Los Angeles Bankruptcy Law Monitor

Do You Have Too Much Income For Chapter 7?

Christine Wilton — Mon, 06 Sep 2010 05:18:12 -0800

The bankruptcy rule changes from Bankruptcy Abuse Prevention and Consumer Protection Act 0f 2005, or BAPCPA, created the Means Test formula for determining whether a consumer qualified to file bankruptcy under Chapter 7 of the Bankruptcy Code. Basically, the means testing requires that the debtor’s income must be below the median level for households, using Census Bureau and IRS standards.

Based on your current income and expenses you have determined that you qualify to file bankruptcy under Chapter 7 and file your case in good faith. Now, enters the United States Trustee. The Trustee’s role in a Chapter 7 case, is to determine whether your estate has any assets that can be sold to pay your debts, or whether you have income to pay at least a portion of your debts, pursuant to 11 U.S.C. § 707(b)(3)(B).

A June, 2010 decision by Bankruptcy Judge Randall L. Dunn, in In re Stubblefield (Bankr. D. Or. 2010) granted the U.S. Trustee’s motion to dismiss the debtor’s case pursuant to Section 707(b)(3) because the debtor’s ability to pay creditors through Chapter 13 is of primary importance when considering whether the Chapter 7 filing is an abuse. The Court determined that although the debtor’s income had declined, under the totality of the circumstances and using the six factors outlined in Price (In re Price, 353 F.3d 1135 (9^th Cir. 2004)), the debtor’s ability to pay a substantial portion of her unsecured debts was of primary importance.

Uncertainty Is Causing the Weak Economy

Christine Wilton — Mon, 30 Aug 2010 05:11:00 -0800

I was privileged to attend an insider’s breakfast briefing with guest speaker Congressman Ed Royce of the 40^th District a couple weeks ago. This event was hosted by the Fullerton Chamber of Commerce. When Congressman Royce spoke about the impact of economic reform and healthcare, as it relates to small business here in California, he mentioned that businesses were hoarding capital and not spending because of the uncertainty in Washington. We all know that the economic recovery is primarily dependent upon spending, but most Americans are still working on paying down their debt. Adding to the lack of consumer spending is the national jobless rate holding at 9% and here in California, we rank third with 12.3% unemployment rate.

Ironically, as Mr. Royce was speaking, his colleagues in the Senate blocked a bill to aid small business. The problem with most bills though, is the cost of such legislation. We can all agree that government spending must end and the private sector needs to pick up the slack, but with political rhetoric at an all-time high and legislation costing trillions of dollars, paid for by cuts in Medicare and increased fees; the Congressman explained that this would have erected a new entitlement program.

Congressman Royce explained that Healthcare and taxes are the two major expenses to small business in America. The hoarding of capital by American businesses is due to the long range rule changes creating uncertainty in Washington. Congressman Royce explained, “We must eliminate uncertainty first, then small business will begin to spend capital.” We need to eliminate our debts and the uncertainty in Washington, along with the toxic mortgages. This is a marathon recovery, not a sprint to the economic finish line.

California is Sinking Into the Ocean of Underwater Mortgages

Christine Wilton — Mon, 23 Aug 2010 05:26:49 -0800

I'm losing my voice over year, screaming from the mountain top. I've been calling 'Bull' on the toxic securitized mortgages and explaining to my fellow Californians that we have all been blindsided into thinking that this ocean front real estate of ours will always increase; or bounce back sooner rather than later. I don't know about you, but I'm sitting on at least $200,000 in negative equity.

As you all probably know, I read a lot. I also share with you here, my musings and information. Here are some more tidbits for you homeowners to chew on. First, remember when I posted, When Should You Walk Away From Your Mortgage, about the psychology of why people don't/won't strategically default? It's time to get ruthless with our own personal finances; like the wealthy do. If it's toxic, it's time to dump it, and deal with it legally.

In this morning's readings, I found Strategic Default's website where homeowners post their own stories. I found Brad's story from there. Brad happens to have his own website called You Walk Away and he provides a calculator that is intended to tell you how much savings you'll have by walking away from your underwater mortgage. It's liberating to say the least. Now, these sites talk about short sales and loan modifications, but as I've been screaming; if MERS is involved and named on your promissory note, then you're not getting a modification absent litigation.

When will you get off your high moral horse and get real? I'm clueless on this one. If your home mortgage is your only financial concern, then you may look to foreclosure or short sale as a solution; even bankruptcy can be a home saving device. However, if you are dealing with more than just your home mortgage, it's high time you dealt with your debts as legally effective as Chrysler, GM, and AIG. No, you can't get a bailout; but you can file Bankruptcy. As my favorite bankruptcy guru, Max Gardner said in his recent post by Mandelman Matters, The Great Unwind and Final Redemption, "Praise the Lord and pass around those bankruptcy petitions. Like now. Like yesterday."

Foreclosure Mills Continue to Sweep Up America's Homes Despite Evidence of Fraud

Christine Wilton — Mon, 16 Aug 2010 05:24:22 -0800

Last week, Yves Smith caused a stir with this post, "Fannie and Freddie Continue to Rely on Foreclosure Mills Despite Evidence of Fraud." The 64 comments are worth a read, if anything to ferret out the boys from the men in terms of skill level in dealing with the legal issues. Smith gives acknowledgment to O. Max Gardner, who is the nation's go-to bankruptcy litigation attorney and, I am proud to say that, I am a Lieutenant in his army. So, what's all the scuttle butt about?

Smith's post referred to another piece published by Mother Jones, "Fannie and Freddie's Foreclosure Barons," which provides a peek inside the shady document fabrication operations to cover up past mistakes in the mortgage industry and post foreclosure clean-up. What a mess.

Looking at the securitization issues from a California standpoint, we have both federal and state law to contend with. From a bankruptcy position, here in the Central District we have the In re Foreclosure cases , In re Hwang, In re Walker, and In re Vargas. Since the mortgage follows the note, we need a complete, and unbroken chain of custody of the note and adherence to the California Commercial Code. We are arguing the Creditor has no standing and even if they did, there are major computation errors in their claims. The fight goes on for now. Results may vary in California. Side effects include general frustration; nausea; possible foreclosure; and guilt for not paying your mortgage.

Filing Bankruptcy Will Reduce Your Stress

Christine Wilton — Mon, 09 Aug 2010 05:00:04 -0800

Let's face it, we are in tough financial times throughout our country. There are many options to dealing with money issues. Along with tough financial times comes stress, even depression, anxiety and fear. Our emotions are tied very closely to our relationship with money. Here are a few tools that just might help you gain some perspective.

Take a look at this WebMD article, The Debt-Stress Connection and notice where you might be in terms of your stress level about your current financial situation. Your life is much too precious to lose over your debts. It's important to start right where you are and decide to take action; whatever action is necessary to change the outcome. What is the worst that could happen to you financially? Most people don't answer the question with any health issues, but that's what you're facing if you remain paralyzed about the situation.

Take action and get help. I'm a big fan of the Dave Ramsey program for those of you that have the ability to climb out of debt without bankruptcy. Learn about financial planning and get yourself on a budget today. Have a reality check with your doctor, your tax professional, financial planner and your bankruptcy lawyer.

Vision your life in five years. What does your life in the future look like? Where will you live? How will you provide for your self? Your family? Imagine what that looks like and then decide the path that is right for you to get there. For some, it's creating a budget and sticking to it. For others, it means filing for bankruptcy. The sooner you commit to your future, the sooner you'll feel better.

Remember that financial responsibility requires that we make some tough choices in our lives. Filing bankruptcy is not the end, but a process toward a new beginning.

MERS Acting Solely as Nominee has No Standing to Foreclose

Christine Wilton — Mon, 02 Aug 2010 17:02:05 -0800

Homeowners in California have been fighting an uphill battle to unwind wrongful foreclosures and have been getting mixed results in state courts all over California. I have always said that it's easier to stop a foreclosure by filing bankruptcy than it is to try to reverse a wrongful foreclosure in state court once it's been sold or reverts back to the bank.

Mortgage Electronic Registration Systems, Inc., fondly known as 'MERS,' has been named on more than 80% of all California mortgages, but who are they? MERS came onto the scene back in the 90's, created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper. What they really did was cheat many local governments out of recordation fees and failed to properly document the assignments and transfers of the sub-prime mortgages as they were allegedly turned into securitized investments.

Mandelman, over at Mandelman Matters, recently posted this article entitled, California Court Rules: MERS Cant' Foreclose, Citibank Can't Collect. The court case he cited, In re Walker, 2:10-21656-E-11 is a Chapter 11 case where MERS, acting solely as 'Nominee' assigned a Deed of Trust to the Creditor. The Court was not swayed by the assignment and held that the Creditor had not demonstrated any document to support its claim that it has standing to enforce the promissory note and deed of trust.

MERS is not a real party in interest and has no right to enforce, assign, or foreclose on any mortgage note, even though their named on the note as a 'nominee' and 'beneficiary.' So, if you look at your mortgage note and see MERS listed as a nominee and beneficiary, chances are pretty good that your mortgage has been securitized and any attempt to foreclose by the loan servicer, or any entity for that matter is probably unlawful. Call your lawyer and take action to stop the foreclosure and save your home.

Bankruptcy Can Be Cheaper, Better, and Faster than Debt Settlement

Christine Wilton — Mon, 26 Jul 2010 07:01:46 -0800

I know what you've been told because I have heard it all too. The government wants you to do your very best to avoid bankruptcy at all cost. Bankruptcy is bad; or at least, a harsh remedy to dealing with debt, and should be your last resort. We have all bought into this 'agreement reality' and it couldn't be further from the truth.

I assert, bankruptcy is a powerful tool that should be considered in your overall financial plan that includes eliminating debts. Adrian Lapas, over at Bankruptcy Law Network explained the pitfalls of debt settlement by warning of 1099 tax bills for canceled debts; and even creditor's unwillingness to negotiate a settlement at all. Oh, and I'm really tired of discussing your credit score because it's already been adversely affected by your not making your payments on time. In fact, filing bankruptcy might actually improve your credit score once all that bad debt is cleared from your credit report.

I've had clients come to me after signing up with these debt settlement companies and spending nearly $10,000 on fees, only to find themselves in lawsuits with their creditors that these companies warned them about and would not help them with. Remember that if you negotiate your settled debts, you're still paying money toward them and you'd better have some cash saved up to pay it in full if they accept your offer. Also, you must be prepared for that 1099 tax bill at the end of the year because you'll wind up paying taxes on that can celled debt.

Bankruptcy not only eliminates the debt without any payments from you, it will eliminate your liability entirely and you won't owe taxes on the debts that were discharged in the bankruptcy. That's where bankruptcy as a tool, is more efficient and not only a powerful tool, but a cost saving device for you as well.

Are You Being Overcharged On Your Mortgage?

Christine Wilton — Mon, 19 Jul 2010 05:00:30 -0800

Recently, Katie Porter, over at Credit Slips, reported that Bank of America (BOA) reached a settlement with the Federal Trade Commission regarding certain mortgage overcharges, including overcharges in bankruptcy once serviced by Countrywide. Henry Sommer joined the conversation, asking if the Bank of America Settlement is a sign of true progress.

After reading the consent judgment and order provided by Katie, followed with Henry's entertaining summary of the requirements set forth in that order that include BOA's agreeing to not lie, cheat, or steal from consumers, I am not getting that warm feeling like we've accomplished much. Did I miss anything?

Those homeowners that can afford to make a mortgage payment seek Chapter 13 where they are given time to make up the arrears on their mortgage and get their finances back on track. What has been happening though is that many receive their discharge only to be served a Notice of Foreclosure soon after for charges on their mortgage. I'm even seeing this when the servicer files their proof of claim, declaring that "hey, we're going to do this up front and charge attorneys fees and costs to even file this proof of claim." They'll also usually include inflated arrears, inspection fees they did not conduct, and other fees and costs that are superfluous to your mortgage.

It is imperative that debtor's counsel in chapter 13 practice, scrutinize every proof of claim in every case and hold these Creditors to account for their willful failure to follow the law. If you're a homeowner seeking to stop a foreclosure and you know that you've been overcharged and your loan servicer adding charges incorrectly, don't file under Chapter 13 without a competent attorney that not only practices Chapter 13, but really understands this mortgage mess we're in.

Wells Fargo Won't Stop Freezing Bank Accounts

Christine Wilton — Wed, 07 Jul 2010 14:25:53 -0800

Many a Creditor has driven us bankruptcy lawyers and our clients nuts with their antics, but freezing a client's bank account after their case has been filed takes the cake. The Ninth Circuit BAP just released In re Mwangi Case No. 09-1408 (9th Cir.B.A.P., June 30, 2010), which held that Wells Fargo's national policy of placing administrative holds on accounts of persons filing a bankruptcy petition violates the automatic stay by exercising control over property of the estate. The issue in Mwangi was their national procedure of running a computerized comparison of all newly filed Chapter 7 bankruptcy cases against Wells Fargo's list of account holders. If they found a match of one of their account holders who had also filed bankruptcy, then Wells Fargo would immediately 'freeze' that account, preventing the debtor from having access to their money.

It's no secret that Wells Fargo has been notorious for freezing the accounts of debtors filing bankruptcy under Chatper 7. We also have it on good word that Wells Fargo will continue to hold funds while they appeal the Mwangi case.

Keep in mind that your bank account is property of the estate upon filing your bankruptcy case that presumably includes the cash in your bank accounts. So, don't go on a spending spree just yet. Any Exempt funds are not exempt until 60 days after the conclusion of your meeting of creditors. Technically, all of your assets, including cash on hand must be turned over the trustee to administer your estate, but that is just not practical. This means that the law is not on your side here and while Wells Fargo can put a freeze on your accounts, they also must act prudently by asking for guidance and direction from the Trustee and/or Court as to what to do with your funds.

This reminds me of the term "vicious compliance." This term seems to crop up in certain union worker circles when they don't like a particular ruling or law, they will strictly comply with it and demonstrate that it doesn't work and then use it against management by knowing it better. So, if Wells Fargo wanted to 'viciously' comply with the law, they would stop freezing accounts and simply send all the money to the trustee. No matter how you slice this ruling, Wells Fargo is still a big bully.

Bankruptcy Filings Soar in 2010

Christine Wilton — Mon, 05 Jul 2010 05:00:26 -0800

As debtor's counsel, I get the sense that many Americans who need to file for bankruptcy are avoiding it still because of its stigma and the myths fed to them by their government, creditors, family and friends. In spite of the 'file bankruptcy as a last resort' method to financial reform for American households, filings are soaring in 2010.

Liz Pullium Weston wrote about it in her article, Bankruptcy filings soaring again. I can't tell when that article was written and that bugs me to some extent, but I can move on from that. In May, the American Bankruptcy Institute issued their first quarter press release, that revealed that bankruptcy filings are up 17% in the first quarter over 2009; and, consumer filings are up 18.2% in the first quarter. California is 8th on the list of states with the highest per capita filing rate for the 12-month period ending March 31, 2010, with our Central District experiencing a 57.8% increase. So, what does this mean for the remainder of the year?

I predict that you will see California sink into the ocean of financial despair with the continued housing market depression and the banks attempt to control the housing prices by holding inventory of foreclosed homes. Foreclosures will continue to rise as the asset-backed securitized mortgages continue to reset over the next 7 to 10 years. Remember that these teaser rate, sub-prime, fancy loans were sold straight into the housing crash in 2008.

When California decides to make the tough decisions in closing their budget gap, you will see more municipalities filing chapter 9, like Valejo, CA, when the state pulls funds from the communities and cuts services. You see, states can't file bankruptcy like the local governments can. The problem here is that the federal government can print money when they need it, and municipalities can file bankruptcy under Chapter 9 of the Bankruptcy Code, but the states have no remedial measure other than to cut services and pull funds from the local governments.

The bottom line here is that financial reform starts with every American taking personal responsibility for their own household and taking stock of their options, including the option to choose to file bankruptcy under Chapter 7, 11, or 13, depending upon your own set of circumstances. Most bankruptcy attorneys offer free consultations by phone and you should take advantage of their advice. We help our clients steer clear of scams and help you to take stock of your liabilities, depending upon your current situation and your financial goals. Yes, you can keep your stuff and lose your debts. You can save your American Dream of home ownership.

Payday Loans and Bankruptcy

Christine Wilton — Mon, 28 Jun 2010 05:05:15 -0800

Are you one of the many Americans caught up in the viscious grip of payday loans? It seems, these days, that payday loan shops are replacing Starbucks on every corner. It's the new business to be in with this depressed economy. Here's what happens when you obtain payday loans in your rup-up to filing for bankruptcy.

If you have presented a post-dated check as 'security' for the loan, when you file for bankruptcy, the payday lender will simply cash the check and hang on to the funds. The lender can do this under 11 U.S.C. Sectioin 362(b)(11), which provides that the automatic stay does not apply to the presentment of a negotiable instrument and the giving of notice and protesting dishonor of such an instrument.

However, the overconfidence on the part of these payday lenders comes with a price. One decision, In re Thomas, 311 B.R. 75 (W.D. Mo. 2004) provides that a post-petition transfer of funds out of the account by presentment of post-dated payday loan check could be avoided pursuant to 11 U.S.C. Section 549(a). This means that you could bring an action to recover the funds as an unauthorized post-petition transfer. Unfortunately, such actions are more costly than the amount transferred; which is why most debtors decline to bring an action under Section 549.

Ask your bankruptcy lawyer about their experience with repeat offenses by payday lenders because the creditor's willful violation of the automatic stay does give rise to actual damages, costs, and attorney fees; even punitive damages in some cases. Don't think that these payday lenders have the upper hand just because they have your check in their hands.

Mortgage Forensic Loan Audits Scam Alert

Christine Wilton — Mon, 21 Jun 2010 05:00:11 -0800

California’s mortgage crisis is out of control. The sub-prime lending didn’t end until late 2007 and into early 2008 when the economy collapsed. What further frustrates our sunshine state’s mortgage problems is that we were sold Jumbo loans due to our high property values. A Jumbo loan is a mortgage loan in an amount above conventional conforming loan limits and as of 2010, the limit is $417,000 according to Wikipedia.org. So, many California homeowners are in default on their primary mortgage because their “teaser” rate has ended and they’re now faced with increased interest rates and forced to pay principal and interest on a mortgage that they could not afford, with a jumbo loan that the lender is unwilling to modify.

Homeowners are being led down the primrose path of a modification offer by the lender only as a courtesy due to the HAMP program’s rules and California Law that requires the lender to contact the borrower and attempt a workout. The law, however, does not require a mandatory workout and the sub-prime lender, loan servicers, and asset-backed securitized mortgages will always be refused a modification of their mortgage because the investors don’t want it.

It may seem like we’re in a desperate situation here in California, and that’s why so many scams are cropping up. Recently, I’ve even been marketed to by these forensic mortgage loan audit scammers. They’re a new twist on foreclosure rescue fraud, so be alert to these offers. The envelope looks legitimate, but it’s nothing more than a cleverly disguised marketing piece. They generally target those homeowners in foreclosure, but they’re now starting to target the potential predatory loans too.

If you’re looking for help, avoid:

anyone offering guarantees;
instructs you not to contact your lender, lawyer, or housing counselor;
collects a fee up front; encourages you to lease your home so you can buy it back over time;
recommends that you make your mortgage payments to someone other than directly to the lender or loan servicer;
offers to buy your home for cash at an amount less than market value; or
pressures you to sign papers you haven’t had a chance to read thoroughly or don’t understand. Get Help.

You can always check out the Federal Trade Commission [FTC], the nation’s consumer protection agency for current information and scams to avoid. Contact your lender or loan servicer immediately when you fall behind on your payments. You can also get FREE advice from housing counseling agencies certified by HUD by calling 1-888-995-HOPE. Remember that filing bankruptcy will LEGALLY STOP A FORECLOSURE through the Automatic Stay, 11 U.S.C. §362.

Help NCLC Hold The Banks Accountable For What They've Done Under Hamp

Christine Wilton — Tue, 15 Jun 2010 07:16:06 -0800

"If anything good should ever happen in the foreclosure crisis, we should all celebrate now," says Mandelman Matters. His latest article entitled, HAMP. It's a Real Class ACTion, has me doing the happy dance as I read about the class action law suit that was filed by Boston-based nonprofit, and extremely formidable National Consumer Law Center ("NCLC").

NCLC, along with co-counsel has brought four class action lawsuits on behalf of residents of Massachusetts that challenge the failure of Wells Fargo Bank, Bank of America, J.P. Morgan Chase Bank and IndyMac Mortgage Servicers/One West Bank to honor their agreements with borrowers to modify mortgages and prevent foreclosures under the HAMP Program. Get Excited because this is the first step toward national reform! It may start in Massachusetts, but never fear, California will catch the wave and you can take my words, and Mr. Thompson's to the bank.

HELP NCLC HOLD THE BANKS ACCOUNTABLE FOR WHAT THEY'VE DONE UNDER HAMP:

DONATE TO NCLC!

And, in the “Comments” box on the donate form please type in “Mandelman Matters," because he cared enough to share this priceless update with all of us and I'm only mirroring his sentiment and bringing it to the west coast. Your Local Bankruptcy Lawyers appreciate the support.

Don't Get Stung in a Short Sale

Christine Wilton — Mon, 14 Jun 2010 05:02:09 -0800

American homeowners are still in trouble with mounting mortgage defaults and depressed property values. The lenders and loan servicing companies are non-responsive to their customers and HAMP has had an embarrassing 20% success rate, which leaves homeowners high and dry when it comes to help with their mortgages and distressed properties. Getting out from under your upside down property through a short sale starts to look pretty good in comparison to either a foreclosure or bankruptcy on your credit report; right?

Back on April, Carry Bay highlighted the dark side of short sales in her article, Short Sales…A Breeding Ground for Fraud? Since short sales are gaining in popularity and I continue to respond to questions from my clients about their options; it’s important to be on the lookout for fraud.

Speaking of fraud, the next time you’re approached with an offer to short sell your property consider this: The only people that are benefiting from the short sale of your home are the mortgage companies and the real estate broker who gets a commission from the sale. In addition, you would be left holding the bag, long after the deal is done, if the transaction is not conducted properly.

This article, A Short Sale May Not Mean You’re Home Free, warns of the problems that crop up long after you move out. Not only could you be liable for deficiencies, especially if you held a second mortgage or home equity line of credit on the house, but your credit score may be in worse shape, if the information is reported incorrectly. Don’t just let your Dream of homeownership slip away without knowing your options and your rights.

Creditor Fraud On The Court Through Fake Documents

Christine Wilton — Mon, 07 Jun 2010 05:34:23 -0800

On May 16, 2010 Max Gardner published a blog article entitled, Fake Documents and Fraud on the Court. We are in the midst of a national foreclosure crisis and debtor's counsel throughout the nation are finding themselves defending their clients, not just against losing their home, but losing their home because their lender manufactured fake documents. We should all be outraged.

Apparently Florida is leading the nation in getting the word out about these fake documents being submitted in our Courts. So, what can you do? Don't just stand by and lose your home because you've been served a piece of paper that looks legitimate. Have your local bankruptcy lawyer review these documents and your loan documents with you.

Your first step in defending your American Dream of homeownership should be to send a Qualified Written Request to the lender to determine who owns your note. However, this letter alone will not stop any foreclosure proceeding. Filing a Chapter 13 bankruptcy will legally stop your foreclosure and give you breathing room to make up for any payment arrears, while your attorney goes after your lender on your behalf.

Filing Bankruptcy Will Ruin My Credit

Christine Wilton — Mon, 31 May 2010 05:00:27 -0800

A bankruptcy will remain on your credit report for up to ten (10) years. However, the perceived hit to your credit is an illusion that your creditors don’t want you know about. You see, if you’re already experiencing wide spread defaults on your bills, or even your mortgage, then your credit score has already been adversely affected.

In fact, not taking any action toward resolving your money problems will cause significant and long-term damage to your credit score. Late payments and defaults will stay on your credit report for up to seven (7) years and if those debts are not discharged or paid, they can haunt you for all eternity. The biggest hit to your credit score is unpaid debts; not a bankruptcy.

Filing bankruptcy will eliminate old debts and completely clear your credit report of all debts, period. This fresh start by filing bankruptcy, cleans the slate and can actually cause your credit score to go up. Yes, I said that your credit score will likely increase after bankruptcy. Your creditors don’t want you to know this and they will do everything they can to get you to pay them as much as possible.

The folks over at the National Bankruptcy Forum agree, according to their recent blog article entitled, “Has the Biggest Reason Not to File Bankruptcy Already Happened to You?” This article points to the fact that being late, or failing to pay your debts has more of a negative impact on your credit score than filing bankruptcy. Why continue to suffer and throw good money after bad? If you are considering bankruptcy, call your local bankruptcy lawyer today.

California Bankruptcy Exemptions

Christine Wilton — Mon, 24 May 2010 05:00:11 -0800

Whether you're filing bankruptcy under Chapter 7 or 13 in California, you will get to keep most of your belongings and your home. That is, if you have a home worth keeping. Under the law, the keeping of assets is known as 'exemptions;' meaning the assets are exempt from being taken to pay your debts. These exemptions can be found in the California Code of Civil Procedure Sections 703 and 704.

On Schedule C of the bankruptcy forms, you will be required to state under which law you are applying your exemptions and you must use one or the other and cannot use both. This is important to keep in mind because even though Bankruptcy Law is federal law, here in California, we have our own unique sets of exemptions that we can apply.

Don't lose your stuff in your attempt to eliminate your debts through bankruptcy by filing your own case. Now, more than ever before, you need to consult with your local bankruptcy lawyer to protect your rights.

How To Use Credit Wisely After Bankruptcy

Christine Wilton — Mon, 17 May 2010 05:15:04 -0800

I always tell my clients that your credit score only tells you one thing; how well you manage DEBT. So, why would you want to go back into debt again after bankruptcy? After all, don't you just want to enjoy the feeling of financial freedom from debt for as long as possible? My first inclination would be to strongly discourage you from ever getting into debt again, but I know you're an adult and you can do with your life and money as you please. So, here are some suggestions I found from the folks over at the National Consumer Law Center on Using Credit Wisely After Bankruptcy.

Lower interest rates. Just because you've filed bankruptcy; it doesn't mean that you will forever be stuck with high interest rate offers on credit. In fact, I strongly encourage you to avoid those high cost, high interest rate predatory type lenders. Run, don't walk away from anyone advertising, "Bad Credit?; No Credit? Bankruptcy? No Problem!" You're guaranteed to get a loan from these lenders, but it will cost you more than it did to file bankruptcy in the first place. Don't get pressured into signing any contract that you don't understand, or that cost too much just for the credit.

Here's the deal. You've worked hard to take responsibility for your financial well-being and now have your bankruptcy discharge. You'll be able to get credit again and on good terms too, but don't you want better than that for yourself and your family?

Savings accounts. Instead of debt and credit, consider setting money aside every month in a savings account to save for big ticket items. Remember layaway? Be your own lender and save money to buy what you want. Chances are, if you have the cash in your account and actually have the money to buy that flat screen TV, it will be much harder to part with that cash than it would be to put it on a credit card and pay 29% interest. There is a dysfunctional psychology to that. So, if you can't afford it, save your money and pay cash instead.

Shop around. Rich people do this all the time. Shop around for services you need and use all the time, like groceries, phone service, insurance, etc.

Ask for discounts. I have found that negotiating and asking for discounts on things really makes a difference. Here's a story: I was at a do-it-yourself-store a few weeks back. My boyfriend and I were shopping for area rugs for our living room. We found one we could both agree on, but the only one left was the hanging sample. It was in otherwise perfect condition hanging on the display clamps. So, I told the representative that I would like for him to roll it up, give me a discount and send me on my way with the rug. Now, mind you, they were already on sale and I was asking for an even greater marked down price. He went to talk to his manager and brought back a hand written ticket and had taken another $50.00 off the price! I am telling you that asking for a discount works.

Read before you sign. Don't be embarrassed because you don't understand a complex financial document. You're not a lawyer. Hey, I know some lawyers that don't understand complex financial products. Remember that when you sign a legal document and enter into a contract, you're agreeing to what is in that document whether you read it, or understood it. Be a well informed consumer. If you don't understand the contract; don't sign it. Just because something is being sold in the marketplace does not make it a good idea.

How Does Bankruptcy Affect HAMP Eligibility?

Christine Wilton — Mon, 10 May 2010 05:26:47 -0800

Your federal government tried to help save your home by creating the Home Affordable Modification Program, or HAMP as we have come to know it. Too bad it's not working because this program only has a 20% success rate. Many homeowners who were stuck in the log jam of the HAMP program were forced into bankruptcy, only to find the lenders reject their modification after their case was filed.

The HAMP administration has created supplemental directives that briefly support modifications for those either in bankruptcy or contemplating filing bankruptcy. These changes become effective June 1, 2010. Under these new guidelines, servicers must consider borrowers in active bankruptcy for HAMP if a request for modification is received from the borrower, borrower’s counsel or bankruptcy trustee. Borrowers who are in a trial period plan and subsequently file for bankruptcy may not be denied a HAMP modification on the basis of the bankruptcy filing. Even if you've received a discharge in your bankruptcy case, you should still be eligible for a HAMP modification.

Here is some great news for those in a chapter 13 bankruptcy. As taken directly from the Supplemental Directive 10-02, "When a borrower in an active Chapter 13 bankruptcy is in a trial period plan and the borrower has made post-petition payments on the first lien mortgage in the amount required by the trial period plan, a servicer must not object to confirmation of a borrower’s Chapter 13 plan, move for relief from the automatic bankruptcy stay, or move for dismissal of the Chapter 13 case on the basis that the borrower paid only the amounts due under the trial period plan, as opposed to the non-modified mortgage payments." This means that if you're in a trial modification and you subsequently file for bankruptcy under Chapter 13, you will continue to pay the modified mortgage payment.

Bankruptcy in the Lesbian and Gay Community

Christine Wilton — Fri, 07 May 2010 05:52:06 -0800

In this economy, all cross-sections of our community have been impacted. Money matters to all of us. Your local bankruptcy attorneys are working hard to dispel the lies and myths about filing bankruptcy. It is imperative that the truth be told; bankruptcy is an important tool that will facilitate Economic Recovery for America. That's why we're coming to the Long Beach Lesbian and Gay Pride Festival, May 15-16, 2010.

Attorney R. Grace Rodriguez is the sponsor of the Financial Wellness Clinic booth inside the festival. Local Bankruptcy Attorneys will be on hand to answer your questions about debt relief options; fiancial wellness; tips to avoid bankruptcy; the bankruptcy process and life after bankruptcy. A special note to homeowners: Filing Bankruptcy Will Stop Foreclosure!

The lesbian and Gay community has special legal needs when it comes to bankruptcy and financial wellness. It is more important than ever to know your legal rights. The attorneys will be dispensing valuable information and providing pricelss resources to the booth's viistors. Be sure to look for the Financial Wellness Clinic Booth at this year's festival, held in Long Beach on May 15-16, 2010. Be proud. Be debt FREE.