Lien Removal After Bankruptcy

Lien removal after bankruptcy is a complicated, but important subject. Debtors often discover liens after bankrutpcy. What can a debtor do to get rid of these liens? It depends! Read on for more information.

Abstracts of Judgment

A creditor can only obtain a judgment against a borrower if the borrower defaults on their debt. A creditor records an “abstract of judgment” with the government after the creditor wins a lawsuit against a borrower. The abstract of judgment creates a lien on any real property owned by the debtor in that county.

A debtor must clear the judgment lien if they ever want to sell their house, refinance, or really do anything with their property. Typically, this means that a debtor must pay off the judgment lien.

Most people are not aware of a judgment lien against their home until they go to sell their home. In fact, a typical credit report won’t necessarily disclose liens.

Chapter 7 Bankruptcy Doesn’t Affect Liens

A typical Chapter 7 bankruptcy does not get rid of abstracts of judgments or judgment liens.

The bankruptcy does eliminate the debtor’s personal responsibility to pay the debt. But a creditor will retain their lien on the debtor’s home even after the bankruptcy is over.

This means that a debtor still has to pay off the judgment lien, even after bankruptcy, if the debtor wants to sell or refinance their home. Luckily, there is a very powerful solution to this problem.

How to Remove Liens After Bankruptcy

A good bankruptcy attorney will fight to remove a judgment lien as part of a Chapter 7 bankruptcy. The court does not automatically remove liens. A debtor must file a Motion to Avoid Lien with the bankruptcy court in order to obtain a court order removing the lien.

What happens if a debtor does not file a Motion to Avoid Lien in the bankruptcy? In most cases, a debtor has options.

A debtor can reopen their already-closed bankrutpcy to file a Motion to Avoid Lien under certain circumstances. The creditor must have filed the judgment lien prior to the bankruptcy. And the lien must impair an exemption claimed by the debtor in their home.

Lien removal after bankruptcy is a complicated procedure that must be executed perfectly for the court to grant the request. Small deficiencies will leave the court with no option but to deny the motion. I strongly recommend that a debtor in need of filing a Motion to Avoid Lien retain a good bankruptcy attorney.

Do you need to remove a judgment lien after your bankruptcy was closed by the court? Contact my office at (916) 333-2222 to discuss your options.

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Bankruptcy Timeline in Sacramento

Most bankruptcy filers are apprehensive about how long their case will last. The good news is that the bankruptcy timeline in Sacramento is probably quicker than you think! Read on to learn more about the timelines for a typical Sacramento Chapter 7 Bankruptcy.

The Clock Starts Ticking Once Your Case is Filed

Bankruptcy officially starts when an attorney files a bankruptcy petition with the United States Bankruptcy Court. The court assigns an official case number. The court also assigns a judge and trustee to oversee each case.

The Bankruptcy Court notifies creditors of your case. The Court also assigns various dates and deadlines, including a date for your Meeting of Creditors.

The bankruptcy court in Sacramento typically schedules Meetings of Creditors about 30 days after the filing date.

A Typical Bankruptcy Ends With a Discharge

The primary motivation for most bankruptcy filers is to obtain a discharge. The bankruptcy court will only discharge debts after the case has been fully administered by the trustee.

Creditors are provided with a certain amount of time to object to a bankruptcy filer’s discharge. You can find this deadline on the paperwork that sets the date for the Meeting of Creditors. The court will move forward with the discharge as long as no creditor objects prior to the deadline.

Most Chapter 7 Cases Are Over in About 90 Days

A typical Chapter 7 Bankruptcy in Sacramento lasts just three months from start to finish. In just three months, a bankruptcy filer can emerge from bankruptcy debt free!

Careful planning prior to filing ensures that your case will proceed smoothly. Cases that aren’t over in 90 days typically result from sloppy mistakes on paperwork or not following court instructions.

Call (916) 333-2222 to discuss whether bankruptcy is right for you. Don’t delay! Your fresh start can be right around the corner. 

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Bankruptcy Motion to Compel Abandonment

Own a business? Filing a Chapter 7 bankruptcy? You may need to file a Motion to Compel Abandonment. This will let you keep operating your business while you are in bankruptcy.

The Trouble with Businesses and Chapter 7 Bankruptcy

When a person declares Chapter 7 bankruptcy, everything they own is temporarily “owned” by the bankruptcy estate. If a bankruptcy filer owns a business, the business is included in that estate.

The bankruptcy estate is administered by a bankruptcy trustee. The trustee is liable for acts of the business while it is operating during bankruptcy. Most trustee’s don’t like this liability.

In fact, not all bankruptcy trustees are comfortable with the bankruptcy filer running a business. Some of these trustees may demand that the bankruptcy filer stop operating their business during their case. This is not a very good outcome for the bankruptcy filer.

Motion to Compel Abandonment

One option for a bankruptcy filer in this situation is to request that the court “abandon” the business so that the trustee no longer owns it. If successful, the trustee won’t be able to demand that the bankruptcy filer cease business operations during the bankruptcy.

The Motion to Compel Abandonment is easy to understand. The bankruptcy filer informs the court that the business doesn’t have any liquidation value (if true) and requests that the court abandon the property back to the debtor.

Because the business doesn’t have any liquidation value, the court will determine that it is not an asset that requires administration by the trustee.

In bankruptcy terms, the court will determine that the business has an “inconsequential value” to the estate. The court will then order the business abandoned.

Conclusion

Not all businesses will require an abandonment motion in a Chapter 7 bankruptcy. Consult with an experienced bankruptcy attorney if you have a business and are considering declaring a personal Chapter 7 bankruptcy.

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Bankruptcy Without a Lawyer

Everyone in America has the right to represent themselves in court. In fact, this is true in bankruptcy. That means that you can file bankruptcy without a lawyer. Read on for more information!

Chapter 7 is Possible Without a Lawyer

Of the two main types of consumer bankruptcy, Chapter 7 is the easier of the two to complete on your own. Chapter 13 bankruptcies are very complex and require years of training to get right. For this reason, if you’re going to go it alone in bankruptcy, Chapter 7 is realistically possible without a lawyer.

Steps Through Bankruptcy

Here is a brief list of things that most debtors must do to successfully complete a basic Chapter 7 Bankruptcy.

  1. Gather required documents, such as pay stubs, tax returns, bank statements, and your list of creditors
  2. Prepare your petition, schedules, and Statement of Financial Affairs
  3. Take your pre-filing credit counseling course
  4. File the Chapter 7 petition, schedules, and Statement of Financial Affairs
  5. Pay the required filing fee to the Court at the time of filing, request to pay the filing fee in installments, or request a filing fee waiver
  6. Send the required “521 Documents” to your assigned Bankruptcy Trustee in advance of your bankruptcy hearing
  7. Attend the “Meeting of Creditors.” The court schedules your Meeting of Creditors. You will receive notice of the date and time in the mail.
  8. Follow up with the Bankruptcy Trustee to satisfy any concerns after the Meeting of Creditors
  9. Take your post-filing bankruptcy debtor’s education course. Submit your certificate to the court.
  10. Wait for your discharge.

The steps are relatively straight forward, but missing a step or completing documents incorrect can have adverse consequences.

For instance, failing to file the post-filing bankruptcy debtor’s education course with the court will result in the case being dismissed without a discharge. The only way to fix that mistake is to re-open the bankruptcy to file the certificate. The court will charge a $260 filing fee just to do this!

Caution: Loss of Property is Can Happen in Chapter 7

The scary thing for pro se debtors in Chapter 7 is the loss of property. The bankruptcy code describes Chapter 7 as a “liquidation.” This means that the court is empowered to seize and sell property belonging to the bankruptcy filer. The court uses the proceeds to pay down the debtor’s bills.

Note that “property” doesn’t just refer to houses and land. Property means everything that belongs to the bankruptcy filer. This includes intangible assets such as tax refunds, lawsuits, or money owed to the debtor.

If the bankruptcy filer doesn’t apply the right bankruptcy “exemptions,” or they don’t have enough exemptions, loss of property is very real in a Chapter 7.

Of course I want you to consider hiring my firm for your bankruptcy. Please contact us at (916) 333-2222 to schedule a consultation today!

 

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What Happens When You File Chapter 7

There are several different versions of bankruptcy. Chapter 7 is the most popular bankruptcy. What happens when you file Chapter 7? Read on to find out.

Chapter 7 Is A Liquidation Bankruptcy

The goal of Chapter 7 is to eliminate as much unsecured debt as possible. The tradeoff in this type of bankruptcy is something called “liquidation.”

If a bankruptcy filer has too much assets, the Bankruptcy Court has the authority to sell some of those assets for the benefit of the creditors. These are called “asset” bankruptcies. Asset bankruptcies are very rare for consumer cases.

In 99% of the cases that we file here, the bankruptcy filer does not lose any property whatsoever. These are called “no-asset” bankruptcies.

The bottom line is that the goal of a bankruptcy filer in Chapter 7 is to eliminate their debt. This happens at the end of a Chapter 7 when the court issues a “discharge.” The discharge excuses all debts except for the ones that cannot be discharged pursuant to bankruptcy law.

There Is One Court Appearance Required In Every Chapter 7

Each debtor in a bankruptcy case must appear in court one time. This is known as the “Meeting of Creditors.”

The bankruptcy trustee assigned to the case will place the debtor under oath and will proceed to ask questions about the bankruptcy case.

Think of the Meeting of Creditors as an interview. The role of the Trustee is to ensure that the bankruptcy filer is playing by the rules, telling the truth, and not hiding any income or assets.

While it is called a “Meeting of Creditors,” it is very uncommon for creditors to appear in consumer cases. In most situations, the Meeting of Creditors only lasts a few minutes — typically less than five for a simple consumer case.

The Automatic Stay Protects The Bankruptcy Filer From Creditors

The Automatic Stay is one of the most important parts of bankruptcy! The Automatic Stay prevents creditors from taking any further collection activity against the bankruptcy filer.

This means that Creditors cannot sue, call, harass, garnish, or levy the debtor while the bankruptcy case is pending. This gives the bankruptcy filer breathing room to sort through their financial issues.

The Automatic Stay can even halt a foreclosure or car repossession! For this reason, some Chapter 7 bankruptcy cases are filed as much for the protections of the Automatic Stay as much as for the discharge.

Please call my office at (916) 333-2222 if you are considering a Chapter 7 bankruptcy in Northern California. We can give you more information and schedule an in-office consultation to learn more about your situation. Dont’ delay!

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Business Bankruptcy in Sacramento

Businesses declare bankruptcy too. Business bankruptcies are typically much different than personal bankruptcies for one main reason. Read on to learn more!

Why do businesses declare bankruptcy?

Businesses declare bankruptcy for the same reason that regular people declare bankruptcy: insolvency. A business is insolvent when its debts exceed its assets. A business might become insolvent because of a large lawsuit, loss of a big client, or a project going bad.

Many businesses operate on credit. Defaults on credit

Business bankruptcy is often followed by personal bankruptcy

Most small business owners personally guarantee many of their businesses’ debts. This includes leases, lines of credit, credit cards, and loans. Because most small businesses do not have much in the way of assets, small business lenders need security from the owner before lending money to the business.

So even if a business declares bankruptcy, the owner may still be on the hook for some or all of the businesses’ debts. For this reason, a business owner might declare personal bankruptcy if the lenders turn around and sue the business owner after the business declared bankruptcy.

Business bankruptcy does not end in a discharge

This is the unique aspect of a Chapter 7 business bankruptcy. Corporations do not receive a discharge in bankruptcy. The sole purpose of a corporation to declare bankruptcy is to “wind down” the affairs of the business. This typically means that the Chapter 7 Trustee will sell assets and pay claims according to priority.

Unless there are assets in the business that need to be liquidated, there are not many reason to declare bankruptcy for a corporation. The business owner should instead evaluate their persona liability on business debts. A personal bankruptcy may be required depending on the extent of the owner’s liability.

My law firm assists business and business owners with bankruptcy in Sacramento. Please call us at (916) 333-2222 for more information about business bankruptcy. 

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How to Get a Credit Card After Bankruptcy

I recently wrote articles on how to get a Mortgage and Car Loan after bankruptcy. This article will discuss your credit card options after bankruptcy.

Credit Cards Aren’t Bad At All

It is foolish to say that debt is bad, or that credit cards are bad. Used responsibly, credit cards can make managing your finances a breeze. Credit cards help spread payments on large purchases out over time. As long as the interest is reasonable, there is nothing wrong with financing a large purchase.

Paying off a credit card in full each month usually doesn’t incur any interest charges at all. I personally like having all of my purchases in one place. Another added benefit is fraud protection. Credit card companies are very easy to deal with if a card is lost or stolen. I certainly wouldn’t want my debit card account hacked into, and this is the reason why I almost never use a debit card. –

What To Look  For When Applying For a Credit Card

A recent bankruptcy filer should avoid high interest and excessive fees to the maximum extent possible. These are the cards that get people into a lot of trouble. Recent bankruptcy filers are usually flooded with credit card offers in the mail. Read the fine print carefully. You really want to know what you are getting into prior to applying.

I recommend starting with a secured credit card. A secured card will be easier to obtain right after bankrutpcy. And the account should have better terms than unsecured cards.

Not sure where to get a secured credit card? I recommend that you contact your bank. Since you already have a relationship with your bank, they should be willing to help you reestablish your credit.

Don’t Wait to Reestablish Your Credit

I strongly recommend that you start the process to reestablish your credit as soon as you are out of bankruptcy. No law prohibits a recent bankruptcy filer from quickly establishing credit after a bankruptcy case is over. Do not delay!

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How to Get a Car Loan During Bankruptcy

Bankruptcy is a powerful tool that allows debtors to get a fresh start. What about a debtor that needs to get a new car loan in the middle of a bankruptcy? It may come as a surprise, but it is absolutely possible. Read on to learn more.

What Happens to Car Loans After a Bankruptcy is Filed

Debtors have the opportunity to decide what to do with their car loans during a Chapter 7 Bankruptcy. A debtor can keep their car and maintain payments. A debtor may also surrender their car and escape financial liability on the loan.

Surrendering a car during bankruptcy is a great idea, especially if the terms of the loan aren’t ideal. For example, a high interest car loan with lots of negative equity is the type of car loan that should be surrendered during bankruptcy.

Careful pre-petition planning ensures that a debtor receives the best possible benefit from a bankruptcy.

It is Possible to Get a Car Loan During Bankruptcy

If a Debtor surrenders their car during a bankruptcy, how is that person supposed to get around? Many debtors are surprised to hear that it is possible to get a car loan even while a bankruptcy case is pending.

That’s right. There is no legal prohibition against obtaining new credit even before a bankruptcy case concludes.

Practically speaking, it may be difficult to find lender willing to let a debtor borrow money while in the middle of a bankruptcy. But I have personally seen it happen. So I know it is possible. This is another area where careful preparation and homework will pay dividends.

Don’t Let a Bad Car Loan Follow You After Bankruptcy

As discussed above, there are options for debtors that need to surrender a bad car loan during a bankruptcy. It does not make much sense to get a “fresh start” in a Chapter 7 only to emerge from bankruptcy with the same bad car loan.

I encourage all potential bankruptcy filers to carefully review their car loan situation prior to filing a Chapter 7 bankruptcy. There are opportunities out there to save significant money!

There are many benefits to filing Chapter 7 bankruptcy in Sacramento. Please call my office at (916) 333-2222 to schedule a consultation today!

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How to Dismiss Chapter 7 Bankruptcy

Sacramento Bankruptcy Lawyer Rick MorinI recently wrote an article on How to Dismiss Chapter 13 Bankruptcy. What about dismissing a Chapter 7?

Dismissal of Chapter 7 Isn’t Always Possible

Unlike Chapter 13, a debtor does not have an automatic right to dismiss their Chapter 7 bankruptcy. Except for rare cases, Chapter 7 cases are essentially unstoppable once their are filed. Chapter 7 bankruptcy is a “liquidation” bankruptcy. The Court is empowered to liquidate assets for the benefit of creditors. A vast majority of Debtors in Chapter 7 do not lose any property. Only a small percentage actually lose anything.

A Few Things Can Result in Dismissal of Chapter 7

You must appear at the Meeting of Creditors. The court can dismiss your case if you do not appear. I do not advise people to skip their Meeting of Creditors. After all, the court ordered the Debtor to appear.

The Chapter 7 Trustee and the United States Trustee can keep a Chapter 7 open notwithstanding the failure of the Debtor to appear at the Meeting of Creditors. Merely skipping the hearing isn’t an automatic dismissal.

Failing to file all of the required paperwork with the Court can also result in dismissal of a bankruptcy. However, the same warning applies.

How to Dismiss Your Case

Asking the Bankruptcy Court for permission to dismiss your bankruptcy is the only formal way to request dismissal. You must file a “Motion to Dismiss.” In your motion, you must tell the court exactly why you are asking for the dismissal. The bankrutpcy court is likely going to be very skeptical of your request. If you don’t have an attorney, now would be a good time to get one.

Chapter 13 is a Last Resort

If things aren’t going to your way in your Chapter 7, you may want to try to convert to Chapter 13 instead of asking for a dismissal. The Court will not likely grant a conversion request after an unsuccessful attempt at dismissal.

I help people with Chapter 7 and Chapter 13 bankruptcies. Please call my office at (916) 333-2222 if you would like to schedule a bankruptcy consultation. 

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Do Creditors Take Belongings in Bankruptcy?

Sacramento Bankruptcy Lawyer Rick MorinPotential bankruptcy filers often ask me “can I keep X if I file for bankruptcy?” 9.5 times out of 10 the answer is “yes.” This is where the rubber hits the road in Chapter 7 bankruptcy. Keep reading to learn more about the property you can and cannot keep in a bankruptcy.

Chapter 7 is a Liquidation Bankruptcy

The bankruptcy court discharges unsecured debts in a Chapter 7 bankruptcy. The court can also seize property for the benefit of the bankruptcy filer’s creditors. Property that is taken is called “unexempt” property.

A Bankruptcy Trustee typically sells unexempt property at an auction. The Trustee uses the auction proceeds to pay down some or all of the debts that are being discharged by the court.

Don’t worry though. There is much more to the story.

Most Bankruptcy Filers Don’t Lose Any Property in Bankruptcy

95+ percent of all Chapter 7 filers don’t lose any property during bankruptcy proceedings. A savvy bankruptcy filer can protect most if not all of their property. This is called “exempting” property. In California, a debtor can exempt a home, cars, boats, jewelry, and even cash in the bank. Keep in mind: each case is different.

Property that is fully exempt cannot be seized by the court. Most bankruptcy filers in Califonria don’t have any unexempt property, so they don’t lose anything during their case.

What property is exempt versus non-exempt? Great question!

California Law Specifies Bankruptcy Exemptions

Very specific provisions in California law define which bankruptcy exemptions available to a debtor. A bankruptcy filer should consult with a qualified attorney before deciding which set of bankruptcy exemptions to utilize. One set of exemptions is better for homeowners with equity in their home. Another set of exemptions is better for debtors without a home or without any equity in their home.

Going it Alone in Chapter 7 is Risky

The big risk in a Chapter 7 bankruptcy is not applying the appropriate exemptions to your property. Running out of bankruptcy exemptions can also spell trouble.

Careful pre-petition analysis is required to successfully emerge from Chapter 7 without losing any property. Making the wrong decisions prior to filing can have disastrous consequences. This is one of the reasons why it is so important to hire a great bankruptcy attorney.

Be careful about exempting all of your property prior to filing for Chapter 7 bankruptcy. I can help you with this process from start to finish. Please call my office at (916) 333-2222 to discuss your bankruptcy options. 

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Law Office of Rick Morin, PC. A 5-star law practice serving all of California. 

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