Chapter 13 Bankruptcy – Page 5 – Law Office of Rick Morin, PC

Bankruptcy Law, Bankruptcy Rules, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Creditors

List all of your bankruptcy creditors – or else!

Bankruptcy Creditors

Preparing a successful Chapter 7 or Chapter 13 bankruptcy involves many steps. One of the most important steps in any bankruptcy is to ensure that you have listed all of your creditors. Here’s why.

After a Chapter 7 or Chapter 13 bankruptcy is filed, the court will send every creditor a notice of bankruptcy filing. This notice tells your creditors that you have filed bankruptcy. The notice also gives your creditors information about your case such as the date of your bankruptcy meeting of creditors. The notice also contains important deadlines.

The court will only mail this notice to creditors that have been properly listed on the bankruptcy schedules. After all, the bankruptcy court does not know who you owe money to. The court simply takes information that is provided on your bankruptcy paperwork and uses that information to notify all of the relevant parties.

One question that I am often asked is what to do when a creditor has sold a debt or assigned it to a collection agency. My rule is to be as thorough as possible when listing bankruptcy creditors. I prefer to list the original creditor, such as capital one, and also the collection agency that the debt is it assigned to, such as Midland Funding LLC. This ensures that all appropriate parties receive your notice of bankruptcy. It also ensures that each creditor will stop contacting you once your bankruptcy is filed.

Another trick is to make sure that you notify your creditors at the appropriate mailing addresses. Look on your debt statements for a “correspondence address.” This address might be different than the payment address. You also might need to use Google or other tools in order to locate the mailing address for your various creditors. Sometimes this information is not easy to find on a creditor’s website.

The bottom line is that you should take time to ensure that you list all of your creditors at the right address on your bankruptcy paperwork. Bankruptcy law and the rules of the bankruptcy court tell you that only properly listed debts will be discharged in your bankruptcy. The main point of this article is this: list all of your debts, even debts that you are not sure about.

After going through bankruptcy, you don’t want to discover that you forgot to list major creditors. Dealing with creditors after your bankruptcy is over can be difficult. Getting things right at the beginning will help you down the road.

Please call my office if you have any questions about filing bankruptcy in Sacramento. My phone number is (916) 333-2222.

March 4, 2015/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

Does Debt Consolidation Have You Hanging on the Edge?

Bankruptcy and debt consolidation

Debt consolidation may seem like at great idea, especially for those debts that you just can’t seem to get rid of. However, many debt consolidation programs have serious drawbacks. You should take these factors into consideration before deciding how to tackle your debt.

1. How much will debt consolidation cost?

Ask if the consolidation program has additional fees or other hidden costs. Before signing up, make sure you know exactly what you are getting into. For example, what will happen if you make a late payment or can no longer afford to make your payments? More often than not, your creditors can continue to charge debt against you, even when you are making your best efforts to make your payments on time. There are very few “legal” protections associated with debt consolidation plans.

2. Will debt consolidation meaningfully reduce your monthly payments?

Creditors, such as they are, do not care if you will be able to pay for this month’s rent or groceries. It is true that debt consolidation can offer some minor relief by bundling all of your unsecured debts into one monthly payment. However, your payments might not actually be any less than before! Basically, you might find yourself back at square one. This is one benefit of Bankruptcy over consolidation: bankruptcy cuts the collection agencies out of the equation, allowing you to focus on getting back on your feet.

3. Will debt consolidation be any better on your credit than bankruptcy?

Worried about your credit? Debt consolidation will still bring down your credit score. Plus, you will then face the challenge of trying to rebuild good credit while juggling to pay back your existing debt. Unlike bankruptcy, debt consolidation will not protect you from car repossessions, bank levies, or wage garnishments. If debt collection is impacting your daily life, consolidation may not be enough.

You should also be aware that many people who choose debt consolidation still end up taking out additional loans or credit cards. This will have a negative effect on your credit score.

Don’t get caught in an endless cycle of only making the minimum payments. If you want to get your fresh start or have questions about bankruptcy as a debt-relief option, call my office at (916) 333-2222.

February 23, 2015/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, General Debt

5 Budget Life Hacks for Destroying Your Debt

Get out of debt

Is your debt getting out of control? Here are some budget life hacks that might help you get out of a sticky debt situation.

1. Build a Budget

This one is so obvious, but I have to put it as number one because most people don’t have a budget plan. Without a budget, the rest of the following tips will be meaningless. A budget can be a simple listing of your usual household expenses, such as rent, utilities, food, etc. In fact, I’ve prepared a PDF budget that you can fill out for yourself. Download it here.

Only once you have a grasp of your financial situation will you be able to make informed choices about your debt. Don’t just wing it. Sit down and create a comprehensive budget. It will only take a few minutes.

2. Revise Your Budget

Maybe you don’t have any money left over on your budget to make debt payments. If that is the case, you might need to re-evaluate your budget. Common areas that can easily be cut back are the communications line: cell phone and cable plans can eat up a huge portion of your budget. If you’re deep in debt, do you really need to spend $200 a month on cable and $200+ a month on a cell phone plan?

If you can’t think of any areas where you could reduce your budget, think about showing it to a friend or family member. A fresh set of eyes might help provide some context for where you are spending your money. What might seem like a “typical” monthly expense for food or a car payment might seem excessive to another person.

3. Stick to Your Budget!

Now that you have an idea of your monthly budget, it is time to stick to it. If your budget states that you have $300 over at the end of the month, you could easily dedicate that to debt payments. But you’re only going to make progress on your debt if you dedicate your disposable income to paying things off.

4. Look at the Cost of Your Debt

Are you always taking out high-interest payday loans or over-drafting your account? These are very expensive ways to borrow money, and they will quickly wreck your budget. Do whatever you can to avoid $35 overdraft fees and the crazy-high interest charges associated with payday loans. This is why a budget is so important: you need to live within your means. If you can’t live with the income that you have, you are going to dig yourself a deep hole because of the high cost of “quick fixes” like payday loans and overdrafts.

5. Bankruptcy Might be an Option

There might be a point where no manner of re-jiggering your budget will help you get out of debt. A Chapter 7 or Chapter 13 bankruptcy might be the solution for your debt options. While bankruptcy will not affect the structural issues of having a unbalanced budget, it will get rid of the pressure of having to pay off your unsecured debts. A fresh start might be all you need to get back on track. But even after bankruptcy, the tips above will be critical for you to build a solid financial foundation for the future.

Please call my office you would like to discuss whether bankruptcy is right for you. I can be reached at (916) 333-2222.

February 16, 2015/by Attorney Rick Morin

Bankruptcy Law, Bankruptcy Rules, Chapter 13 Bankruptcy

Chapter 13 Bankruptcy and Taxes

Sacramento Bankruptcy Lawyer Rick Morin Going through a Chapter 13 Bankruptcy can be confusing enough without tax season sneaking up behind you. In this post, I will go through some frequent questions regarding Chapter 13 bankruptcy and taxes.

What returns are due?

According to the Bankruptcy Code, all Chapter 13 debtors must file all required tax returns for the years ending within four years of your bankruptcy filing. If you’re going to be asking the government for assistance in the form of bankruptcy, the IRS expects that you have played by their rules and filed all of your tax returns. Makes sense!

In addition, you’ll also need to stay current with all applicable federal, state, and local tax returns throughout your bankruptcy. A typical Chapter 13 bankruptcy will last between 3 and 5 years, so it is important to stay on top of your taxes during that time. Even one missed return can put your bankruptcy at jeopardy!

When should I file?

The federal tax returns for the four preceding years must be filed before your Bankruptcy Hearing, or “Meeting of the Creditors”. You can however, apply for an extension for 120 days if you need to. In general though, it’s always best to file as soon as possible so that all debts are known beforehand. (It can also take some time to verify that all the correct returns were filed.)

What will happen if I don’t file?

If for whatever reason you don’t file your tax returns, your Bankruptcy Plan may not be confirmed. This may result in your case being dismissed. You should also note that interest and penalties will be charged on returns not filed by the due date under the Internal Revenue Code. For more than just bankruptcy reasons, it is critical that your taxes are filed on time each year.

Where can I get proof of filing?

Your bankruptcy trustee may ask you to submit copies of transcripts of your tax returns as proof of filing. If you don’t have the copies you can request a free transcript from the IRS website, www.irs.gov or submit a Form 4506-T, Request for Transcript of Tax Return, with the IRS by calling 1-800-908-9946. Keep in mind this process may take 10 to 15 days after the request is received. When you go to court for your Meeting of Creditors, it is best to have all of your tax-related issues sorted. If not, the bankruptcy trustee may continue your hearing to allow you time to resolve any issues.

Have more questions?

If you’re planning on filing for a Chapter 13 Bankruptcy and have more questions regarding your situation, please call my office at (916) 333-2222.

February 12, 2015/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Creditors

Rebuild Credit After Bankruptcy

Construction

Most of my clients ask for advice on how to rebuild credit after bankruptcy. The good new is that it is absolutely possible to have a good credit score within just 12-24 months of filing for bankruptcy. You will need to have a plan and stick to it, but it is not impossible by any stretch of the imagination!

Chapter 7 bankruptcy will give you a fresh start. Your old debts will be a thing of the past. No more collection calls, garnishments, or lawsuits. But bankruptcy itself doesn’t do anything for your credit. That is up to you.

An easy way to start working on your credit might not actually take any effort on your own part. If you are keeping a car loan, called a “reaffirmation” in bankruptcy terms, your lender will report your ongoing payments to the credit bureaus. This means that you don’t even have to apply for any new accounts to start working on your credit after bankruptcy. However, it is important that you make your loan payments on time!

Not everyone knows what makes up a credit score. For purposes of this blog, one of the most important parts of a credit score is your payment history. Even one late payment that hits your credit can wreck months and months of hard work. So whatever you do after bankruptcy, make sure that your payments on credit accounts are on time each and every month!

Right after bankruptcy, it will be very possible to get new credit cards. In fact, you will probably receive credit card solicitations in the mail. Be careful though: a lot of the products being offered to you right after a Chapter 7 bankruptcy will have high interest and fees. Know what you are getting into before signing up.

What I strongly recommend to people after bankruptcy is this: a secured credit card. Most of the major banks offer them. I know that Capital One and US Bank offer good secured credit card products. A secured credit card requires a deposit in the amount of your credit limit. They usually start small, around $300 to $500. Once you establish a good history of on-time payments and responsible use, the bank will convert your secured card into a full credit card — and they will even refund your deposit!

Whatever route you take, it is critical that you maintain good credit habits. Don’t max out your accounts and make sure you are making your payments on time each month. A good credit score is no free lunch. It will take a concerted effort and careful planning to get right. But it is worth the effort!

If you have questions about re-establishing credit after a Chapter 7 or Chapter 13 bankruptcy in Sacramento, please call my office at (916) 333-2222.

February 9, 2015/by Attorney Rick Morin

Bankruptcy Law, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Local Bankruptcy News

Bankruptcy Hijacking: What You Need to Know

Bankruptcy hijacking has been a problem in Southern California bankruptcy courts for some time. The trend is starting to show up in the Sacramento Bankruptcy Court too. Here is what you need to know about this concerning phenomenon.

Bankruptcy hijacking can be defined as a third party fraudulently taking advantage of a debtor’s bankruptcy case without the debtors knowledge. Sound confusing? It is! Here is an example that illustrates what has been happening in bankruptcy courts up and down the state.

One of the main protections of filing for bankruptcy is known as the “automatic stay.” The stay acts to protect a person from nearly all collection activity while the debtor’s bankruptcy is sorted out by the court. The automatic stay is so powerful that it can even stop a bank from foreclosing on a house. It is this protection that unscrupulous individuals are taking advantage of — and make no mistake, it is seriously illegal.

Let’s say that Person A is about to have their house foreclosed upon. They hire an unscrupulous person, Scam Artist, to “stop the foreclosure.” What Scam Artist does is pretty clever: he or she fakes a grant deed from Person A to Debtor and back dates it prior to the bankruptcy. Scam Artist then faxes the fake grant deed and a copy of Debtor’s notice of bankruptcy to the foreclosure servicer. The servicer, now thinking that the house is protected by Debtor’s bankruptcy stay, pulls back and stops the foreclosure sale. Up until this point, Debtor has no idea any of this is happening.

The first Debtor hears about the scheme is when Bank comes into the Bankruptcy Court and files a “Motion for Relief from Automatic Stay.” This motion is a request by the Bank to have the Bankruptcy Court lift the automatic stay so that Bank can proceed with the foreclosure. Debtor, the Bankruptcy Trustee, and the Court are all very confused when this motion shows up for one simple reason: the property listed in the Motion isn’t listed on any of Debtor’s bankruptcy paperwork. This is for good reason: the property doesn’t belong to Debtor!

Debtor now has to respond to the Motion, incurring time and expense. Debtor also has to endeavor to convince everyone in the process that they weren’t perpetrating a fraud on the Court by not “listing” the house referred to in the Motion. This is a huge mess for everyone involved.

Presumably, Person A has bought themselves a few extra months in their house. But they also have put themselves at risk of criminal prosecution. For the Bank’s part, their sloppy reliance on a forged grant deed has unnecessarily complicated Debtor’s bankruptcy case. There is plenty of blame to go around.

To find out more about the bankruptcy process in Sacramento, please call my office at (916) 333-2222. I can guide you through the Chapter 7 and Chapter 13 bankruptcy process.

February 1, 2015/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

5 Signs You Need to File for Bankruptcy Today

Sacramento Bankruptcy Lawyer Rick Morin One common thing that I hear from my clients is that they have considered bankruptcy for a long time. In some cases, multiple years have gone by but they haven’t taken any action to get their finances in order. Here are the top 5 signs that people need to be aware of when considering whether bankruptcy is right for them.

1. Maxed Out Credit Cards

Are your credit cards always maxed out? This is a sign that you’re living with more debt than you can pay off. Large amounts of revolving debt isn’t necessarily a bad thing, but if it is a common occurrence, it can be a sure sign of financial distress.

2. Taking Out PayDay Loans or Cash Advances

A “get money now” loan may seem like a good idea if you’re in a tight spot. However, these loans are often the last straw for my clients. Payday loans and cash advances have oppressively high interest rates. I’ve seen some loans over 100% interest per year. There’s no hope of paying these things off. Don’t be a victim of these near-criminal loans. It is probably time for a fresh start.

3. Feeling Overwhelmed

Many people feel stressed when it comes time to pay the bills. However, there is a difference between stress and hopelessness. If you can’t reasonably foresee a way to get your financial situation in order, a bankruptcy can provide you with a fresh start so that you can focus on the important things in life — not your bills.

4. You Are Not Sure of Who You Owe Money To

If you are not sure exactly how much you owe and to whom, you have a problem. This is a common problem that I see in my office and is a surefire sign of financial distress. You can’t reasonably expect to pay everyone back if you’re not sure who your debts are with. Now is the time to sit down and figure this mess out. And bankruptcy might be an option for you.

5. Afraid of Harassing Creditors

Do you let all your calls go to voicemail or wait days, possibly weeks, before opening your mail? Ignoring the problem won’t make it disappear. Take control of the situation and stop ignoring your creditors. You and you alone have the power to fix the situation that you are in.

Have you thought about bankruptcy but you’re not sure how to get started? Please call or text my office at (916) 333-2222 for a friendly and free bankruptcy consultation.

January 29, 2015/by Attorney Rick Morin

Bankruptcy Law, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

Top 7 Bankruptcy Myths That Must Die

As a Bankruptcy Attorney in Sacramento, I hear all sorts of myths about the bankruptcy process. Here are some of the bankruptcy myths that I hear over and over again — and the real truth.

1. You Can’t Keep Your Car in Bankruptcy

A lot of folks think that they will need to surrender their car when they file bankruptcy. This is almost never the case. While a debtor has the option to surrender a car (because of a bad loan, for instance), in almost all cases, you do not have to surrender your car in a bankruptcy.

2. You Won’t Get Any Credit Cards for 10 Years

Bankruptcy will appear on your credit report for 7-10 years after you file. But this does not mean that you will not be able to obtain credit for 10 years. Most of my clients report that they receive credit card offers and auto loan solicitations immediately after their bankruptcy case is discharged. Be careful though: the credit offers you receive immediately after bankruptcy will probably have high interest and fees. So it pays to shop around.

3. Civil Court Judgements Can’t Be Included in Bankruptcy

A lot of my clients have dealt with financial issues for years prior to filing for bankruptcy. What gets them to file is the fact that one of their debts has gone to court and resulted in a judgement. As long as the judgement is unsecured, it can be discharged in a bankruptcy. If a creditor has put a judgement lien on your house, there are still options. Call me to discuss.

4. You Have to Surrender Your Tax Refund to the Court

This one has some truth to it. Under certain circumstances, a debtor must surrender their tax refund to the Bankruptcy Trustee. However, in most of my Chapter 7 cases, my clients are not required to surrender their tax refund to the Trustee. The bankruptcy exemptions that you use in your case will determine whether you get to keep your tax refund, so plan carefully.

5. Garnishments and Bank Levies Don’t Stop Until Discharge

This one is absolutely wrong! Wage garnishments and bank levies must stop immediately upon the filing of your bankruptcy. The “automatic stay” goes into effect the second that my office sends your bankruptcy paperwork to the courthouse.

6. Such-and-Such Debt Is Not Dischargeable

There are some sneaky and aggressive debt collectors who will tell you that their debt can’t be discharged in a bankruptcy. If you press them for details, they will shout out a bunch of nonsense. Listen to a professional: in all but the most extreme cases, your unsecured debt will be eliminated in a Chapter 7 bankruptcy. That’s the truth!

7. Your Debts Must Be At Least $X In Order to Claim Bankruptcy

While the number is always different, some people think that there is a minimum debt required to file for bankruptcy. This is not true. There is no debt minimum contained anywhere in the bankruptcy code. Each case is different, and the court will look to your individual circumstances to make sure that you aren’t abusing the bankruptcy process. If you’re are having trouble with your finances and can’t afford to repay your debt, it is a good idea to at least discuss your situation with a bankruptcy attorney.

If you have any questions about these bankruptcy myths or others, please call my office. I can be reached at (916) 333-2222.

January 25, 2015/by Attorney Rick Morin

Bankruptcy Law, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Meeting of Creditors

4 Surprising Questions You Might Be Asked at Your Bankruptcy Hearing

For most debtors, the bankruptcy hearing is the most daunting part of the bankruptcy process. Whether you are filing Chapter 7 or Chapter 13 bankruptcy, each debtor is required to appear in court for a “meeting of creditors.”

As I have discussed in the past, the meeting of creditors is an opportunity for the Bankruptcy Trustee and your creditors to ask you questions regarding your financial affairs. Most hearings go well and are done in a matter of minutes. But not always!

Here are four questions that tend to surprise people during a meeting of creditors.

1. Did you disclose all property that belongs to your non-filing spouse?

A married couple is not required to file bankruptcy together. One spouse may file bankruptcy and the other spouse is not required to file. However, because California is a community property state, the debtor must disclose all property owned by both the debtor and his or her spouse. By not disclosing all property owned by the non-filing spouse, the debtor would not be able to “exempt” that property. This means that the property of the non-filing spouse may be subject to liquidation by the bankruptcy trustee!

The lesson here is to list all property owned by either spouse.

2. Have you paid any money to family in the past year?

Money paid to family in the 12 months prior to the filing of the bankruptcy (and sometimes longer too!) can be recovered by the Bankruptcy Trustee. Some debtors don’t think that it is important to disclose payments to family on debts. This is because the debtor intends to repay the family member after the bankruptcy. This can cause a lot of trouble for a debtor in a bankruptcy. All debts, even debts that a debtor intends to repay after the case, must be disclosed to the court.

The lesson here is that if you have repaid a family member a loan prior to the filing of a bankruptcy, you must discuss this with your attorney. There are plenty of options here, but it must be discussed prior to the filing of your bankruptcy!

3. Why are you filing bankruptcy?

Most Bankruptcy Trustees don’t ask the reason behind your bankruptcy filing. But some do! Make sure that you have a concise, easy-to-understand answer to this question. You might be surprised by some of the answers I have heard from debtors while waiting in court.

4. Are you entitled to any money such as lottery winnings?

Can you imagine filing bankruptcy and then winning the lottery? It actually happens. In some cases the bankruptcy trustee will have the right to recover these lottery winnings for the benefit of your creditors. Even though this situation sounds unlikely, if it does actually happen, the debtor must disclose recent lottery winnings. Failure to do so can result in the revocation of your bankruptcy discharge, and in some cases, even prosecution!

If you have any questions about filing Chapter 7 or Chapter 13 bankruptcy in Sacramento, please call my office at (916) 333-2222.

January 11, 2015/by Attorney Rick Morin

Bankruptcy Law, Bankruptcy Rules, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

Importance of Bankruptcy Paperwork Might Surprise You

When a person signs their bankruptcy forms, they do so under penalty of perjury. This means that the government can prosecute a bankruptcy debtor for lying on their bankruptcy paperwork. This alone is a good enough reason to tell the truth and not hide anything. Surprisingly, omissions on your bankruptcy paperwork can have effects in other areas too.

A person filing bankruptcy must realize that the entire bankruptcy petition (except for their social security number) becomes a public record. Anyone that wants to have access to the bankruptcy filing can do so by looking at it at the courthouse or even online via PACER. I always tell my clients that they can expect to receive solicitations from car dealerships and credit card companies after they file their bankruptcy. This is because advertisers search the court docket for bankruptcy filings. Interesting, right?

There is a story circulating amongst Sacramento bankruptcy attorneys that illustrates the importance of telling the truth on your bankruptcy. A debtor filed a bankruptcy and failed to list all of their personal property on Schedule B of their petition. Schedule B is the bankruptcy form where the debtor is required to list all of their personal property, no matter how insignificant. In this case, the debtor did not list some “toys” such as expensive cameras and bicycles. Later on, a burglar stole these cameras and bikes from the debtor’s house. When the debtor filed an insurance claim, the insurance company reviewed the debtor’s bankruptcy petition — 3 years after the bankruptcy! Because the debtor did not list these assets in their bankruptcy, the insurance company denied the claim.

Your bankruptcy petition and schedules could also be introduced as evidence in litigation down the road. Again, since you have to sign your paperwork under penalty of perjury, you should make sure that it is true and accurate!

I assist all of my clients with making sure that their paperwork is true, accurate and complete. My office uses proprietary procedures and check lists to ensure that we don’t miss any details, important or not. A bankruptcy filing is a big deal, and we work hard to do the best that we can every time.

If you have any questions about filing for bankruptcy in Sacramento, please call me at (916) 333-2222. Don’t delay!

December 15, 2014/by Attorney Rick Morin