back Taxes in California? appeared first on The Bankruptcy Group, P.C..

2 weeks 11 hours ago

There is nothing in state or federal law that prohibits a California resident from filing for bankruptcy without an attorney, which is called “filing pro se” (“for oneself”). However, declaring bankruptcy without a lawyer exposes the debtor to grave legal and financial perils, particularly if the petitioner intends to file for Chapter 13 or Chapter 11, which are among the most technically complex forms of bankruptcy. Our Sacramento bankruptcy attorneys discuss eight reasons to avoid filing bankruptcy without a lawyer in California, and explain why legal representation is beneficial for debtors in a Chapter 7, Chapter 11, or Chapter 13 case.

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Can You File Bankruptcy without a Lawyer in CA?
The short answer to this question is yes. Legally speaking, any adult resident of California may file for bankruptcy without an attorney. However, there are numerous reasons to avoid filing bankruptcy pro se – today more than ever before.
While filing for bankruptcy has always been a complex procedure in the United States, the process became substantially more convoluted in 2005. In April of that year, Congress passed comprehensive bankruptcy reform legislation called the “Bankruptcy Abuse Prevention and Consumer Protection Act,” or BAPCPA.
While this piece of legislation was well-intentioned, having been enacted primarily to reduce the abuse of bankruptcy regulations pertaining to Chapter 7 eligibility, it also had the effect of complicating bankruptcy regulations to the point where the average person is now effectively rendered unable to file pro se successfully, particularly if he or she is filing under Chapter 13 or Chapter 11, both of which require the debtor to propose – and gain court approval to proceed with – a long-term debt reorganization plan. Continue reading to learn some of the reasons we urge California residents – and, for that matter, all U.S. debtors – to seek legal assistance from a qualified Chapter 7, Chapter 13, or Chapter 11 bankruptcy attorney.
8 Reasons to Hire an Attorney for Your Bankruptcy Case
Though it is not necessarily impossible to obtain a bankruptcy discharge after filing pro se, it is very difficult. But don’t simply take our word for it – listen to what the website of the United States Courts has to say on the matter:

[S]eeking the advice of a qualified attorney is strongly recommended because bankruptcy has long-term financial and legal outcomes. Filing personal bankruptcy under Chapter 7 or Chapter 13 takes careful preparation and understanding of legal issues. Misunderstandings of the law or making mistakes in the process can affect your rights. Court employees and bankruptcy judges are prohibited by law from offering legal advice.

As these warnings go on to point out, “Pro se litigants are expected to follow the rules and procedures in federal courts and should be familiar with the United States Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the local rules of the court in which the case is filed.” Unfortunately, this is no simple task.
Not only are bankruptcy regulations vast in scope, they are also written using legal terminology that is unfamiliar to most debtors and often poses a barrier to the clear understanding so vital to success in a bankruptcy case. That does not even begin to touch on the many local rules, court procedures, and deadlines which are applicable to a given case.
In a worst-case scenario, the petition will suffer from errors or omissions that ultimately lead to dismissal of the case by the bankruptcy court, which for Placer and Sacramento County residents is U.S. Bankruptcy Court for the Eastern District of California. Even in a scenario where there are no critical errors, the debtor is likely to miss or be unaware of small but impactful details that can result in higher monthly payments, greater loss of property or assets, or inability to discharge certain debts.
How, for instance, do you know whether you are better off using System 1 or System 2 of California’s bankruptcy exemptions? How do you know whether it is more advantageous to file immediately or delay filing? How do you decide which chapter of bankruptcy you should file under? And what is your plan if an unforeseen obstacle develops, such as a creditor objecting to your Chapter 13 plan, or failing to file a proof of claim?
With a skilled and experienced Chapter 7, Chapter 11, or Chapter 13 bankruptcy attorney by your side, you will not have to worry about handling any of these problems or challenges by yourself. Your Chapter 7 lawyer will be there to:

  1. Help you decide which chapter to file under, and when.
  2. Determine which exemptions are most advantageous for protecting your property.
  3. Prepare and file your bankruptcy paperwork.
  4. Represent you in proceedings with your creditors.
  5. Protect you from harassment by creditors or debt collectors.
  6. Explain your rights and responsibilities under bankruptcy regulations, such as your responsibility to undergo credit counseling and debtor education.
  7. Prepare you for any tax-related consequences that may result from filing for bankruptcy.
  8. Help you explore alternative options to bankruptcy, where applicable.

Without legal representation, you will lose all of these advantages, and will have a more difficult time getting the debt relief you need.
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Roseville Bankruptcy Lawyers for Chapter 7, 11, and 13
The Bankruptcy Group serves Californians who reside in the Sacramento, Folsom, and Roseville areas. We handle business bankruptcies and personal bankruptcies, and represent both single filers and married couples who wish to file jointly.
If you’re thinking about filing for Chapter 7, Chapter 11, or Chapter 13 bankruptcy in the Sacramento area, make sure you get the legal help you need to give you the greatest chance of success. For a free and confidential legal consultation with an experienced Folsom Chapter 7 lawyer, Folsom Chapter 13 lawyer, or Folsom Chapter 11 attorney, contact our law offices at (800) 920-5351 today.
The post Can I File for Bankruptcy in California without an Attorney? appeared first on The Bankruptcy Group, P.C..

2 weeks 2 days ago

In our continuing posts about issues related to the decrease in the value of taxi medallions in New York City, this month we are covering two lawsuits regarding the dramatic drop in taxi medallion values. The first lawsuit involves two taxi medallion owners who have filed lawsuits against the New York City and the Taxi and Limousine Commission (“TLC”). This lawsuit was reported in the New York Daily News on May 3, 2017. The plaintiffs, driver Marcelino Hervias and medallion owner William Guerra argue that: (1) the apps for hailing cars and burdensome rules have made taxi medallions practically worthless and have created unfair competition; (2) New York City and the TLC are bound by a rule to create standards ensuring medallion owners remain financially stable; (3) New York City allows the apps to dominate the streets and provide rides similar to taxis, but with none of the financial and legal burdens that medallion owners and drivers face; and (4) the driver has to work harder and longer to cover his monthly medallion loan payments and expenses. Mr. Hervias estimates that his business is down 30% and that he must work extra shift hours each day to make up the difference. Mr. Hervias also states that there is no market for medallions because financial institutions will not lend money to buy a medallion. The attorney for the plaintiffs indicated that this is the first suit of its kind as it pertains to the taxi industry. The article states that Mayor de Blasio and the City’s Corporation Counsel (the entity that defends the City against lawsuits) did not return requests by the Daily News reporter for comments.

The second case involves New York City credit unions that manage more than 2 billion dollars in taxi medallion loans are appealing a court ruling that rejected their argument that the TLC treatment of medallions violates the equal protection clause under the United States Constitution. (information about this lawsuit can be found in a May 4, 2017 post on The credit unions’ legal argument was that medallion owners are required to comply with state regulations, while Uber, Lyft, Gett and other ridesharing services operate without being required to comply with the same regulations. The credit unions argue that such disparate treatment violates the equal protection clause of the 14th Amendment of the U.S. Constitution. However, on March 30, 2017, United States District Court Judge Alison J. Nathan ruled that there was no disparate treatment because a mobile app is not the same as hailing a medallion on the street. The judge wrote that “[q]uite simply, medallion taxicabs are not similarly situated to hire vehicles because medallion taxicabs… have . . . a monopoly over one particular form of hailing.” The ruling also notes that several courts around the country considering similar Equal Protection claims also came to the same holding. The original lawsuit was filed in November 2015 by Melrose Credit Union (‘Melrose”), Progressive Credit Union, LOMTO Federal Credit Union (“LOMTO”) and taxicab industry organizations and individual investors. The credit unions filed a notice of appeal on April 27, 2017 with the Second Circuit Court of Appeals in New York City.

It is this author’s opinion that individual lawsuits like that described in the Daily News article are expensive, could take years to conclude and the outcome or result is uncertain. With respect to Judge Nathan’s ruling, many taxi medallion owners would argue that “this is a distinction without a difference”. But Judge Nathan’s ruling is the law, unless it is reversed on appeal.

The article noted that Melrose was placed into conservatorship in February by the New York State Department of Financial Services. The article also states that LOMTO is undercapitalized, with a net worth of 5.87% according to the National Credit Union Administration.  

These two lawsuits would seem to suggest that litigation will not assist medallion owners whose medallions have dramatically decreased in value.

Many taxi medallion owners who’ve consulted with Shenwick & Associates own medallions, which, to use a finance term, are “underwater.” Underwater means that the value of the asset is less than the loan collateralized by the asset. In simple terms, many medallion owners have loans against the medallions totaling $700,000-$900,000 (or more) and the medallions presently are worth approximately $240,000. As Mr. Hervias noted in the Daily News article, if banks are not providing loans to medallion purchasers, in the future it will become increasingly difficult for buyers to buy medallions because of the lack of financing (unless they are all cash buyers).

What options are available for medallion owners? One possible solution may be for medallion owners and their organizations to lobby the City of New York and Mayor de Blasio to create a fund to compensate medallion owners due to the disparate treatment faced by medallion owners and the ridesharing services. Another solution is for the city or state to create an entity or mechanism to provide funding or financing for future medallion purchases. The city or state could also look to the ridesharing services to contribute to those funds, though the ridesharing services would argue that their technology is merely “disruptive” and that competition has decreased the value of medallions, not inappropriate actions on their part. Recent articles about the Uber culture would seem to suggest that Uber would not voluntarily contribute to such funds.

The issue for medallion owners is: (1) whether they should continue to make loan payments on their medallions, if the value of the loans exceeds the value of the medallions; (2) competition from the ridesharing services has reduced their earnings; and (3) banks are not lending money to finance medallion purchases. If a medallion owner stops making loan payments, he or she will be in default under their loan(s) and the banks can commence litigation to foreclose on the medallions and/or seek repayment of their loans.

As we discussed in a prior article dated February 2nd, medallion owners who stop paying their loans have four options: (1) arrange their financial affairs so that they are “judgment proof”; (2). negotiate an out-of-court settlement with the banks that financed their medallion purchases; (3) file for bankruptcy protection or (4) litigate with the banks that loaned them money to purchase their medallions (an expensive and often times losing proposition). The option that is best for an individual medallion owner depends on his or her facts and circumstances.

Medallion owners who need such counseling are urged to contact Jim Shenwick.

2 weeks 2 days ago

Chapter 13 is sometimes referred to as “reorganization” bankruptcy. That is because the core feature of Chapter 13 bankruptcy is a reorganization plan, which will last from three to five years depending on your disposable income, the nature of your debts, and other factors. Generally speaking, California debtors who file for Chapter 13 are able to keep their vehicles, provided they continue to make full and timely car payments throughout the duration of their reorganization plan. However, there are also some situations where a filer may be in danger of vehicle repossession. Our Roseville bankruptcy lawyers explain what happens to your car when you file for Chapter 13 bankruptcy in California.

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Chapter 13 Car Repossession
If you live in the Roseville, Sacramento, or Folsom area and are worried about losing your vehicle to repossession, you should contact a Sacramento Chapter 13 attorney immediately for legal guidance. You may be able to prevent your car from being repossessed if you file for Chapter 13 bankruptcy, but it is vital to act quickly. While it may be possible to get your car back if it has already been repossessed, the simpler course of action is to prevent repossession before it occurs.
On the other hand, there can also be strategic advantages to delaying a bankruptcy filing under certain circumstances, which is one of the reasons it is so crucial to consult with a knowledgeable bankruptcy attorney prior to filing a petition in U.S. Bankruptcy Court for the Eastern District of California (which has jurisdiction over Placer and Sacramento Counties, among others). An experienced Chapter 13 lawyer will be able to review your debts, assets, disposable income, and financial objectives to help you make an informed decision about the drawbacks and benefits of filing immediately versus filing at a later point in time.
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What Happens to Your Car Payments in Chapter 13?
Getting back to the subject of car payments under Chapter 13 bankruptcy, you will generally be able to keep your vehicle provided you comply with the terms of your reorganization plan, which must be approved by the bankruptcy court. In the period between filing for bankruptcy and getting court approval of your plan, it is very important that you continue to make payments. Car payments made after filing but prior to plan approval, which are known as “adequate protection” payments, are meant to compensate for the depreciation of the vehicle while you are waiting on the court’s approval. In most but not all cases, filers should expect adequate protection payments to be equivalent to their normal car payments.
Once your plan has been approved by the bankruptcy court, you will continue to make payments toward the vehicle. This is known as “secured debt,” because it is secured by collateral (the vehicle). Secured debts generally must be paid off in full in Chapter 13. The benefit of filing is that you will be granted time to catch up on late or missed payments, which are known as “arrearages,” enabling you to keep your vehicle. While it is sometimes possible to keep a vehicle in Chapter 7 bankruptcy by using exemptions, Chapter 13 is generally the better option for eligible filers who do not wish to surrender their property.
Not only does the Chapter 13 reorganization plan give the petitioner time to catch up on missed payments; a court order known as the “automatic stay,” which takes effect automatically (hence the name) upon filing for bankruptcy, generally prevents creditors from collecting debts while the case is underway. However, there is an exception in cases where the creditor is granted court approval to lift (remove) the automatic stay after filing a document known as a “motion for relief from the automatic stay.” If you fall behind on your auto loan payments, the creditor may file this motion in an effort to repossess your vehicle. The protective powers of the automatic stay can also be diminished by multiple bankruptcy filings, so be sure to consult with an attorney about this potential issue if you have filed for bankruptcy in the past.
There is another additional point that is important to mention. Chapter 13 bankruptcy regulations require that all of the debtor’s disposable income – that is, any income remaining after Chapter 13 payments and reasonable living expenses – goes toward his or her reorganization plan. If you own an expensive luxury vehicle, the bankruptcy court might determine that your car payments are not actually a reasonable living expense, and require you to claim a lower expense instead.
CA Bankruptcy Lawyers Serving Roseville, Sacramento, and Folsom
Are you a California resident who is worried about losing your vehicle to repossession, or your home to foreclosure? Are you struggling to pay off car loans or other debts that have become overly burdensome and difficult to manage, including medical debt and credit card debt? You may be able to solve all of these problems by declaring bankruptcy with assistance from a Folsom Chapter 13 lawyer. To speak confidentially about your legal options in a free bankruptcy consultation, contact the attorneys of The Bankruptcy Group at (800) 920-5351 today.
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