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16 hours 25 min ago

Supreme Court Knocks a Hole in the Fair Debt Collection Practices Act On June 12, 2017, the Supreme Court knocked a hole in consumers’ rights under the Fair Debt Collection Practices Act. Starting now, debt buyers, like Midland, Portfolio Recovery, and Cavalry are free of the regulations under the FDCPA.  Here’s my list of the […]The post Supreme Court Knocks a Hole in the Fair Debt Collection Practices Act by Robert Weed appeared first on Robert Weed.


1 day 10 hours ago

According to an article in USA TodayWells Fargo faces new accusations that it tried to capitalize financially on its customers without their permission — this time by allegedly modifying mortgage terms for people who had filed for bankruptcy protection.
With the smoke still lingering from the firestorm that erupted from the bank’s opening of fake consumer accounts, Wells was hit with multiple lawsuits alleging that the bank surreptitiously extended loan lengths, potentially costing some homeowners tens of thousands of dollars.Wells Fargo
On June 7, 2017 plaintiff attorneys alleged “illegal stealth modifications” of mortgage loans.  The attorneys are seeking to establish a class action group in the bankruptcy court detailing actions taken by Wells Fargo in more than 100 bankruptcy cases.
Surprise – Wells Fargo “strongly denies the claims”.
In a separate article in the L.A. Times, Elizabeth Warren calls on Feds to use their powers to remove Wells Fargo board members over the earlier false accounts scandal.

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About the Author:
Diane L. DrainDiane L. Drain is a well known and respected Arizona bankruptcy attorney. She is an expert in both consumer bankruptcy and Arizona foreclosure. Since 1985 she has been a dedicated advocate for her clients and spokesperson for Arizona citizens. Diane is a retired professor of law teaching bankruptcy for more than 20 years. As a teacher she believes in offering everyone, not just her clients, advice about the Arizona bankruptcy laws. She is also a mentor to hundreds of Arizona attorneys.
I would be flattered if you connected with me on GOOGLE+
*From Diane: This article/blog is available for educational purposes only and does not provide specific legal advice. By using this information, you agree there is no attorney client relationship between you and me, and that this information should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state.*

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The post Wells Fargo in Trouble Again – appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


1 day 13 hours ago

Deciding to file bankruptcy is a really personal decision. But there are a few red flags which probably mean it's a really good option. So if you're considering going into your retirement account and borrowing money to pay off unsecured debts like credit card debts and medical debts, that's a pretty good sign that it might be time to file bankruptcy. Look your retirement funds are earmarked for your retirement. They are 100 percent exempt in bankruptcy. So if we file a bankruptcy for you nobody can touch your retirement account. So why would we take the money out of your retirement account and pay off debts that are dischargeable in bankruptcy. It probably doesn't make sense.
The post Bankruptcy Attorney in Tucson, Arizona appeared first on Tucson Bankruptcy Attorney.


3 days 13 hours ago

By Jessica Silver-Greenberg and Michael Corkery

More than a decade after Yvette Harris’s 1997 Mitsubishi was repossessed, she is still
paying off her car loan.

She has no choice. Her auto lender took her to court and won the right to seize a
portion of her income to cover her debt. The lender has so far been able to garnish
$4,133 from her paychecks — a drain that at one point forced Ms. Harris, a single
mother who lives in the Bronx, to go on public assistance to support her two sons.

“How am I still paying for a car I don’t have?” she asked.

For millions of Americans like Ms. Harris who have shaky credit and had to turn
to subprime auto loans with high interest rates and hefty fees to buy a car, there is no
getting out.

Many of these auto loans, it turns out, have a habit of haunting people long after
their cars have been repossessed.

The reason: Unable to recover the balance of the loans by repossessing and
reselling the cars, some subprime lenders are aggressively suing borrowers to collect
what remains — even 13 years later.

Ms. Harris’s predicament goes a long way toward explaining how lenders,
working hand in hand with auto dealers, have made billions of dollars extending
high-interest loans to Americans on the financial margins.

These are people desperate enough to take on thousands of dollars of debt at
interest rates as high as 24 percent for one simple reason: Without a car, they have
no way to get to work or to doctors.

With their low credit scores, buying or leasing a new car is not an option. And
when all the interest and fees of a subprime loan are added up, even a used car with
mechanical defects and many miles on the odometer can end up costing more than a
new car.

Subprime lenders are willing to take a chance on these risky borrowers because
when they default, the lenders can repossess their cars and persuade judges in 46
states to give them the power to seize borrowers’ paychecks to cover the balance of
the car loan.

Now, with defaults rising, federal banking regulators and economists are
worried how the strain of these loans will spill over into the broader economy.

For low-income Americans, the fallout could, in some ways, be worse than the
mortgage crisis.

With mortgages, people could turn in the keys to their house and walk away. But
with auto debt, there is increasingly no exit. Repossession, rather than being the end,
is just the beginning.

“Low-income earners are shackled to this debt,” said Shanna Tallarico, a
consumer lawyer with the New York Legal Assistance Group.

There are no national tallies of how many borrowers face the collection lawsuits,
known within the industry as deficiency cases. But state records show that the courts
are becoming flooded with such lawsuits.

For example, the large subprime lender Credit Acceptance has filed more than
17,000 lawsuits against borrowers in New York alone since 2010, court records
show. And debt buyers — companies that scoop up huge numbers of soured loans for
pennies on the dollar — bring their own cases, breathing new life into old bills.

Portfolio Recovery Associates, one of the nation’s largest debt buyers, purchased
about $30.2 million of auto deficiencies in the first quarter of this year, up from
$411,000 just a year earlier.

One of the people Credit Acceptance sued is Nagham Jawad, a refugee from
Iraq, who moved to Syracuse after her father was killed. Soon after settling into her
new home in 2009, Ms. Jawad took out a loan for $5,900 and bought a used car.

After only a few months on the road, the transmission on the 10-year-old Chevy
Tahoe gave out. The vehicle was in such bad shape that her lender didn’t bother to
repossess it when Ms. Jawad, 39, fell behind on payments.

“These are garbage cars sold at outrageous interest rates,” said her lawyer, Gary
J. Pieples, director of the consumer law clinic at the Syracuse University College of
Law.

The value of any car typically starts to decline the moment it leaves the dealer’s
lot. In the subprime market, however, the value of the cars is often beside the point.

A dealership in Queens refused to cancel Theresa Robinson’s loan of nearly
$8,000 and give her a refund for a car that broke down days after she drove it off the
lot.

Instead, Ms. Robinson, a Staten Island resident who is physically disabled and
was desperate for a car to get to her doctors’ appointments, was told to pick a
different car from the lot.

The second car she selected — a 2005 Chrysler Pacifica — eventually broke
down as well. Unable to afford the loan payments after sinking thousands of dollars
into repairs, Ms. Robinson defaulted.

Her subprime lender took her to court and won the right to garnish her income
from babysitting her grandson to cover her loan payments.

Ms. Robinson and her lawyer, Ms. Tallarico, are now fighting to get the
judgment overturned.

“Essentially, the dealers are not selling cars. They are selling bad loans,” said

Adam Taub, a lawyer in Detroit who has defended consumers in hundreds of these
cases.

Many lawyers assisting poor borrowers like Ms. Robinson say they learn about
the lawsuits only after a judge has issued a decision in favor of the lender.

Most borrowers can’t afford lawyers and don’t show up to court to challenge the
lawsuits. That means the collectors win many cases, transforming the debts into
judgments they can use to garnish wages.

The lenders argue that they are just recouping through the courts what they are
legally owed. They also argue that subprime auto lending meets an important need.

And collecting on the debt is a critical part of the business. The first item on the
quarterly earnings of Credit Acceptance, the large subprime auto lender, is not the
amount of loans it makes, but what it expects to collect on the debt.

The company, for example, expects a 72 percent collection rate on loans made in
2014 — the year that a used 2009 Volkswagen Tiguan was repossessed from Nina
Lysloff of Ypsilanti, Mich.

With all the interest and fees on her Credit Acceptance loan factored in, the car
ended up costing her $28,383. Ms. Lysloff could have bought a brand-new
Volkswagen Tiguan for $22,149, according to Kelley Blue Book.

When Ms. Lysloff fell behind, the trade-in value on the car was a fraction of
what she still owed. Last year, Credit Acceptance sued her for $15,755.

The strategy at Credit Acceptance, which has a market value of $4.4 billion, is
yielding big profits. The Michigan company said its return on equity, a measure of
profitability, was 31 percent last year — more than four times Bank of America’s
return.

Credit Acceptance did not respond to requests for comment.

Some of the people who got subprime loans lacked enough income to qualify for
any loan.

U.S. Bank is pursuing Tara Pearson for the $9,339 left after her 2011 Hyundai
Accent was stolen and she could not pay the fee to get it from the impound lot. When
she purchased the car in 2015 at a dealership in Winchester, Ky., Ms. Pearson said,
she explained that her only income was about $722 from Social Security.

Her loan application listed things differently. Her employer was identified as
“S.S.I.,” and her income was put at $2,750, court records show.

Citing continuing litigation, U.S. Bank declined to comment about Ms. Pearson.

Auto lending was one of the few types of credit that did not dry up during the
financial crisis. It now stands at more than $1.1 trillion.

Despite many signs that the market is overheating, securities tied to the loans
are so profitable — yielding twice as much as certain Treasury securities — that they
remain a sought-after investment on Wall Street.

“The dog keeps eating until its stomach explodes,” said Daniel Zwirn, who runs
Arena, a hedge fund that has avoided subprime auto investments.

Some lenders are pulling back from making new loans. Subprime auto lending
reached a 10-year low in the first quarter. But for those borrowers already stuck with
debt, there is no end in sight.

Ms. Harris, the single mother from the Bronx, said that even after her wages had
been garnished and she paid an additional $2,743 on her own, her lender was still
seeking to collect about $6,500.

“It’s been a nightmare,” she said.

Copyright 2017 The New York Times Company.  All rights reserved.


5 days 13 hours ago

Initial Facts This is a bankruptcy case study for Ms. F. who resides in Aurora, Illinois. She is in the office to determine whether or not she can qualify for chapter 7, the fresh start bankruptcy. Otherwise, she is potentially interested in a chapter 13 bankruptcy case which is a reorganization of debts. Let’s look+ Read More
The post Bankruptcy Case Study For Ms. F., From Aurora, Illinois appeared first on David M. Siegel.


1 week 20 hours ago

By Gretchen Morgenson

Even as Wells Fargo was reeling from a major scandal in its consumer bank last year,
officials in the company’s mortgage business were putting through unauthorized
changes to home loans held by customers in bankruptcy, a new class action and
other lawsuits contend.

The changes, which surprised the customers, typically lowered their monthly
loan payments, which would seem to benefit borrowers, particularly those in
bankruptcy. But deep in the details was this fact: Wells Fargo’s changes would
extend the terms of borrowers’ loans by decades, meaning they would have monthly
payments for far longer and would ultimately owe the bank much more.

Any change to a payment plan for a person in bankruptcy is subject to approval
by the court and the other parties involved. But Wells Fargo put through big changes
to the home loans without such approval, according to the lawsuits.

The changes are part of a trial loan modification process from Wells Fargo. But
they put borrowers in bankruptcy at risk of defaulting on the commitments they
have made to the courts, and could make them vulnerable to foreclosure in the
future.

A spokesman for Wells Fargo, Tom Goyda, said the bank strongly denied the claims
made in the lawsuits and particularly disputed how the complaints characterized the
bank’s actions. Wells Fargo contends that the borrowers and the bankruptcy courts
were notified.

“Modifications help customers stay in their homes when they encounter
financial challenges,” Mr. Goyda said, “and we have used them to help more than
one million families since the beginning of 2009.”

According to court documents, Wells Fargo has been putting through
unrequested changes to borrowers’ loans since 2015. During this period, the bank
was under attack for its practice of opening unwanted bank and credit card accounts
for customers to meet sales quotas.

Outrage over that activity — which the bank admitted in September 2016, when
it was fined $185 million — cost John G. Stumpf, its former chief executive, his job
and damaged the bank’s reputation.

It is unclear how many unsolicited loan changes Wells Fargo has put through
nationwide, but seven cases describing the conduct have recently arisen in
Louisiana, New Jersey, North Carolina, Pennsylvania and Texas. In the North
Carolina court, Wells Fargo produced records showing it had submitted changes on
at least 25 borrowers’ loans since 2015.

Bankruptcy judges in North Carolina and Pennsylvania have admonished the
bank over the practice, according to the class-action lawsuit filed last week. One
judge called the practice “beyond the pale of due process.”

The lawsuits contend that Wells Fargo puts through changes on borrowers’
loans using a routine form that typically records new real estate taxes or
homeowners’ insurance costs that are folded into monthly mortgage payments.
Upon receiving these forms, bankruptcy court workers usually put the changes into
effect without questioning them.

It is unclear why the bank would put through such changes. On one hand, Wells
Fargo stood to profit from the new loan terms it set forth, and, under programs
designed to encourage loan modifications for troubled borrowers, the bank receives
as much as $1,600 from government programs for every such loan it adjusts, the
class-action lawsuit said. But submitting the changes without approval violates
bankruptcy rules and puts the bank at risk of court sanctions and federal scrutiny.

When a lawyer for a borrower has questioned the changes, Wells Fargo has reversed
them.

Abelardo Limon Jr., a lawyer in Brownsville, Tex., who represents some of the
plaintiffs, said he first thought Wells Fargo had made a clerical error. Then he saw
another case.

“When I realized it was a pattern of filing false documents with the federal court,
that was appalling to me,” Mr. Limon said in an interview. The unauthorized loan
modifications “really cause havoc to a debtor’s reorganization,” he said.

This is not the first time Wells Fargo has been accused of wrongdoing related to
payment change notices on mortgages it filed with the bankruptcy courts. Under a
settlement with the Justice Department in November 2015, the bank agreed to pay
$81.6 million to borrowers in bankruptcy whom it had failed to notify on time when
their monthly payments shifted to reflect different real estate taxes or insurance
costs.

That settlement — in which the bank also agreed to change its internal
procedures to prevent future violations — affected 68,000 homeowners.

Borrowers having financial difficulties often file for personal bankruptcy to save
their homes, working out payment plans with creditors and the courts to bring their
loans current in a set period. If the borrowers meet their obligations over that time,
they emerge from bankruptcy with clean slates and their homes intact.
Changing these payment plans without the approval of the judge and other
parties can imperil borrowers’ standing with the bankruptcy courts.

In the class-action lawsuit filed last week, the lead plaintiffs are a couple in
North Carolina who say that Wells Fargo submitted three changes to their payment
plan in 2016 without approval. The first time, Wells Fargo put through the changes
without alerting them, according to the couple, Christopher Dee Cotton and Allison
Hedrick Cotton.

The Cottons’ monthly payments declined with every change, dropping to $1,251
from $1,404.

Buried deep in the documents Wells Fargo filed — but did not get approved by
the borrowers, their lawyers or the court — was the news that the bank would extend
the Cottons’ loan to 40 years, increasing the amount of interest they would have to
pay. Before the changes, the Cottons owed roughly $145,000 on their mortgage and
were on schedule to pay off the loan in 14 years. Over that period, their interest
would total $55,593.

Under the new loan terms, the Cottons would have incurred $85,000 in interest
costs over the additional 26 years, on top of the $55,593 they would have paid under
the existing loan, their court filing shows.

Theodore O. Bartholow III, a lawyer for the Cottons, said Wells Fargo’s actions
contravened the intent of the bankruptcy system. “When it goes the right way, the
debtor and mortgage company agree to do a modification, go to court and say, ‘Hey
judge, modify or change the disbursement on my mortgage.’”

Instead, Wells Fargo did “a total end run” around the process, said Mr.
Bartholow, of Kellett & Bartholow in Dallas. The Cottons declined to comment.

Mr. Goyda, the Wells Fargo spokesman, denied that the bank had not notified
borrowers. “The terms of these modification offers were clearly outlined in letters
sent to the customers and/or to their attorneys, and as part of the Payment Change
Notices sent to the bankruptcy courts,” he wrote by email.

Mr. Goyda said that “such notices are not part of the loan modification package,
or part of the documentation required for the customer to accept or decline
modification offers.” He added, “We do not finalize a modification without receiving
signed documents from the customer and, where required, approval from the
bankruptcy court.”

Mr. Limon and other lawyers say that while the bank may wait for approval to
complete a modification, it has nevertheless put through unapproved changes to
borrowers’ payment plans. According to a complaint he filed on behalf of clients in
Texas, instead of going through the proper channels to try to modify a loan, Wells
Fargo filed the routine payment change notification.

The clients also accuse the bank of making false claims by contending that the
borrowers had requested or approved the loan modifications. In many cases, the
trustees who handle payments on behalf of consumers in bankruptcy would accept
the changes Wells Fargo had submitted on the assumption they had been properly
approved.

Mr. Limon represents Ignacio and Gabriela Perez of Brownsville, who say Wells
Fargo put through an improper change to their payment plan last year.

After experiencing financial difficulties, Mr. and Mrs. Perez filed for Chapter 13
bankruptcy protection in August 2016. They owed about $54,000 on their home at
the time, and had fallen behind on the mortgage by $2,177. The value of their home
was $95,317, records show, so they had substantial equity.

In September, the Perezes filed a payment plan with the bankruptcy court in
Brownsville; the trustee overseeing the process ordered a confirmation hearing on
the plan for early November.

But in a letter to the Perezes dated Oct. 10, Wells Fargo said their loan was
“seriously delinquent” and offered them a trial loan modification. “Time is of the
essence,” the letter stated. “Act now to avoid foreclosure.”

Because they were going through bankruptcy, the Perezes were not under any
threat of foreclosure. Mr. Perez said in an interview that the letter worried him, so he
asked his lawyer to investigate.

Then, on Oct. 28, 2016, DeMarcus Jones, identified in court papers as “VP Loan
Documentation” at Wells Fargo, filed a notice of mortgage payment change with the
bankruptcy court. It said the Perezes’ new monthly payment would be $663.15, down
from $1,019.03. In the notice, the bank explained that the reduction was a “Payment
change resulting from an approved trial modification agreement.”

The changes had not been approved by the Perezes, their lawyer or the
bankruptcy court, their complaint said.

Although the monthly payment Wells Fargo had listed for the Perezes was
lower, there was a catch — the same one that showed up in the Cottons’ loan. The
Perezes had been scheduled to pay off their mortgage in nine years, but the loan
terms from Wells Fargo extended it to 40 years. The Perezes would owe the bank an
extra $40,000 in interest, the legal filing said.

“I thought that I was totally crazy, or they were totally crazy,” Mr. Perez said. “I
am 58, in what mind could they think I would agree to extend my mortgage 40 years
more? I don’t understand much maybe, but it doesn’t sound legal to me.”
Mr. Limon quickly fought the changes.

If he had not, Mr. and Mrs. Perez could have faced further complications. The
new Wells Fargo payments were so much less than the payments the Perezes had
submitted to the bankruptcy court that if the trustee had started making the new
payments with no court approval, the Perezes would have emerged at the end of
their bankruptcy plan owing the difference between the amounts. The Perezes would
be unwittingly in arrears, and the bank could begin foreclosure proceedings if they
were unable to make up the difference.

© 2017 The New York Times Company.  All rights reserved.


1 week 1 day ago

If you are gainfully employed, the payment will most likely come directly from your wages in the form of a payroll control order. If you are self-employed or do not receive a regular pay check, then you will have to make the payment directly to the Chapter 13 Trustee. If you fall behind on your+ Read More
The post Paying The Chapter 13 Bankruptcy Trustee appeared first on David M. Siegel.


1 week 3 days ago

Unfortunately, it has become a common misconception that filing for bankruptcy will cause you to lose all of your property. Very seldom is this actually true. In most cases, the people who file bankruptcy in California – also known as “filers,” “debtors,” or “bankruptcy petitioners” – can keep much of their property and protect their assets by using bankruptcy exemptions. Chapter 7 exemptions can potentially protect your home, your car, and other valuable assets and belongings from sale or liquidation by the bankruptcy trustee. Keep reading to hear Sacramento bankruptcy attorneys explain how bankruptcy exemptions work, and see a comparison of the state exemption systems (System 1 and System 2) available to California debtors.

bankruptcy law group sacramento
What is an Exempt Property or Asset?
When a debtor files bankruptcy with help from a Sacramento Chapter 7 lawyer, his or her assets and personal belongings become part of what is known as the “bankruptcy estate.” The bankruptcy court which is handling the filer’s case – that typically being the U.S. Bankruptcy Court for the Eastern District of California, Sacramento Division, for residents of the Sacramento area – will appoint a trustee to administer (manage) the bankruptcy estate. In Chapter 7, which is also called “liquidation bankruptcy,” the trustee’s role involves:

  1. Assessing the value of the debtor’s assets, which must be itemized on the debtor’s bankruptcy forms.
  2. Selling nonexempt assets to help certain creditors recoup their financial losses.
  3. Distributing proceeds from the sale amongst creditors.

Nonexempt assets are assets which are not protected by bankruptcy exemptions, whereas exempt assets are assets which are protected by bankruptcy exemptions. A trustee cannot sell or liquidate exempt assets. Moreover, even if the asset is nonexempt, it may still be safe from liquidation if:

  • The debtor is able to purchase the nonexempt property from the trustee, who may be amenable to an installment agreement.
  • The trustee decides to abandon the nonexempt property. This may occur if the asset or property is upside-down (meaning the loan exceeds the property’s market value), or if proceeds from the sale would be so insubstantial as to render the sale process pointless.

Chapter 7 Federal Exemptions
Speaking broadly, there are two sets of exemptions in bankruptcy:

  1. Federal bankruptcy exemptions
  2. State bankruptcy exemptions

There can be wide variations in bankruptcy laws by state, including those pertaining to bankruptcy exemptions. For instance, only some states permit debtors to choose between (though not blend) state and federal exemptions. Unfortunately, California filers are somewhat limited in that California prohibits debtors from using the federal bankruptcy exemptions.
However, California filers still have a choice. Debtors in California may choose between two different sets of California bankruptcy exemptions:

  1. System 1 Exemptions (also called “704 exemptions”)
  2. System 2 Exemptions (also called “703 exemptions”)

Exemption amounts are uniform throughout the state of California. In other words, the California Chapter 7 exemptions which are available to Sacramento filers are the same as those available to Roseville filers, Folsom filers, and so on.
Additionally, exemption amounts are the same regardless of whether the debtor files Chapter 7 or Chapter 13, though exemptions play very different roles in each chapter of bankruptcy. While the main purpose of exemptions in Chapter 7 is to protect property from liquidation, the primary function of exemptions in Chapter 13 is determining how much money the debtor will need to pay back as part of his or her reorganization plan. When you contact The Bankruptcy Group for a free consultation, our California Chapter 13 attorneys can help you better understand the complex relationship between Chapter 13 exemptions and monthly payments in reorganization bankruptcy.
Continue reading to see a list of current System 1 and System 2 bankruptcy exemptions in California.
bankruptcy attorneys in sacramento
2017 Chapter 7 Exemptions in California: System 1 vs. System 2
Debtors should be advised that bankruptcy exemptions are periodically updated to account for inflation in the economy. The following California Chapter 7 bankruptcy exemptions are current as of 2017. The following list is non-exhaustive, and additional exemptions may be available depending on factors like:

  • What types of possessions you own.
  • What, if any, benefits you are receiving.
  • Which types of insurance you have.

California System 1 Bankruptcy Exemptions

  • Homestead Exemption

    • If single, not disabled – $75,000
    • If family, one member with no interest in homestead – $100,000
    • If age 65+ or physically/mentally disabled – $175,000
  • Motor Vehicle Exemption – $3,050
  • Tools of the Debtor’s Trade – $8,000 to $15,975
  • Personal Property Exemptions
    • “Health aids reasonably necessary to enable the [filer] to work or sustain health,” including “prosthetic and orthopedic appliances” (California Code of Civil Procedure § 704.050)
    • “Household furnishings, appliances, provisions, wearing apparel, and other personal effects” (California Code of Civil Procedure § 704.020(a))
    • Home improvement materials – $3,200
    • Jewelry, artwork, family heirlooms – $8,000
  • Other
    • Student financial aid (“[F]inancial aid for expenses while attending school provided to a student by an institution of higher education,” California Code of Civil Procedure § 704.190(b))
    • Worker’s compensation benefits (“[A] claim for workers’ compensation or workers’ compensation awarded or adjudged,” California Code of Civil Procedure § 704.160(a))

California System 2 Bankruptcy Exemptions

  • Homestead Exemption – $26,800
  • Motor Vehicle Exemption – $5,350
  • Tools of the Debtor’s Trade – $8,000
  • Personal Property Exemptions
    • “[H]ousehold furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor” (California Code of Civil Procedure § 703.140(b)(3)) – $675 per item
    • Health aids
    • Jewelry – $1,600
  • Wildcard – $1,425

sacramento bankruptcy lawyers
Contact Our Experienced Sacramento Bankruptcy Lawyers
Choosing the right set of exemptions is critical to ensuring that you will be able to keep the maximum amount of valuable or sentimental personal property when filing for bankruptcy. However, it isn’t always obvious which set of exemptions is the “right” choice. Some debtors are better served by System 1, while System 2 is the superior choice for others filing Chapter 7 bankruptcy in Sacramento. Critically, exemptions are unavailable in business bankruptcy, which is one reason it is especially important for business owners to have legal help from a Sacramento business bankruptcy lawyer.
Let the experienced California Chapter 7 attorneys of The Bankruptcy Group help you make an informed decision about which set of exemptions to use, which chapter of bankruptcy to file, when to file bankruptcy, and other crucial bankruptcy considerations. For a free and confidential legal consultation, contact our law offices at (800) 920-5351 today.
The post Exemptions in Chapter 7 Bankruptcy in California appeared first on The Bankruptcy Group, P.C..


2 weeks 11 hours ago

What happens in a Chapter 13 bankruptcy case when a creditor files a proof of claim involving a debt for which the statute of limitations to collect the debt has run? More specifically, does the filing of such a claim violate the Fair Debt Collection Practices Act (the “Act”)? That’s the issue considered by the U.S. Supreme Court in its recent decision in the case of Midland Funding, LLC v. Johnson. 1 Read More ›
Tags: Chapter 13, U.S. Supreme Court


2 weeks 2 days ago

We usually think of credit cards and medical bills as the leading culprits behind consumer debt. However, many Californians struggle with an additional source of financial hardship: taxes owed to the IRS. While tax payments can seem overwhelming, the good news is that it may be possible to discharge (eliminate) certain tax debts by filing for Chapter 13 bankruptcy. However, in order to be dischargeable, tax-related debts need to meet specific requirements. Keep reading to hear these requirements explained by Roseville bankruptcy attorneys, and learn when you can discharge tax debt in Chapter 13 in California.

sacramento bankruptcy attorney
Can You File Bankruptcy on Back Taxes Owed to the IRS?
At The Bankruptcy Group, our Roseville Chapter 13 lawyers are often contacted by Californians wo have questions and concerns about tax-related debt. Some of the most common questions we receive from potential clients include, “Does bankruptcy clear IRS debt?” and, “Can back taxes be wiped out in bankruptcy?”
The answer is maybe, depending on the circumstances surrounding the debt. Factors like the type of tax that gave rise to the debt, the age of the debt, and when the tax was assessed all have an impact. If the tax debt meets certain criteria, which are explained in detail in the next section, it may be dischargeable not only in Chapter 13 (reorganization), but also in Chapter 7 (liquidation). Together, these are the two most common types of personal bankruptcy in California.
If a debt is dischargeable, it means the debtor will no longer liable for the debt once his or her case is discharged by the bankruptcy court. If a tax debt is discharged, the IRS cannot come after the filer to collect the debt, as bankruptcy court rulings supersede determinations made by tax authorities. (Note that for Californians in the Sacramento area, “bankruptcy court” generally refers to the Sacramento Division of the U.S. Bankruptcy Court for the Eastern District of California, which serves Sacramento and Placer Counties.)
Continue reading to find out when tax-related debts are dischargeable in Chapter 13 bankruptcy. Other examples of dischargeable debts in California bankruptcy cases generally include, but are not limited to, debts associated with:

  • Business Loans
  • Credit Card Bills
  • Medical Bills
  • Personal Loans
  • Utility Bills

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When is Tax Debt Dischargeable?
The only type of dischargeable tax debt is income tax debt. Generally speaking, debts arising from other tax obligations – for instance, payroll taxes – are considered to be non-dischargeable priority debts.
A priority debt is a debt that takes precedence in a bankruptcy case, even if it is not secured by collateral like a secured debt (such as a home mortgage). In Chapter 13, debtors are generally required to pay priority debts in full, in monthly installments, over the life of their three- to five-year reorganization plan.
However, there may be some cases where a Chapter 13 debtor can discharge federal income tax debt by filing for bankruptcy. In order for income tax debt to be dischargeable, the debt (and debtor) must meet certain requirements. These requirements are that:

  1. The taxpayer did not commit fraud, tax evasion, or other tax crimes. Fraudulent acts may result in dismissal of the bankruptcy case, and potentially, criminal prosecution.
  2. The debtor filed the relevant income tax return a minimum of two years before the bankruptcy filing date. Special rules apply for late returns, so a bankruptcy petitioner should consult with a Folsom Chapter 13 bankruptcy lawyer if he or she missed the tax filing deadline.
  3. The relevant tax return was due a minimum of three years before the bankruptcy filing date.
  4. One of the following statements must be true:
    • The IRS tax assessed the tax a minimum of 240 days before the bankruptcy filing date.
    • The IRS did not assess the tax.

CA Bankruptcy Attorneys Serving Roseville and Sacramento
It is very difficult for taxpayers to successfully navigate the highly technical regulations governing bankruptcy and taxes. It is not in your best interests to file bankruptcy without assistance from a bankruptcy lawyer, especially if you are concerned about IRS liabilities. Without the benefit of a Chapter 13 attorney’s extensive experience applying bankruptcy law in California, you are likely to miss key details that could make an enormous financial difference. In the worst-case scenario, you could even make errors that lead to the dismissal of your case, leaving you few remedies to eliminate or mitigate your tax liabilities and other debts.
If you are worried about paying back taxes and income tax-related debt, you are urged to speak with a Folsom bankruptcy attorney concerning your legal options. For a free and confidential consultation, contact The Bankruptcy Group at (800) 920-5351 today.
The post Can You Put Back Taxes in a Chapter 13 Bankruptcy in California? appeared first on The Bankruptcy Group, P.C..


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