Chapter 13 Bankruptcy – Page 3 – Law Office of Rick Morin, PC

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, General Debt

4 Tips to Rebuild Credit After Bankruptcy

Rebuild Credit After Bankruptcy

It is absolutely possible to rebuild credit after bankruptcy. There are many myths out there about re-establishing your credit score after a bankruptcy. Here are some tips and tricks to get you back on track after bankruptcy.

1. Bankruptcy Doesn’t Mean No Credit

Yes, it is true — bankruptcy will remain on your credit report for 7 to 10 years after your bankruptcy filing. However, this does not mean that you won’t have access to credit for 7 to 10 years. This is the biggest myth that I hear.

Most of my clients report receiving credit card solicitations within months after their bankruptcy case closes. Current federal mortgage guidelines allow bankruptcy filers to obtain FHA-backed mortgages just two years after bankruptcy.

I strongly recommend that my clients take immediate action after their bankruptcy cases are closed to start re-establishing their credit.

2. A Secured Credit Card is a Great Way to Start

Those initial credit card solicitations you receive in the mail after bankruptcy won’t be very good. They often times will have very high interest or outlandish fees. Read the fine print carefully before you take the plunge

A better bet is to contact the financial institution where you already bank. See if they offer a “secured credit card.” Most banks do these days. Capitol One and US Bank also have great secured card products.

3. Re-Affirm your Mortgage or Car Loan

Here’s a credit product that you might already have: a car loan or mortgage loan. Make sure that you talk to your attorney about re-affirming these loans during your bankruptcy. If you re-affirm a secured loan, your lender will keep reporting your payment history to the credit bureaus even after bankruptcy. If you keep up with these payments, you’ll have a credit account reporting good things to the bureaus on day one after your bankruptcy is over.

4. Pay Your New Accounts on Time

Whatever you do with your new credit products, make sure that you pay them on time! Even a single late pay can wipe out months of hard work. Even if you have to make the minimum payment, just pay it! More than any other factor, late payments tell the world that you aren’t able to manage your obligations responsibly. As you start racking up more and more on-time pays on your credit report, your score will keep going up. I really can’t stress the importance of on-time payments enough!

Ultimately, there’s no secret recipe involved with increasing your credit score after bankruptcy. Responsibly manage your credit accounts and your lenders will see that you are serious about your new financial direction in life — even with a bankruptcy on your record.

Contact my office at (916) 333-2222 to discuss how bankruptcy can get your finances back on track and get you a fresh start in Sacramento!

November 8, 2015/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Creditors

What To Do If a Creditor Contacts You After Bankruptcy

Bankruptcy Creditors You’re done with your bankruptcy! Congratulations on achieving a fresh start on your finances. Now you need to start rebuilding your credit. But wait: a nefarious creditor has started contacting you about one of your pre-bankruptcy debts. What To Do If a Creditor Contacts You After Bankruptcy?

There are a few reasons why a pre-bankruptcy creditor might try to contact you after your case has been discharged. It could be an innocent mistake. You should inform the creditor that you declared bankruptcy and already received your bankruptcy discharge. The creditor will likely want to know your bankruptcy case number for their records. While technically contacting you after your debts have been discharged is illegal (mistake or not), as long as the creditor stops bugging you it’s not that big of a deal.

However, not all post-bankruptcy contact is a result of an innocent mistake. Some creditors are sloppy with their handling of bankruptcy cases and habitually violate bankruptcy law by contacting debtors. In these cases, my office is very aggressive about making sure that the creditor fixes these mistakes.

Other creditors actually intend to violate bankruptcy law and pursue debtors after discharge. They hope that a debtor isn’t familiar with post-bankruptcy laws and they try to trick debtors into paying back a debt. Others will put incorrect items on a debtor’s credit report at an inopportune time, and will demand payment to take the credit item off of the report. These activities are highly illegal and the bankruptcy courts have the power to order sanctions against devious creditors. Placing incorrect items on a credit report is a violation of federal law and gives rise to additional legal claims against a creditor.

I advise all of my clients to be vigilant during and after their bankruptcies for illegal conduct by their creditors. In some cases I can bring legal action against these creditors and obtain damages for the client!

Don’t ignore post-bankruptcy communications from your creditors. Contact me at (916) 333-2222 if you suspect that a creditor is harassing you or ignoring your bankruptcy discharge.

November 2, 2015/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Local Bankruptcy News

New Bankruptcy Scam

Sacramento Bankruptcy Lawyer Rick Morin I have received word of a new devious new bankruptcy scam going around. I want to alert all of my clients so that they can avoid being scammed.

One thing that you need to realize is that your bankruptcy petition is 99.99% public record. The only item of information that is not accessible to the general public is your complete social security number. Your name, address, previous addresses, employer and pay history, etc are all viewable by any person with a PACER account. This is giving scammers a lot information they need to try to get money out of you.

The scam goes like this. The scammer “spoofs” your caller ID so that it appears that your attorney’s office is calling you. They typically call after hours and pretend to be staff person in the law firm. I have heard a couple versions of the story, but they are all share one thing in common: the person demands that you immediately go to a Walmart or Western Union and transfer a few hundred dollars.

The scammer’s familiarity with your bankruptcy petition gives them a lot of information to sound credible.

Rest assured, my office would never ask you to run to Walmart in the middle of night to transfer money to a creditor. However, enough people across the country are being scammed this way that it is a hot topic on the bankruptcy attorney forums. I haven’t heard from any of my clients about this scam, but at least one Sacramento attorney reports it happening a client.

My best piece of advice is to remain vigilant during and after your bankruptcy. The unfortunate reality is that there is no shortage of shady criminals out there trying to take money from innocent people.

If you receive a phone call like the one I described above, call my office to confirm. If you’re my client you know me and you know Hilary. If someone else is pretending to call from my office or the court, you should be suspicious!

October 18, 2015/by Attorney Rick Morin

Chapter 13 Bankruptcy

Bankruptcy Chapter 13

Sacramento Bankruptcy Lawyer Rick Morin Chapter 13 bankruptcy can be an incredibly powerful tool to help you get your finances back on track. Bankruptcy Chapter 13 can also be quite intimidating and confusing for some people. Here are some interesting facts that you might not know about Chapter 13.

1. Only people can declare Chapter 13

That’s right, only people can use Chapter 13. Corporations, LLCs and partnerships are not able to utilize Chapter 13. If a corporation needs bankruptcy help, it has to be in the form of Chapter 7 or Chapter 11. If your business is run as a sole proprietorship, you can use Chapter 13 to reorganize your finances.

2. You can’t have too much debt in Chapter 13

There are debt limits for Chapter 13 filers. Currently, your unsecured debt must be less than $383,175 and your secured debt must be less than $1,149,525. If your debts are in excess of these limits, Chapter 13 is not possible for you.

3. Chapter 13 will last either 3 or 5 years

Recent court decisions state that a Chapter 13 bankruptcy must either be three or five years long. There is no in-between. If you earn more than the median household income for your state, you will have to stay in Chapter 13 bankruptcy for five years.

4. There is no risk of losing your property in Chapter 13

Unlike in Chapter 7, there is no risk that the bankruptcy court will take some of your property. You can keep all of your property during Chapter 13. Caution: if you fail to make your Chapter 13 payments, the court can convert your case to Chapter 7. It is important to keep up with your Chapter 13 payments!

5. You are shielded from collection activity for the full life of the Chapter 13

All of your creditors that are included in your Chapter 13 have to live with the bankruptcy just like you do. This means that they are not able to harass you about your debts, sue you, garnish your wages or levy your accounts while you are in your bankruptcy. This gives you plenty of breathing room to reorganize your finances and get everything back on track!

Please call my office at (916) 333-2222 with any questions about bankruptcy Chapter 13 in Sacramento.

October 11, 2015/by Attorney Rick Morin

Chapter 13 Bankruptcy

Top 5 Reasons to File Chapter 13 in Sacramento

CHAPTER 13 IN SACRAMENTO

Chapter 13 bankruptcy is a powerful option for many people that need a fresh start with their finances. Here are the Top 5 Reasons to File Chapter 13 in Sacramento.

1. Wipe Out a 2nd Mortgage

Secured loans such as mortgages aren’t affected by Chapter 7 bankruptcy. But did you know that you can wipe out a second mortgage in a Chapter 13? In certain circumstances where your house is underwater, you can “strip” a second mortgage right off your house and discharge the debt in Chapter 13. In many cases this can mean substantial savings, even when compared with Chapter 7.

2. Catch Up on Mortgage / Car Loan Arrears

Chapter 7 bankruptcy won’t help you if you have missed many payments on your mortgage or car loan. If you need help catching up on your mortgage or another secured debt like a car loan, Chapter 13 will buy you some time. You will make monthly payments towards your arrears, and during the time that you are in bankruptcy your creditors won’t be able to try to foreclose or repossess your property.

3. Pay off non-dischargeable debts over time without interest

Some types of debts are not dischargeable in bankruptcy, such as some taxes, past-due child support, and certain types of personal injury judgements. If you are facing imminent collection activity on a non-dischargeable debt, Chapter 7 bankruptcy won’t give you much relief. But Chapter 13 will give you time to pay these debts off — without interest or penalties accruing. Just imagine paying off the IRS on your terms, not theirs. Chapter 13 can make this possible.

4. Your Income is Too High for Chapter 7

Not everybody qualifies for Chapter 7 income. Certain high-income earners will not be able to pass the “means test” to be able to get into Chapter 7 court. If this is the case for you, and you still need assistance with your debts, Chapter 13 is your best option. You will be given five years to repay at least a portion of your debts. In many cases you do not have to repay all of your debts during Chapter 13. Whatever is not paid off will be discharged by the court at the end of your case, just like in Chapter 7.

5. You Received a Recent Chapter 7 Discharge

Nobody wants to declare bankruptcy more than once, but unfortunately sometimes it is a necessity. Under current bankruptcy law, you can only get into Chapter 7 once every eight years. If you run into financial trouble before the eight years has passed, you can always file a Chapter 13 to regain control over your finances.

Please contact my office at (916) 333-2222 to discuss the many benefits of Chapter 13 bankruptcy in Sacramento.

September 7, 2015/by Attorney Rick Morin

Bankruptcy Rules, Chapter 13 Bankruptcy, Local Bankruptcy News

When Are Chapter 13 Payments Due in Sacramento?

Sacramento Bankruptcy Lawyer Rick Morin Chapter 13 bankruptcy is a reorganization bankruptcy where the court lets you repay some of your debts over time. Chapter 13 bankruptcy is great for people that do not qualify for Chapter 7 bankruptcy or just need some breathing room to figure out their finances.

Every Chapter 13 case involves a monthly payment by the debtor to the bankruptcy trustee. The trustee then distributes your plan payment to your various creditors in accordance with the instructions provided to the court in your Chapter 13 plan.

A debtor’s first Chapter 13 payment is due on the 25th day of the month following the month in which the bankruptcy was filed. For instance, if you file your Chapter 13 case August 12, your first payment will be due September 25.

Subsequent payments are due on the 25th day of each subsequent month. There is no grace period. The 25th means the 25th. A single missed Chapter 13 payment can put your entire bankruptcy in jeopardy. I always encourage my clients to pay their 13 payments early so there is no chance of a late payment.

The old fashioned way of paying involves sending a cashier’s check or money order each month in the mail. However, the trustees are now set up to accept electronic payments directly from your checking account via a service called TFS.

I like the TFS service because it establishes an audit trail. You don’t get that same level of assurance when you place your certified funds in the mail. Trust me, I have had my fair share of clients call my office in a panic because of a lost or mishandled Chapter 13 payment.

TFS does charge a small fee, but it is often less than the fee associated with obtaining a cashier’s check or money order from your bank. So TFS can help you save money too!

Please remember that the information listed above only applies to Chapter 13 cases assigned to trustees David Cusick and Jan Johnson in Sacramento. You should always check with your attorney and/or trustee to ensure that your Chapter 13 payments are being made on the appropriate schedule.

If you have questions about Chapter 13 bankruptcy in Sacramento, please call me at (916) 333-2222.

August 30, 2015/by Attorney Rick Morin

Bankruptcy Law, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

How to Declare Bankruptcy in Sacramento

Unfortunately, you can’t wish all of your debts away by just saying the words “I declare bankruptcy.” The process is complicated and full of traps for the unwary. If you want to declare bankruptcy in Sacramento, you should read this brief outline of the bankruptcy process from start to finish.

For those that are new to the bankruptcy process, bankruptcy is the legal tool used to alleviate yourself from debt. Most filers have two options when it comes to bankruptcy: Chapter 7, where most debts are discharged, or a Chapter 13, where you pay back part of your debt over time.

You should also know that all bankruptcy is a federal law. Bankruptcy cases are administered by the United States Bankruptcy Court. Even though bankruptcy is a function of federal law, each state has its own rules as to how many assets you can declare as exempt, and thus keep during the course of your bankruptcy. Exempting assets is a critical part of preparing for filing.

In order to file for bankruptcy, you will need to create and file a bankruptcy petition. On the petition, you will include information about your financial situation, including monthly income, expenses, assets, debts and creditors. The petition will tell the court exactly where you stand financially. You will also be required to take two credit-counseling classes, one before and one after you file. These classes are designed to help you understand credit, budgeting and more so that you do not find yourself in the same situation again.

Once the petition is filed, you will officially be “in bankruptcy.” You will be assigned a case number and a a bankruptcy trustee. Your creditors will also be notified by the court. If you are filing bankruptcy to stop an imminent wage garnishment, bank levy, or foreclosure, you should send those creditors an official notice of bankruptcy as soon as possible.

Between when you file your bankruptcy case and when you get your bankruptcy discharge, there is one court appearance that is typically required. This is called a “meeting of creditors.” Your bankruptcy trustee will be asking you basic questions about your case to ensure that you are playing by the rules. Your creditors will also be given an opportunity to ask questions about your financial affairs — but in the vast majority of cases, no creditors actually appear.

Assuming there are no complications in your Chapter 7 case, your bankruptcy can be over in as soon as 90 days. Chapter 13s are much more complicated and typically last three to five years. In either case, you can obtain amazing results and move on with your life with a fresh start.

Bankruptcy is a serious financial decision. However, it is the most efficient way to become debt-free. I can help you get a fresh start with your finances. Please call my office at (916) 333-2222 to get started.

August 10, 2015/by Attorney Rick Morin

Bankruptcy Law, Chapter 13 Bankruptcy, Local Bankruptcy News

New Car Loan During Chapter 13 in Sacramento

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Chapter 13 bankruptcy cases are considered “reorganization” bankruptcies. The case will last between 3 and 5 years, and during that time the debtor will repay at least a portion of that debt. Chapter 13s are great for many debtors, but they can be cumbersome because many large life decisions require court approval.

For instance, if you want to obtain a new car loan during Chapter 13, you must first seek court approval. Here is how it works.

Let’s say that your existing car dies or you just decide that you need something different. Outside of bankruptcy, you would go to a car lot and make a deal. You might obtain financing on your own or through the dealer. In any event, the transaction will take a few hours.

During Chapter 13 bankruptcy, you are not allowed to incur new debt without court approval. In Sacramento, the car buying process isn’t so easy.

You first have to make a deal on a specific car and arrange for financing. You literally do all of the paperwork up to the point where you would sign and drive away with the car.

You then take these final details to your Chapter 13 attorney. The attorney then has to seek court approval. The process is called a “Motion to Incur Debt.” The court rules here in Sacramento typically require at least 14 days notice between when you file your motion and when it is approved by the court. During that 14 days, your car might be sold to someone else! Most car dealers won’t hold the vehicle.

Because you’re in bankruptcy, your credit might not be very good. I’m finding that clients aren’t able to obtain loans on their own with terms that the court will accept. That’s right — the court reviews the car loan details to make sure that it is appropriate for your case.

Judges here in Sacramento are loath to approve car loans with high interest rates. On the one hand, this makes perfect financial sense. High interest rates on car loans are very predatory and take advantage of people with bad credit. However, it can be frustrating to have the court deny your request to purchase a vehicle on credit, especially if your previous car died or is no longer running.

To get around these requirements, some bankruptcy filers find a credit-worthy consignor, or even have a family member take out a loan in their name. These aren’t always good options, but some creativity might be needed to get yourself out of a jam.

I am a Sacramento Bankruptcy Attorney. I help many people with Chapter 13 reorganizations. Please call my office at (916) 333-2222 if you have questions about Chapter 13 in Sacramento.

August 5, 2015/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

Wells Fargo and Bankruptcy Don’t Mix

sacramento-bankruptcy If you are considering declaring bankruptcy in Sacramento, chances are you are at least somewhat concerned with keeping your assets safe. Most people are primarily worried about their houses or cars, but what about your bank accounts?

Unfortunately banks can and will freeze bankruptcy filers accounts. Wells Fargo in particular has a very aggressive policy. The banking goliath has made it very well known in the bankruptcy community that when it comes to bankruptcy, their clients are their least concern. You may think that this won’t happen to you, but the policy is nationwide. The bank uses a program to cross reference each day’s bankruptcy filers with their account holders and subsequently freeze any account containing over $5,000. Even accounts with less money in them are at risk.

Once the account is frozen, Wells Fargo will only release the funds at the bankruptcy trustee’s request. Generally speaking, most trustees will want to wait at least until the Meeting of Creditors has concluded before considering such request. Even if the trustee is sympathetic, debtors will still be unable to access their accounts for at least one month, if not longer. This can be devastating when your bills come due, especially if you are already struggling to stay current on mortgage and car payments, not to mention everyday expenses like gas and groceries.

Some debtors have tried fighting against Wells Fargo’s policy in court. However, the Ninth Circuit Court of Appeals has consistently favored Wells Fargo and have continued to validate the bank’s hold on any debtor’s funds. While I do not agree with this policy, it is the law here in California.

As a Sacramento Bankruptcy Attorney, I strongly recommend that you avoid Wells Fargo altogether. Before filing bankruptcy, consider closing out any Wells Fargo accounts and switching to a different bank. Generally, small local banks and credit unions are much more lenient towards bankruptcy filers and consumers in general. Remember, Wells Fargo and Bankruptcy aren’t a good mix.

July 28, 2015/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

Declare Your Independence From Debt

Today is Independence Day, so naturally I have to write a blog about declaring your independence from debt.

The bankruptcy code was written to help honest, yet unfortunate debtors who find themselves unable to repay their debts. Bankruptcy provides us with the rare opportunity to push the “reset” button in our lives. Chapter 7 or Chapter 13 bankruptcy are not tools to be taken lightly. However, under the right circumstances, bankruptcy is a very powerful tool.

Did you know that nothing in the bankruptcy code prevents you from repaying your debts even after bankruptcy? If you later on decide that you want to repay some of your debts, nothing will stop you. What bankruptcy says is that your creditors can’t ever force you to repay your debts after your case is over. Some people have such a strong moral obligation to repay their debts, and that is fine. But don’t let your creditors ruin your life just because you have fallen on tough times.

Independence from debt means that you will have the opportunity to rebuild your finances. This fresh start will give you breathing room to tackle the fallout from job losses, huge medical bills, or some unfortunate financial decisions.

For the most part, the bankruptcy courts and trustees don’t much care about how you got yourself into a dire financial place. At no point in the process will anyone be judging your individual situation. The only exception to this rule is for debtors that have engaged in illegal conduct or fraud in the past.

Want to declare your independence from debt? Call my office today at (916) 333-2222.

July 4, 2015/by Attorney Rick Morin