Blogs
A bankruptcy filing can immediately stop foreclosure in most cases when proceedings have yet to be finalized. Bankruptcy may help homeowners buy more time in determining their next move including whether or not they want to keep their home. This is also a good time for debtors to review with their bankruptcy attorney about their [...]
You need to file Chapter 7 Bankruptcy and you live in the Central Valley of California. You may be wondering whether you can keep your car in a Chapter 7 bankruptcy. Either your car is paid for, or you are still making payments. If your car is paid for, you can exempt from your bankruptcy several thousand dollars of the value of your car. If your car is worth more than several thousand dollars, you can apply wild card exemption wild card exemptions to exempt the remaining value.
If you are making payments on your car, you only need to exempt the equity you own in your car. If your car is worth $12,000, but $10,000 is financed, then you only need to exempt $2,000. Your lender, however, will seek to have you reaffirm the financing agreement. Reaffirmation is like renewing your agreement with the creditor or title holder of the vehicle. You and the lender define an agreement that allows you to keep the vehicle after their bankruptcy case is completed. You may agree to repay all or a portion of the outstanding balance remaining on the loan. Most lenders in the Central Valley will require payment of the full outstanding balance. They will sometimes lower the interest rate.
Another option is to redeem the vehicle by making a lump-sum payment that often adds up to be the vehicle’s total value. Because you are filing bankruptcy, you will not likely be in a position to do this, making reaffirmation the most realistic solution.
A vehicle that has payments still owed on it is part of a secured loan agreement you originally made in the beginning. A lien against the vehicle makes it possible for the lender to repossess it when payments are not made. In Chapter 7 the lien still survives if you discharge what is owed or payments you missed, but reaffirmation can help you keep your vehicle when your case is completed as long as you make payments according to the new agreement.
Photo Credit: http://www.flickr.com/
Will You Lose Your Car After Filing Chapter 7 Bankruptcy? You should be able to keep your car after filing a chapter 7 bankruptcy. In a nut shell, Chapter 7 Bankruptcy allows debtors to keep all exempt property, such as clothes, tools, retirement funds and cars. In the Fresno area, most chapter 7 cases result in debtors keeping all of their property because after an analysis, it is all found to be protected with bankruptcy exemptions. The idea of exemptions is to allow for debtors to get a reasonable fresh start. In other words, there are limits -- you can keep the Honda, but not the Tesla or Porsche. Here are the steps to see if you can keep your car: Step 1: If You Sold Your Car, How Much Money Would You Profit? If you sold your car, how much profit would you make? If your car is paid off, you will be able keep 100% of the proceeds of the sale of the car. The profit would be the total amount you sold the car.
If the car is financed, than the profit would be the money left over after the car lender was paid. If the car sold for $10,000, and the present loan value was $8,000, than your profit would be $2,000. If the car is sold for $10,000 and the present loan value is $11,000, there would be no profit ($0.00). In fact, to make the sale take place, you would have to pay the lender an additional $1000 for the lender to take the lien off of the car.
Step 2: Apply the Appropriate Exemption Amount. In California, debtors have two exemption amounts to choose from with regard to cars. The two choices are based upon whether you will be protecting the equity in your home. In California, you can protect a lot of equity in your home. (See How Much Money Can I Keep When I File Bankruptcy?) As a result, exemptions on personal property is greatly reduced.
If You Have Equity In Home You Are Claiming ExemptIf you have equity in your home, the amount of equity you are allowed to exempt in cars is reduced. Presently, the car exemption is $2,725.
If You Are Not Protecting Home EquityIf you are not protecting any equity in your home, you can protect more! Presently the total exemption value for multiple cars is $4,800.
If there is more equity than $4,800, debtors are allowed to use a "wildcard" exemption of approximately $25,000.
Thus, in many cases, filing a chapter 7 bankruptcy will allow debtors to keep their car.
Attorney Ken Jorgensen is located in Clovis, California. He handles personal, property and business disputes, including bankruptcy and eviction cases. You can find out more about Ken on Facebook, or at his websites, www.fresnolawgroup.com and www.fresnobankruptcylawgroup.com. He can be reached at [email protected] or by telephone at 1-559-324-1882.
Photo Credit: Wreck at Flickr
The January 30, 2007 case of In re Schwarz, __ B.R. ___, 2007 WL247649 (Bkrtcy.S.D. Fla.)(Olson, J.) held certain real property as exempt from administration in the estate under 11 522 (b)(3)(B) which allows for the exemption of any interest in property which the debtor held as tenants by the entireties to the extent that it is exempt from process under applicable nonbankruptcy law.
In this case, the debtor was unable to exempt his real property under the Florida homestead provision of Art. X Section 4 (a)(1) of the Florida Constitution as the new provisions of BAPCPA of 11 USC 522 (b)(3) required the debtor to use the Maryland exemptions as the debtor had not been a domiciliary of Florida for the entire 730 day period prior to filing of the bankruptcy case. The parties agreed that Maryland does not provide for a specific homestead exemption. Nonetheless, the debtor was able to exempt his entire interest in the real property in Florida as he held it as tenants by the entireties on the date of filing pursuant to section 522 (b)(3)(B).
It is significant that the Court looked to Florida tenants by the entireties law as the "applicable nonbankruptcy law" for such determination and not Maryland law.
Property held by a debtor in a tenancy by the entireties is exempt from the claims of individual creditors in bankruptcy under Florida common law with certain exceptions for joint creditors or fraudulent conveyances. In this case, there were no joint creditors nor any indication of a fraudulent conveyance.
Interestingly enough, section 522 (b)(3)(B) does not require the debtor to be residing in the property on the date of filing, but only requires that the debtor hold an interest in the property as a tenant by the entireties immediately before the commencement of the case. In this case, the debtor did not move into the property until after the filing of the case but held an interest in the property as a tenant by the entireties before the commencement of the case.(305) 891-4055 - Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankrkuptcy Cases.
First Payment After Chapter Bankruptcy Is Filed If you have filed chapter 13 bankruptcy, you are required to begin making plan payments within 30 days after your bankruptcy petition is submitted to the court. These payments are held by the trustee until your confirmation is approved or denied by the court. If the court denies […]
By Mary Ann Gorman
Nickelodeon's Drake Bell, formerly known as "Drake" from the show Drake & Josh has filed for bankruptcy.
Drake Bell is 27 years old and has experienced an income roller coaster in the last couple of years. In 2012, Drake made $408,000, while in 2013 he brought in $14,099.
His month expenses are reportedly greater than $18,000, while his monthly income is under $3,000.
Bankruptcy documents indicate that Drake owes $1.597 million on his home. The property is valued at $1.575 million.
Under present Chapter 13 bankruptcy law, a mortgage secured only by a principal residence is not modifiable in Chapter 13 bankruptcy. Chapter 13 law does though allow one to cure and reinstate the arrearage on such a mortgage. Also a wholly unsecured or "underwater" second mortgage on a principal residence may be avoided.
The rule against mortgage modification though does not apply to mortgages on a second home or investment property and such mortgage are generally modifiable.
Under the Bankruptcy Court's new "Loss Mitigation Mediation" program, one may be able to obtain a modification of his mortgage. The Bankruptcy Court appoints a mediator who assists in negotiating a modification. Modification of a principal residence mortgage may include various provisions of the mortgage. First and foremost, modification may include a reduction in the interest rate, the monthly payment and the amount due down to the value of the real estate. .(305) 891-4055 - Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankrkuptcy Cases.
It happens almost every week. Somebody comes into our office with a serious tax problem -- caused by a shoddy tax preparer, either through incompetence, negligence or sometimes downright fraud.
It boggles my mind that there is no regulation of tax preparers. I thought I was the only one who had noticed this problem. But no.
The National Consumer Law Center, a consumer watch-dog group, has recently issued a very good report on this. Following is from the press release announcing the report:
(BOSTON) One of the most surprising aspects about paying taxes in the United States isn't about marginal rates, deductions, or loopholes - it's the lack of regulation for most tax preparers.
Each year, tens of millions of consumers rely upon paid tax preparers to help them file accurate and compliant tax returns, yet the majority of these preparers are not subject to any minimum educational, training,competency, or other standards.
A new report from the National Consumer Law Center (NCLC) documents how a lack of regulation has allowed incompetence and abuses by tax preparers to flourish.
"All 50 states regulate hairdressers, but only three regulate tax preparers," stated Chi Chi Wu, staff attorney at the National Consumer Law Center (NCLC) and author of the report. "Yet an inaccurate tax return can cause a lot more harm than a bad haircut."
The report, "Riddled Returns: How Errors and Fraud by Paid Tax Preparers Put Consumers at Risk and What States Can Do" analyzes years of mystery shopper testing by government agencies, consumer groups, and advocacy organizations, all of which found disturbingly high levels of incompetency and outright fraud, such as:
• Intentional omission of income;
• Falsifying information to make the taxpayer eligible for various credits and deductions, such as charitable deductions, job-related or business expenses, and the Earned Income Tax Credit (EITC); and
• Inability to accurately handle education-related items, such as grants and tuition credits;
This incompetence and fraud could expose consumers to the risk of audit by the Internal Revenue Service, or even criminal sanctions.
Also documented is the severe lack of transparency in tax preparation fees. Taxpayers, especially lower income recipients of the EITC, sometimes end up paying $300, $500 or more in fees. Yet these and other taxpayers often cannot get information beforehand on how much tax preparation will cost them because many tax preparers claim they cannot give a quote or give inaccurate lowball estimates.
"Tax preparation is one of the few businesses in this country where consumers can't get an accurate price quote before buying the service," stated David Rothstein, a contributor to the report and director of Resource Development & Public Affairs at NHS of Greater Cleveland. "The lack of transparency and disclosure is stunning. How can there be a competitive market if consumers can't comparison shop due to lack of price information?"
Government enforcement actions also provide evidence of widespread abuses by paid tax preparers. The latest example is a decision issued just this month by a federal judge shutting down the nation's fourth largest tax preparation chain, Instant Tax Service, and permanently banning its owner from the business of tax preparation due to "an astonishing array of repeated fraudulent and deceptive conduct."
The report also makes the case that the problem is not limited to a few instances, but is endemic and widespread. "Law enforcement action alone is not enough to address the abuses," stated Wu. "Going after a few bad actors would ignore how lack of regulation permits fraud to flourish."
The NCLC report calls on states to regulate tax preparers to address preparer abuse and incompetency. The IRS attempted to address the problem in 2011 with regulations requiring tax preparers to register with the IRS and pass a competency exam. Yet, a federal court struck down these common-sense requirements as exceeding the IRS's statutory authority.
Recommendations
To better protect consumers, state legislatures should require paid tax preparers to:
• Obtain a registration unless they fit into one of exceptions for the limited number of tax preparers already regulated, such as certified public accountants, enrolled agents, and lawyers.
• Pass a basic competency exam.
• Have 60 hours of initial education and 15 hours per year of continuing education.
• Provide a standardized disclosure of their fees.
Along with the report, NCLC is releasing a Model Individual Tax Preparer Act with specific language that states can use to implement these recommendations. It is based on the existing state laws of the three states that do regulate tax preparers (Maryland, Oregon and California), as well as the IRS regulations.
Go to NCLC's website for a free copy of the report and additional information.
And if you're facing a tax problem, give our law firm a call. We'll be happy to help.
It happens almost every week. Somebody comes into our office with a serious tax problem -- caused by a shoddy tax preparer, either through incompetence, negligence or sometimes downright fraud.
It boggles my mind that there is no regulation of tax preparers. I thought I was the only one who had noticed this problem. But no.
The National Consumer Law Center, a consumer watch-dog group, has recently issued a very good report on this. Following is from the press release announcing the report:
(BOSTON) One of the most surprising aspects about paying taxes in the United States isn't about marginal rates, deductions, or loopholes - it's the lack of regulation for most tax preparers.
Each year, tens of millions of consumers rely upon paid tax preparers to help them file accurate and compliant tax returns, yet the majority of these preparers are not subject to any minimum educational, training,competency, or other standards.
A new report from the National Consumer Law Center (NCLC) documents how a lack of regulation has allowed incompetence and abuses by tax preparers to flourish.
"All 50 states regulate hairdressers, but only three regulate tax preparers," stated Chi Chi Wu, staff attorney at the National Consumer Law Center (NCLC) and author of the report. "Yet an inaccurate tax return can cause a lot more harm than a bad haircut."
The report, "Riddled Returns: How Errors and Fraud by Paid Tax Preparers Put Consumers at Risk and What States Can Do" analyzes years of mystery shopper testing by government agencies, consumer groups, and advocacy organizations, all of which found disturbingly high levels of incompetency and outright fraud, such as:
• Intentional omission of income;
• Falsifying information to make the taxpayer eligible for various credits and deductions, such as charitable deductions, job-related or business expenses, and the Earned Income Tax Credit (EITC); and
• Inability to accurately handle education-related items, such as grants and tuition credits;
This incompetence and fraud could expose consumers to the risk of audit by the Internal Revenue Service, or even criminal sanctions.
Also documented is the severe lack of transparency in tax preparation fees. Taxpayers, especially lower income recipients of the EITC, sometimes end up paying $300, $500 or more in fees. Yet these and other taxpayers often cannot get information beforehand on how much tax preparation will cost them because many tax preparers claim they cannot give a quote or give inaccurate lowball estimates.
"Tax preparation is one of the few businesses in this country where consumers can't get an accurate price quote before buying the service," stated David Rothstein, a contributor to the report and director of Resource Development & Public Affairs at NHS of Greater Cleveland. "The lack of transparency and disclosure is stunning. How can there be a competitive market if consumers can't comparison shop due to lack of price information?"
Government enforcement actions also provide evidence of widespread abuses by paid tax preparers. The latest example is a decision issued just this month by a federal judge shutting down the nation's fourth largest tax preparation chain, Instant Tax Service, and permanently banning its owner from the business of tax preparation due to "an astonishing array of repeated fraudulent and deceptive conduct."
The report also makes the case that the problem is not limited to a few instances, but is endemic and widespread. "Law enforcement action alone is not enough to address the abuses," stated Wu. "Going after a few bad actors would ignore how lack of regulation permits fraud to flourish."
The NCLC report calls on states to regulate tax preparers to address preparer abuse and incompetency. The IRS attempted to address the problem in 2011 with regulations requiring tax preparers to register with the IRS and pass a competency exam. Yet, a federal court struck down these common-sense requirements as exceeding the IRS's statutory authority.
Recommendations
To better protect consumers, state legislatures should require paid tax preparers to:
• Obtain a registration unless they fit into one of exceptions for the limited number of tax preparers already regulated, such as certified public accountants, enrolled agents, and lawyers.
• Pass a basic competency exam.
• Have 60 hours of initial education and 15 hours per year of continuing education.
• Provide a standardized disclosure of their fees.
Along with the report, NCLC is releasing a Model Individual Tax Preparer Act with specific language that states can use to implement these recommendations. It is based on the existing state laws of the three states that do regulate tax preparers (Maryland, Oregon and California), as well as the IRS regulations.
Go to NCLC's website for a free copy of the report and additional information.
And if you're facing a tax problem, give our law firm a call. We'll be happy to help.
On July 6, 2007, the court in In re Electric Machinery Enterprises, Inc., ___ B.R. ___, 2007 WL 3031445 (Bkrtcy.M.D.Fla.)(Williamson, J.) issued its decision holding that unsecured creditors are not entitled to collect post-petition attorneys' fees, costs, and other similar charges even if there is an underlying contractual right to them.
The court noted that the majority of the courts have concluded that unsecured and undersecured creditors are not entitled to recover post-petition attorneys' fees, costs, and other charges. The court stated that there are four primary reasons for this view. First, a number of court have focused on the plain language of section 506(b) and applied the legal maxim of expressio unius est exclusio alterius. Section 506(b) provides that to the extent that an allowed secured claim is oversecured, there shall be allowed to the holder of such claim, interest and any reasonable fees, costs and charges. Second, is the Supreme Court's opinion and reasoning in United Saving Ass'n v. Timbers, 484 U.S. 365 (1988), which permitted post-petition interest to be paid only out of an equity cushion and ruling that an undersecured creditor without an equity cushion fell within the general rule of disallowing post-petition interest. Timber's rationale would then apply equally to unsecured and undersecured creditors. Third, courts rely on the plain language of section 502(b) which provides that the court shall determine the amont of the claim "as of the date of the filing of the petition" and that the time for determining the amount of the claim is as it existed as of the time of the filing of the case without the inclusion of post-petition interest, attorneys' fees or costs unless the claim is oversecured where such amounts are allowed under section 506(b). Fourth, courts rely on equitable considerations and policy of providing equality of distribution among similary situated creditors according to the priorites set out in the Bankruptcy Code. Thereby, unsecured creditors with attorney fees provisions in their contracts are not allowed to recover their fees just as unsecured tort claimants are not able.
The court adopted the majority view even though the Supreme Court recently declined to express an opinion as to whether unsecured creditors are entitled to post-petition attorneys' fees in a case under the Bankruptcy Code. Travelers Casualty & Surety Co. of America v. Pacific Gas & Elec. Co., ___ U.S. ___ (2007). The court stated that there is existing Supreme Court precedent under pre-Code law to support he majority view. "Specifically, in Randolph v. Scruggs, 190 U.S. 533 (1903), the Supreme Court formulated the requirement of "benefit to the estate" for the allowance of unsecured creditor's contract claims for post-petition legal fees." The court disagreed with the creditor's contention that the Eleventh Circuit implicity recognized an unsecured creditor's entitlement to attorney's fees in In re Welzel, 275 F.3d 1308 (11th Cir.2001).
Robert Eisenbach, III of In the (Red) Business The Bankruptcy Blog points out in a post dated July 26, 2007 that the Middle District of Florida Bankruptcy Court did not cite to the In re Qmect, Inc. May 2007 decision by the Northern District of California Bankruptcy Court which Bob discussed in a previous post. Bob notes that in In re Qmect, Inc.., the California Bankruptcy Court adopted a view opposite to that of the Florida Bankruptcy Court and held that an unsecured creditor could recover post-petition attorneys' fees as part of its claim if its contract with the debtor provided for recovery of such fees. The court pointed to the policy of the preservation of nonbankruptcy legal rights except to the extent necessary to facilitate the purpose of the bankruptcy proceeding. Bob notes that he expects more decisions to follow on this issue in the wake of the Travelers decision as creditors with attorney's fees provisions in their contracts seek to include post-petition fees in their unsecured claims.
The case of In re Busch, ___ B.R. ___, 2007 WL 1584650 (10th Cir.BAP(Utah))(Berger, J.), also adopted a view opposite to that of the Florida Bankruptcy Court where the court allowed the Debtor's ex-wife, who was an unsecured creditor, to recover certain of her attorney fees incurred in the bankruptcy case. The court reasoned that as the attorney fees would be awardable under state law in state court, that the enforcement of her interests should not be analyzed differently in the bankruptcy court.(305) 891-4055 - Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankrkuptcy Cases.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.