Last year, California-based clothing retailer Pacific Sunwear, better known by its shortened name PacSun, drastically reduced its debt from $88 million to just $30 million by giving stock to senior lender Golden Gate Capital as part of a Chapter 11 reorganization plan: a debt reduction of $58 million. Retail analyst Poonam Goyal was quoted in Bloomberg Markets as calling PacSun’s story “every distressed retailer’s dream.” If your business is undergoing financial hardship – or if you are a California resident whose debt exceeds the limits permitted for Chapter 13 – Chapter 11 may be able to help you substantially reduce the amount you owe various creditors while keeping your company afloat. Our Roseville Chapter 11 attorneys discuss who can file for Chapter 11 in California, how Chapter 11 works, and when it might make sense for an individual to file under Chapter 11.
Who Can File for Chapter 11 in California?
Chapter 11 is sometimes overlooked as a bankruptcy filing option among Californians, not only due to the complexity of the process, but also the rarity with which it is used compared to other chapters of bankruptcy. Among the 20,379 total bankruptcy filings in the U.S. Bankruptcy Court for the Eastern District of California during 2014, the vast majority involved Chapter 7 (16,652 total) or Chapter 13 (3,628 total), compared to just 84 Chapter 11 cases filed during the same time period. Phrased another way, Chapter 7 accounted for about 82% of the cases filed in 2014, while Chapter 13 accounted for 18%, and Chapter 11 accounted for less than 0.5%.
Chapter 11 is normally utilized by businesses, though in rare circumstances individuals may file under Chapter 11 as well. While most individual debtors are better served by Chapter 7 or Chapter 13, Chapter 11 may be appropriate for an individual filer if he or she has too much disposable income to file under Chapter 7, which is decided by a process called “means testing,” and has too much debt to file under Chapter 13. As of April 2016, under federal law an individual cannot file for Chapter 13 if his or her unsecured debts exceed $394,725, or if his or her secured debts exceed $1,184,200. These figures are periodically adjusted to account for inflation.
Chapter 11 is frequently utilized by business entities because they are prohibited from filing under Chapter 13, while filing under Chapter 7, which is permitted, will result in liquidation of the company’s assets. If a corporation, partnership, or limited liability company (LLC) wishes to avoid closure and remain operating throughout the bankruptcy, it is generally necessary to file under Chapter 11. Bankruptcy regulations are federal, meaning these rules apply not only to individuals and businesses in California, but throughout the United States.
What Happens to Debt in Chapter 11?
PacSun’s debt reduction was impressive, but pales in comparison to the Chapter 11 plan for oil and gas company Penn Virginia Corporation announced in mid-2016. According to a report in Law360, “Penn Virginia said that it has entered into a restructuring support agreement with creditors that hold approximately 87% of its funded debt obligations, about $1.03 billion.” While few filers are dealing with that level of debt, Chapter 11 can nonetheless result in substantial reductions to the amount the debtor owes.
Similar to Chapter 13, Chapter 11 is a reorganization bankruptcy in which the filer’s debts are restructured in accordance with a plan of reorganization. After the plan of reorganization is confirmed, most of the filer’s debts will be discharged. However, if the filer is an individual, no discharge will be granted until the debtor has made all payments provided for in the plan. The plan will not be confirmed by the bankruptcy court unless it is fair, feasible, and serves the best interests of the creditors involved.
Unlike a Chapter 13 or Chapter 7 bankruptcy, it is relatively uncommon for California bankruptcy courts to appoint a trustee to administer a Chapter 11 plan. In many though not all Chapter 11 cases, the debtor, who is called the “debtor in possession,” continues to run the business. However, the bankruptcy court will have discretion over any major decisions regarding the business, such as signing a lease, entering an agreement with a vendor, or expanding the business by opening more locations. A Chapter 11 case may conclude in as little as several months, but more typically takes several years to resolve.
Roseville Business Bankruptcy Lawyers Serving Sacramento and Folsom
Serving Roseville, Folsom, and Sacramento, the attorneys of The Bankruptcy Group have years of experience assisting businesses, individual filers, and married couples filing jointly for bankruptcy in California. Whether you are a small business owner thinking about Chapter 11 in Sacramento, a sole proprietor considering Chapter 13 In Folsom, or an individual who wishes to file under Chapter 7 in Roseville, our knowledgeable bankruptcy lawyers can help guide you through the process to maximize the efficiency of proceedings while protecting your interests and advising you of your options and their potential effects.
To speak confidentially in a free legal consultation with our Roseville Chapter 13 lawyers, Roseville Chapter 11 lawyers, or Roseville Chapter 7 lawyers, contact The Bankruptcy Group at (800) 920-5351 today.
The post Can Chapter 11 Reduce or Eliminate Debt for Businesses in California? appeared first on The Bankruptcy Group, P.C..
The Bankruptcy Code puts specific demands upon the debtor seeking to eliminate debt through a bankruptcy filing. It is important for clients to realize that these demands are inherent in the bankruptcy code and are not needless demands from their bankruptcy attorney. In many cases, debtors will wrongfully assume that the demand is coming from+ Read More
The post Requesting Documents Required For Filing Bankruptcy The Right Way appeared first on David M. Siegel.
In February, the FBI reported pastor Karl Robinson was sentenced to four years in federal prison for his role in a mortgage rescue scam that falsely promised California homeowners they could stop foreclosure and stay in their houses by paying fees for “experienced consultants.” Unfortunately for the victims of Robinson’s scam, his financial promises were too good to be true, and their money was wasted on useless, fraudulent services. However, there is a way to stop foreclosure that doesn’t involve empty promises or criminal activity: filing for Chapter 13 bankruptcy in California. Our Roseville Chapter 13 attorneys explain how filing under this chapter enables debtors in California to keep, and remain in, their homes.
Can You Keep Your House in a Chapter 13 Bankruptcy in CA?
The short answer to this question is yes: under the right circumstances, filing for Chapter 13 with strategic timing will allow the filer to retain his or her property and avoid being foreclosed on. The long answer, of course, is more detailed.
There are numerous chapters (types) of bankruptcy, but most Californians end up filing under Chapter 7, which involves liquidation of assets, or Chapter 13, which instead focuses on reorganization or creditor repayment. It is critical to emphasize that filing for Chapter 7 bankruptcy will not prevent foreclosure from occurring.
While a feature of Chapter 7 known as the “automatic stay” can postpone foreclosure, the proceedings will continue once the case is over. Moreover, there are circumstances under which a lender could conceivably persuade the bankruptcy court to lift the automatic stay, thus depriving the debtor of its protection. While Chapter 7 bankruptcy can be immensely beneficial for the right filer in that numerous debts are discharged after a short time period, it is generally not the ideal approach for homeowners concerned about foreclosure. An experienced Roseville Chapter 7 lawyer can help you understand how you would be affected by filing under various chapters, and which type of bankruptcy is right for your situation.
The only way to save your home from foreclosure through bankruptcy is by filing under Chapter 13. If you are a resident of Roseville, Folsom, or Sacramento, you will generally file your Chapter 13 petition with the Sacramento Division of the United States Bankruptcy Court for the Eastern District of California, which is located in the Robert T. Matsui United States Courthouse in downtown Sacramento, for a filing fee of $310 (which includes a $235 filing fee in addition to an administrative fee of $75).
But why does Chapter 13 stop foreclosure, while Chapter 7 doesn’t? The answer lies with the process involved in each type of bankruptcy.
When you file for Chapter 7 in California, most of your debts, including medical debt, credit card debt, and various debts arising from personal loans, can be quickly discharged provided you abide by all bankruptcy regulations and the rules of the bankruptcy court. This means you are no longer responsible for paying the discharged debts. However, a court official called a “trustee” will sell some of your property, excluding property you’ve protected using System 1 or System 2 of California’s bankruptcy exemptions. That doesn’t necessarily mean the trustee will sell your house, particularly if you have no equity; but keep in mind that, once the bankruptcy is over, the lender will still have a lien on your home, even though your liability for the mortgage has been eliminated. That means the lender can still foreclose on your home, despite the discharge you received from the bankruptcy court.
Chapter 13 works differently, and therefore, has a different impact on foreclosure proceedings. When a debtor declares Chapter 13 in California, he or she is required to propose a long-term reorganization plan, which essentially establishes a three- to five-year course of monthly payments that the filer will make toward his or her creditors, starting with secured creditors.
Significantly, you can catch up on mortgage arrears (also called “arrearages”) by making payments as part of your Chapter 13 plan. In other words, Chapter 13 gives the filer anywhere from three to five years, depending on his or her financial circumstances, to catch up on his or her missed mortgage payments. If you can remain current on your mortgage payments going forward, and make up for the payments you have missed, you can save your home from being foreclosed upon.
Contact Our Roseville Bankruptcy Lawyers About Stopping Foreclosure
If you’re a homeowner in Sacramento, Roseville, Folsom, or the surrounding communities, and you’re worried about losing your home to foreclosure, Chapter 13 bankruptcy may be able to help you stay in your house and keep your property. However, it is vital to act swiftly. The longer you wait to speak with an attorney about how to stop foreclosure in Roseville, the fewer legal options will remain open to you. To discuss Chapter 13 or Chapter 7 bankruptcy in a free and completely confidential legal consultation, contact The Bankruptcy Group at (800) 920-5351 today.
The post Can You Stop Foreclosure in Chapter 13 in California? appeared first on The Bankruptcy Group, P.C..
One of the oddities of Wynn at Law, LLC’s flow of phone calls is this: A potential client will call within seconds of getting a $180 speeding ticket, but will wait to call until well into buying a $300,000 home. The stakes are so much higher in the latter, and in fact, a real estate attorney on the front end can end up saving you money. Here are four ways how:
1. Wynn at Law, LLC reviews the title.
It’s a history project that reveals covenants on the property, environmental concerns (like our Geneva Lake Watershed), and liens. Any one of these can be costly to the buyer well after the closing.
2. Home Owner Associations
When there’s a Home Owner Association (HOA) it can have a lasting impact on your happiness with your investment. One area of completely subjective info a seller has to his advantage is his opinion of the HOA. “They’re great.” “They’re harmless.” If the HOA was terrible, would they really tell you and possibly scuttle the sale? I look at the more objective – and legally binding – HOA rules before any contract ties you to them. A sale contract most definitely will.
3. Buyers sometimes want out of a contract.
If you haven’t engaged an attorney before the offer, you might not have protected your ‘out.’ Sellers have the upper hand from engaging an attorney before listing, or at least by using the real estate agent’s legal contract. If the buyer doesn’t have the offer prepared properly and the contract drawn up in his/her best interest, that’s a legal cliff. You’ll either close, or buy your way out of the deal. But…
4. A seller may call his/her attorney.
A suit follows. Even if they’re not unanimously successful, but they are an expensive time-eater.
When we get the chance to work with homebuyers early in the home-buying process, they’re excited people. And you should be: This is a great life changer.
When I work with them later in the life-changing deal once it has gone south, it’s usually because they’re ticked-off with the seller.
Who doesn’t prefer working with happy clients? But more importantly, they’re going to avoid costly mistakes. That’s part of the reward in which we can all share.
*The content and material in this original post is for informational purposes only and does not constitute legal advice.
Photo by Syda Productions, Lev Dolgachov, used with permission.
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Last month, a California-based adoption agency closed its doors after filing for Chapter 7 bankruptcy. Unfortunately for nearly 2,000 hopeful adoptive parents – many of whom had already sunk tens of thousands of dollars into the adoption process – the agency arguably failed to prepare its clients, instead surprising families with last-minute email notifications. Whether it is a corporation, an LLC, or other type of business entity, every company should take steps to avoid this situation by preparing for Chapter 7 and subsequent closure well in advance of filing. In order to help companies prepare for Chapter 7, our Roseville Chapter 7 bankruptcy lawyers have compiled a short business bankruptcy checklist for closing a business in California.
Types of Business Bankruptcy in CA
The vast majority of bankruptcies in California fall into one of the following categories:
- Chapter 7 (Liquidation)
- Chapter 11 (Reorganization)
- Chapter 13 (Reorganization, Wage Earner’s Plan)
Business entities may not file for bankruptcy under Chapter 13, which is prohibited by 11 U.S. Code § 109(e). It is only possible to file Chapter 13 bankruptcy in California if you are filing as an individual, or filing jointly with your spouse. However, with assistance from a Roseville Chapter 13 attorney, sole proprietors may wish to utilize Chapter 13 in certain situations. C corporations, S corporations, limited liability companies, and other California business entities essentially have two filing options under federal law: file under Chapter 7, or file under Chapter 11.
Though both forms of bankruptcy may be utilized by businesses, they involve drastically different criteria and procedures – and likewise, result in drastically different outcomes. While the full explanation is more nuanced, the short explanation is that Chapter 7 is a liquidation in which a trustee sells the company’s assets and the business typically closes. Chapter 11 costs more and takes a longer time to complete, but allows the company to retain its assets and continue operating. Our Roseville Chapter 11 attorneys assist clients with both types of business bankruptcy, and are happy to answer your questions about either during a free consultation.
Chapter 7 Checklist for Businesses: Steps Before Closing
By making sure to take certain steps when filing for bankruptcy in California, you can spare your customers, your employees, and yourself avoidable headaches.
- Hire a California bankruptcy lawyer. Bankruptcy is a complex procedure, particularly if you are filing under Chapter 11, that will have a long-lasting financial impact on your liability for both personal and business debts. It is in your best interests to consult with an attorney, who, in addition to handling your legal documentation and making sure you understand your rights and responsibilities as a debtor, will also work to ensure that your case is filed with strategic timing using the chapter best suited to your objectives.
- Notify your employees. Your employees will need as much time as possible to prepare themselves for the loss of income and to seek a new job.
- Collect accounts receivable. Try to collect as much of the money that is still owed to the company as possible. It’s a good idea to do this prior to announcing closure of the company, and in some cases, may be helpful to offer a small discount as a way of encouraging customers to pay right away. You can also raise money before closing your business by holding a going-out-of-business sale.
- Notify your customers. Make sure your customers receive plenty of notice that the company will be going out of business. For example, you can issue a press release or contact local newspapers about publishing a statement. Even though the company will cease operations, it never hurts to leave a positive impression – especially because you may decide to open a new business later, after the case is closed. Make a good faith effort to wrap up any transactions or contractual obligations you’re committed to, and speak with an attorney immediately about how to handle refunds, project cancellations, and any other unfulfilled provisions of a contract.
- Submit paperwork and tax returns. After you’ve sent the final payments out to your employees, you’ll be required to file various state and federal employment tax forms, in addition to your final tax return. An attorney can help you understand which forms need to be submitted to the IRS, and by which deadlines, in order for you to fulfill your financial obligations.
CA Bankruptcy Lawyers in Roseville, Folsom, and Sacramento
The experienced California bankruptcy attorneys of The Bankruptcy Group provide an array of bankruptcy legal services for corporations, partnerships, LLCs, and sole proprietors, ranging from small family-owned businesses to large franchises with thousands of employees. If you are a business owner who is thinking about filing for Chapter 7, Chapter 11, or Chapter 13 in California, make sure you discuss your legal options with our bankruptcy lawyers before you initiate the filing process. For a free legal consultation with The Bankruptcy Group, call our law offices at (800) 920-5351 today.
The post What to Do Before Your Business Files for Chapter 7 Bankruptcy in California appeared first on The Bankruptcy Group, P.C..
Last month, Medill Reports Chicago covered a surprising source of bankruptcies in Illinois: expensive parking tickets. The report is a good reminder that while medical debt, credit card debt, and mortgage debt are common, the financial factors that can lead to bankruptcy are sometimes less obvious. Our Roseville bankruptcy lawyers explore some lesser-known sources of debt and spending in California.
What Are the Largest Sources of Debt in California?
You’ll get different responses to the question, “What is the biggest source of debt?” depending on who and when you ask – and which state you’re referring to.
In October 2016, the website GOBankingRates, which “collects interest rate information from thousands of U.S. banks, credit unions and lenders,” published the results of a 3,000-person survey, which revealed that among those in debt, the largest sources of debt were mortgage loans, student loans, credit card debt, and medical debt, in that order. In the GOBankingRates survey, California was among 42 states to cite mortgage loans as its primary source of debt.
Student loan debt is one area where Californians may be faring somewhat better than residents of other states, with The Davis Enterprise reporting that, in 2013, “California students graduated with an average debt of $20,269, the third lowest amount among the states.” On the other hand, medical debt has taken an especially heavy financial toll on California, whose residents are burdened by the nation’s third highest rate of debt from medical bills, according to a NerdWallet study based on data from the Centers for Medicare and Medicaid Services “and other federal agencies collected between 2010 and 2013.”
As for credit cards, a ValuePenguin analysis based on data from the Federal Reserve and U.S. Census Bureau revealed that the average credit card debt in California in 2016 was $5,769, tying California with Oregon as the state with the seventeenth highest amount of credit card debt. (For context, Alaska had the highest credit card debt at $7,706, while Iowa had the lowest at $4,734.)
While you’ll encounter some variations and counterpoints in the data depending on its date and source – Debt.org, for instance, claims the average credit card debt in California is actually $5,196 – none of these findings are particularly surprising, as mortgage debt, student loan debt, medical bills, and credit cards are all well known as major sources of debt and financial hardship, not only in California and throughout the United States. What’s more surprising – and equally important to keep an eye on – is how smaller, less glaring expenditures can accumulate over time, potentially creating financial strain.
So, what are Californians in the Roseville area spending most of their money on?
BLS Statistics Show Average Expenditures in the Sacramento, CA Area
Some of the answers can be found in data collected by the Bureau of Labor Statistics (BLS), which periodically conducts a survey called the Consumer Expenditure Survey (CE or CEX) in order to collect information about income and expenditures in different parts of the country.
CE data exists not only for broad regions for the country, but also specific metropolitan areas, including Sacramento. According to BLS data on Sacramento, as of December 2016, Sacramento had a higher unemployment rate than the national average: 4.9 compared to 4.5. However, among the employed, average weekly wages were higher than the national average: $1,045 compared to $989.
Average annual expenditures in Sacramento added up to a costly $61,244 in 2015, but where was that money going? While housing-related expenses accounted for the bulk of that figure at $20,716 – just over a third of total expenditures in 2015 – food and transportation costs were also considerable. Residents in the Sacramento area spent $7,776 on food and $9,640 on transportation during 2015.
More specific data is available for nearby San Francisco, which is only about 85 miles away from Sacramento. For example, CE data on San Francisco revealed that, out of the money residents spent on food, only about half was spent on food at home, which means all those fast food, restaurant, and convenience store purchases are adding up to thousands of dollars each year. The San Francisco CE data also revealed that San Francisco-area Californians spent more than $2,600 on clothing and “services,” plus a hefty $3,318 on entertainment, like toys, video games, and DVDs. And when it came to transportation costs, people who rode public transportation saved big, spending just $1,603 while drivers spent more than $2,200 on gas and motor oil alone.
Sacramento Bankruptcy Lawyers for Chapter 7 and Chapter 13
Taken alone, expenditures like gasoline, entertainment products, dining out, and clothing probably aren’t going to send anyone into bankruptcy. But together, these expenses can add up to thousands upon thousands of dollars over the course of a single year – and for someone who is struggling to remain financially solvent, these combined costs might push him or her toward filing for Chapter 7 or Chapter 13.
Bankruptcy can help eliminate or reduce debt, protect you from creditor harassment, and even save your home from foreclosure, if you file under Chapter 13 at a strategic time. If you’ve been struggling to keep up with your financial obligations and feel like you are being overwhelmed by ever-increasing debt, bankruptcy may be an appropriate legal option. To talk about filing for Chapter 7 or Chapter 13 in Sacramento, Roseville, or Folsom with a Sacramento Chapter 7 lawyer or Sacramento Chapter 13 attorney, call The Bankruptcy Group at (800) 920-5351 today.
The post 4 Surprising Sources of Debt That Contribute to California Bankruptcy Cases appeared first on The Bankruptcy Group, P.C..
In December, an Irvine-based bankruptcy attorney was disbarred after being convicted of conspiracy to commit bankruptcy fraud. The disbarment makes it clear that actual or attempted bankruptcy fraud can result in dire consequences – but you don’t have to be a lawyer to receive harsh penalties. If the trustee suspects that a filer has committed or tried to commit bankruptcy fraud in a Chapter 7 or Chapter 13 case in California, not only can there be negative ramifications for the bankruptcy, but the filer can even be criminally prosecuted. Our Roseville Chapter 7 lawyers explain what bankruptcy fraud is, and examine some of the consequences that can result from committing bankruptcy fraud.
How is Bankruptcy Fraud Legally Defined?
Bankruptcy fraud is a type of “white collar crime,” or financial crime, which is defined by federal law under 18 U.S. Code § 157. Under the legal definition established by this statute, a person commits bankruptcy fraud when he or she files a bankruptcy petition, or other bankruptcy-related document, as part of a scheme to defraud another party, including having intent to devise such a scheme.
It is also bankruptcy fraud to make “a false or fraudulent representation, claim, or promise concerning or in relation to a proceeding under title 11, at any time before or after the filing of the petition, or in relation to a proceeding falsely asserted to be pending under such title.” In other words, it is bankruptcy fraud to make false statements, or to supply false or misleading information, before or after filing, in connection with any bankruptcy proceedings, which is what is meant by “a proceeding under title 11.” (Not to be confused with Chapter 11 bankruptcy, Title 11 of the U.S. Code pertains to bankruptcy generally, including Chapter 7 bankruptcy, or “liquidation,” and Chapter 13 bankruptcy, or “reorganization.”)
Bankruptcy fraud can take several forms under these fairly broad definitions, such as filing multiple claims. One of the most common examples is concealment of the debtor’s assets, which must be listed using accurate, complete, and up-to-date information when the debtor files for bankruptcy. For example, a document called Form 106A/B (Schedule A/B: Property) requires debtors to list any buildings, land, or other pieces of property they own or have an interest in.
Bankruptcy Fraud Penalties and Consequences
For a California bankruptcy attorney, committing or attempting to commit bankruptcy fraud can result in disbarment. But what if you aren’t an attorney? Other than potentially losing your job, what other types of consequences can arise from engaging in bankruptcy fraud?
In fact, this is really a two-part question: what are the consequences of bankruptcy fraud for your bankruptcy case, and additionally, what are the criminal consequences of bankruptcy fraud?
Let’s start by answering the first question. If you intentionally hide or attempt to hide assets, or if you are suspected by the trustee to have engaged in other forms of bankruptcy fraud, the bankruptcy court could potentially deny your discharge or even dismiss your case altogether, which means not only will you remain liable for your debts, you will also lose the invaluable protection afforded by the automatic stay, which normally freezes debt collection actions while a bankruptcy case is ongoing.
In addition to losing out on the substantial financial benefits of bankruptcy, you could have even bigger worries: criminal prosecution. Though non-violent in nature, bankruptcy fraud is still considered to be a serious offense – and a conviction can result in serious criminal penalties to match. Not only does 18 U.S. Code § 157 permit convicted offenders to be heavily fined, further exacerbating any financial difficulties, it also establishes a prison sentence of up to five years, which may be imposed in place of or in addition to the fine.
Because these penalties are rooted in federal law, they apply not only in California, but to filers throughout the United States.
CA Bankruptcy Lawyers Serving Roseville, Sacramento, and Folsom
If you are looking for a skilled, experienced, and trustworthy attorney who can help you file bankruptcy individually, file jointly with your spouse, or assist with your business bankruptcy, you do not need to look any further. Serving the Roseville, Sacramento, and Folsom area, the California bankruptcy lawyers of The Bankruptcy Group have established a reputation for providing friendly, focused, and efficient representation to help make bankruptcy work for you. Whether you are a small business owner or simply an individual who is seeking a solution to make your debt more manageable, The Bankruptcy Group can assess your options, answer your questions, and help you plan your case strategically while protecting your rights as a debtor.
Our accomplished legal team includes Sacramento Chapter 13 attorneys, Sacramento Chapter 7 lawyers, Folsom Chapter 13 attorneys, Folsom Chapter 7 lawyers, and more. To learn more about how we can assist you in a free and completely confidential consultation, contact The Bankruptcy Group at (800) 920-5351 today.
The post What Happens if You Commit Bankruptcy Fraud in California? appeared first on The Bankruptcy Group, P.C..
Most of Wynn at Law, LLC’s bankruptcy clients face sudden situations that have them considering filing Chapter 7 or Chapter 13 bankruptcy. We’re talking about things like massive medical bills or sudden job loss. Finances can be a difficult balancing act at other times as well, so we put together a quick list of warning signs.
1. Wage garnishments
These are a dead giveaway that something got out of hand at some point and a bankruptcy filing may be in the cards. However, before a wage garnishment can take place, the creditor has to take you to court to get the order. So, here is the real heads up…
If a creditor wants a piece of you and has been unsuccessful with collections on its own or with the help of a collection agency, they take you to circuit court. The court is in the county in which you reside. Walworth County Circuit Court, for example, is in Elkhorn. The court sends out a summons when a creditor files against you.
3. Missed or late payments
When you lose track of paying bills by the due date, it’s probably time to use a calendar. If you’re regularly late or paying at or below the minimum payment, that’s a warning sign. It’s also a money drain. Late fees are a nuisance. When you start paying interest on late fees added to your account balance, the situation can spiral out of control quickly.
4. Maxed out cards
One reason we miss payments or pay below the minimum is because a credit limit can be a tempting way to extend your income. Buying groceries on the credit card is one example. Even if you’re a super couponer, paying for Pick ‘n Save on the Visa negates any incremental savings from the coupons.
5. No savings
When you’re not following the old adage that you pay yourself first by putting money into savings or investments (like your retirement plan), it’s a signal. It could flag an unhealthy relationship with money that could bring anyone to Wynn at Law, LLC.
Not every saver can squirrel away enough to make it through an unexpected loss of income… but it provides cushion.
The pattern in these five warning signs is in reverse order. If you’re at warning sign #1 already, call us. If you’re at warning sign #5, there’s probably still a lot you can do before needing an experienced bankruptcy attorney.
*The content and material in this original post is for informational purposes only and does not constitute legal advice.
Photo used with permission.
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Thanks to an error in the postal system, the late filing of a bankruptcy-related complaint was permitted under a March 3 ruling by a California district court. That decision proved unfortunate for Chapter 7 filer Michael A. Turchin, as the complaint, filed by creditor Steven Berkowitz, would make a $624,000 debt owed to Berkowitz non-dischargeable. This case brings up an important question for debtors in California: can creditors dispute which debts are dischargeable? And if so, what are some common reasons a creditor might object to a discharge? Our Roseville Chapter 7 lawyers discuss the U.S. Bankruptcy Code for answers.
3 Reasons Creditors Object to Discharge in Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, debts are separated into two categories:
- Dischargeable Debts — The filer’s liability for these debts will be wiped out when the case is discharged by the bankruptcy court. That means the filer is no longer responsible for paying off the debts which have been discharged.
- Non-Dischargeable Debts — A bankruptcy discharge does not affect the filer’s liability for non-dischargeable debts. In other words, he or she will still be required to pay these debts off, even following a successful bankruptcy case.
Most of the major sources of debt in Californian households today, including credit card bills and medical bills, are dischargeable. However, a bankruptcy trustee or creditor can object to the discharge of a certain debt if certain criteria are met.
In order to dispute the discharge of a debt, the creditor must file a complaint in court by a certain deadline. While bankruptcy courts are strict about holding creditors and trustees to these deadlines, exceptions may occasionally be granted when filing delays are caused by forces outside of the filer’s control, such as the recent extension granted for Berkowitz’s complaint.
The grounds on which a creditor may object to the discharge of a debt are enumerated under 11 U.S. Code § 523, which creates multiple exceptions to discharge in bankruptcy cases. These exceptions, or grounds for objection, apply not only to bankruptcy cases in California, but throughout the United States.
Some are fairly straightforward, such as the provision under 11 U.S. Code § 523(a)(5) that explicitly makes debts “for a domestic support obligation,” such as alimony or child support, non-dischargeable. Others are more complex and difficult to clearly interpret and apply, which is one of the many reasons it is so important to review your debts with a skilled California bankruptcy attorney, who can help determine which of your debts are dischargeable and how you could be impacted by Chapter 7 or Chapter 13 bankruptcy.
Under the U.S. Bankruptcy Code, a few examples of debts that can be objected to include:
- Debts related to certain taxes.
- Debts, other than compensation for financial losses, that are owed to the government, such as fines and penalties, with several exceptions.
- Debts related to death or personal injury resulting from a car accident or other vehicular accident involving driver intoxication.
- Debts related to goods, property, or other items or services obtained by fraud or false statements, in addition to debts related to embezzlement or larceny (theft). For example, Berkowitz claimed he was defrauded by Turchin. A few specific reasons a creditor might object to the discharge of a specific debt, or even the discharge of your case, are that the creditor believes:
- You used a credit card to obtain cash advances, collectively amounting to more than $950, during the 70 days before your bankruptcy.
- You used credit cards to purchase unnecessary items during the three months leading up to your bankruptcy. In this situation, you would need to prove that the items were essential.
- You supplied false or incomplete information when submitting a loan application.
On a related note, it’s worth pointing out that suspected acts of fraud, such as concealing assets, may lead not only to the discharge of a specific debt being denied, but potentially to dismissal of your entire case — or even to criminal investigation and prosecution. According to statistics, the IRS initiated nearly 30 investigations for bankruptcy fraud during 2016 alone, more than half of which led to the sentencing of the defendant, with an average of 17 months to serve.
CA Bankruptcy Lawyer Serving Roseville, Sacramento, and Folsom
Make sure that your rights will be protected by a knowledgeable, experienced Folsom bankruptcy lawyer who knows how to handle aggressive creditors. At The Bankruptcy Group, our California attorneys have years of experience assisting businesses, individuals, and married couples filing jointly with consumer and business bankruptcy, including Chapter 13, Chapter 11, and Chapter 7 in Folsom, Sacramento, and Roseville.
To learn more about your California bankruptcy options in a free legal consultation, contact The Bankruptcy Group right away at (800) 920-5351. We will keep your information confidential.
The post Can a Creditor Object to a Debt Being Discharged in a California Bankruptcy Case? appeared first on The Bankruptcy Group, P.C..
We are pleased to announce that we've moved to a new location near Grand Central Terminal. Our new address is: Shenwick & Associates, 122 East 42nd Street, Suite 620, New York, NY 10168. Please update your records accordingly.
Our phones and e-mail addresses remain the same. We look forward to continuing to serve you from our new location!