Chapter 7 Bankruptcy – Page 10 – Law Office of Rick Morin, PC

Chapter 7 Bankruptcy February

There were 828 Chapter 7 Bankruptcy cases filed in the Sacramento area during February 2014. That is a 16% increase from January 2014.

Chapter 7 filings are up after the slow winter holiday season. I expect this trend to continue as tax refunds come in. Tax refunds are a popular way to pay for the costs associated with bankruptcy.

Of the 828 new Chapter 7 cases, 122 were filed by pro se debtors. That works out to be about 14% of all Chapter 7 cases. “Pro se” means that they debtors filed their cases without the assistance of an attorney or law firm.

There were 219 practicing Chapter 7 Bankruptcy attorneys in Sacramento last month. The top Chapter 7 filer had 34 cases — nearly 5% of the total attorney-filed caseload. 92 of the 219 practicing Chapter 7 Bankruptcy attorneys only filed 1 Chapter 7 case during February.

I am always available to discuss Chapter 7 Bankruptcy. Please contact my office with any questions. I can be reached at (916) 333-2222.

March 2, 2014/by Attorney Rick Morin

Bankruptcy Law, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

Don’t Qualify for Chapter 7? You Have Options

Sacramento Bankruptcy Lawyer Rick Morin When thinking about bankruptcy, most folks think of Chapter 7 Bankruptcy. Chapter 7 provides a “fresh start” by wiping out unsecured debt. The process takes about 3-4 months. For most people, the Chapter 7 bankruptcy process is relatively painless.

However, because of how the bankruptcy code is written, not everyone will qualify for Chapter 7 bankruptcy.

As an initial matter, a lot of people call my office worried that they don’t qualify for Chapter 7. As it turns out, most of them end up qualifying. If you have questions about your eligibility for bankruptcy, it is important that you talk to an attorney.

There are many reasons why Chapter 7 bankruptcy might not be the right fit. Typical hurdles include business ownership, too much equity in a home, or too much household income.

While there are ways of getting around common disqualifying factors, sometimes Chapter 7 just won’t work. In that case, a person in need of bankruptcy assistance should consider Chapter 13 bankruptcy.

Chapter 13 bankruptcy is considered a “reorganization.” It allows a debtor an opportunity to reorganize his or her finances over the course of 3-5 years. During that time, the debtor makes a monthly payment to the Bankruptcy Trustee. The Trustee uses the monthly payment to repay a portion of the debt. Any debt not paid off after the 3-5 year period is discharged.

Chapter 13 bankruptcy has some positive features not found in Chapter 7 bankruptcy. In Chapter 13, you can strip certain liens off of a house. That means that you can eliminate a second mortgage in Chapter 13 bankruptcy. You can’t do that in Chapter 7. Also, certain debts that can’t be discharged in Chapter 7 can be discharged in a Chapter 13.

Chapter 13 is much more complex than Chapter 7. Done correctly, it can provide just as much benefit to a debtor as Chapter 7. It is especially useful for people that don’t qualify for Chapter 7.

Bankruptcy in any form is an important decision. Please call me at (916) 333-2222 to discuss your bankruptcy options. Don’t delay any longer.

February 24, 2014/by Attorney Rick Morin

Bankruptcy Law, Chapter 7 Bankruptcy

Your Tax Refund and Bankruptcy

\ Sacramento Bankruptcy Lawyer Rick Morin Welcome to Tax Season! With it comes special precautions for people filing Chapter 7 Bankruptcy. You must take special care to protect your tax refund.

All of a debtor’s assets, as they existed on the date of filing, belong to a debtor’s Bankruptcy Estate upon the filing of Chapter 7 Bankruptcy. This includes a debtor’s physical assets such as cars and iPhones. Also included are intangible assets such as the right to sue other people and accounts receivable.

The contents of the Bankruptcy Estate are important because the Chapter 7 Bankruptcy Trustee legally can take assets from the estate. These assets are then sold and the proceeds are used to repay a portion of a debtor’s debts.

It is my goal as a Chapter 7 Attorney to protect a debtor’s assets to the maximum extent provided by law. In California, this is done by using exemptions found in the California Code of Civil Procedure.

A Bankruptcy Attorney must take care to accurately exempt a debtor’s tax refund. Without an exemption, the Chapter 7 Trustee may demand that the refund be turned over to the Trustee.

Using California’s 703 exemptions, a debtor would likely be able to exempt the refund using whatever is left over from the “wildcard” exemption. If a debtor must use the 704 exemptions, protecting the tax refund is much more difficult. This is because there is not a wildcard exemption available.

All of this assumes that a debtor has not already received their tax refund. If a debtor has already received the refund, and can not protect it using the 703 exemptions, then the debtor may consider waiting to file Chapter 7 Bankruptcy. A debtor would wait to file until such time that the refund has been exhausted.

There is nothing wrong with using the tax refund on household purposes such as buying groceries, gas, clothes for the kids, or other reasonable purchases.

If a debtor’s tax refund is very large, there could be a question of whether the money was spent solely on household purchases. In this situation, a debtor would be well advised to keep careful records of how the money was used.

Tax refunds are very important. A debtor filing Chapter 7 Bankruptcy should consult with a Bankruptcy Attorney if they have a tax refund pending.

Please contact my office should you have any questions about tax refunds and Chapter 7 Bankruptcy in Sacramento. My office phone number is (916) 333-2222.

February 16, 2014/by Attorney Rick Morin

Chapter 7 Bankruptcy, Local Bankruptcy News

Chapter 7 Bankruptcy January

There were 712 new Chapter 7 Bankruptcy cases in Sacramento during January 2014. That is a 3% decrease from December 2013.

712 new cases will likely be the low water point for the year. We can expect that bankruptcy filings will start to pick up again this spring as people start to receive their tax refunds — a convenient way to pay for the expense of a bankruptcy filing.

Of the 712 new cases, 106 of them were filed “pro se” which means without the assistance of an attorney. This may be an effective option for some simpler cases, but typically judges and trustees prefer cases filed by an attorney — especially complex ones.

If you have questions regarding filing Chapter 7 Bankruptcy in Sacramento, do not hesitate to contact my office. I can be reached at (916) 333-2222.

February 11, 2014/by Attorney Rick Morin

Bankruptcy Law, Chapter 7 Bankruptcy, Meeting of Creditors

521 Documents: What You Need to Know

Before your Meeting of Creditors, also known as a 341 hearing, a debtor is required to provide certain documents to the Bankruptcy Trustee assigned to his or her case. These required documents are commonly referred to as “521 documents” because the requirement is listed in a few parts of 11 USC § 521.

Let’s start with an anomaly here in Sacramento: pay advices.

11 USC § 521(a)(1)(B)(iv) requires that the debtor file 60 days of payment advices (a fancy way of saying pay stubs) with Bankruptcy Court along with other required bankruptcy paperwork. Here in the Eastern District of California, local rules actually tell attorneys not to file the pay advices with the Court. Rather, attorneys are directed to file the pay advices with the Bankruptcy Trustee.

This change in procedure for pay advices is a great example of why familiarity with the local rules in Sacramento is so important.

Moving on, 11 USC § 521(e)(2)(A)(i) requires that a debtor file with the Bankruptcy a copy of his or her most recently filed tax return. This is pretty straightforward. However, sometimes I have a client that has not filed taxes recently. This might be because the debtor only receives social security income (not subject to taxation). A simple note to the Trustee explaining the lack of a tax return is sufficient in these circumstances.

A debtor without a recent tax return because he or she just hasn’t gotten around to filing can expect some extra scrutiny from the Bankruptcy Trustee. Make sure you file your taxes on time!

Bankruptcy Trustees here in Sacramento also demand various other types of documents in preparation of the 341 hearing. These typically include recent bank statements, statements for mortgages and retirement accounts, and specific information regarding outstanding domestic support obligations.

It is always a good idea to check with your specific Bankruptcy Trustee well in advance of your 341 hearing. This will allow you to determine exactly what documents the Trustee will require beyond those listed in 521 of Title 11.

Don’t hesitate to call me if you have any questions about the documents you need to file with the Bankruptcy Trustee. I am happy to discuss Bankruptcy procedures. My office phone number is (916) 333-2222.

February 3, 2014/by Attorney Rick Morin

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy Can be Affordable

One question I get asked a lot is “I’m struggling with my bills, how am I supposed to afford a bankruptcy attorney?” I tell my clients that it is always my goal to provide cost-effective legal services. Trust me, bankruptcy can be affordable in Sacramento!

Just like everything in life, there are a wide range of prices for bankruptcy services in Sacramento. There are so many different price points because there are various ways to go about bankruptcy.

On the low end of the cost scale, you can hire a “bankruptcy petition preparer” who simply helps you fill out all of the bankruptcy forms. This might be very affordable, but these petition preparers are not allowed to give you legal advice, nor can they represent you at your bankruptcy hearing. At the super high end is where you hire a big law firm who will assign a whole team of attorneys to your case.

The right approach depends on your individual needs as a debtor.

My firm focuses on affordable Chapter 7 bankruptcy cases. A typical Chapter 7 case in my office will cost anywhere from $800 to $1300 in attorney’s fees, depending on various factors. I really like to get a feel for a debtor’s specific situation in order to provide an accurate price quote.

Compare the cost of my Chapter 7 Bankruptcy with a complex Chapter 13 case with mortgages, various liens, and old tax debts. A Chapter 13 like that can cost up to $4,000 (or more!) over the life of the case.

My best piece of advice to a person considering bankruptcy is to meet with various law firms to determine which firm and attorney will be the best “fit.” Price isn’t everything, but of course you must pick representation that is affordable to you and your budget.

If you have questions about the cost of Chapter 7 Bankruptcy in Sacramento, please give me a call. I am confident that I can provide you with affordable representation in your bankruptcy case. My office phone number is (916) 333-2222, and I am happy to discuss bankruptcy with you personally.

January 26, 2014/by Attorney Rick Morin

Bankruptcy Law, Chapter 7 Bankruptcy, Creditors

Bankruptcy Car Repossession

Many of my bankruptcy clients have had a car repossessed. Car repossession can be very expensive. Many times, a customer is left with a large bill from their lender even though they do not own the car any more. Bankruptcy can help in this situation.

When a car is repossessed by a lender, the car will be sold at auction. The price of the car at auction will be far less than the price of the car when it was new. Even though a repo seller must take “commercially reasonable” steps to get a fair price for the car, the price that these cars sell for is typically very, very low.

The lender will then bill the car owner for the difference between the price they got for the car and the outstanding balance of the loan. This is known as a “deficiency balance.” The bill typically also includes a lot of fees and penalties as well.

As you can see, car repossession will result in a large bill of many thousands of dollars. A person in this situation has to ask themselves why they should continue to pay for a car that they no longer own.

Like many consumer debts, a large deficiency balance from an auto repossession can end up in court in the form of a lawsuit. Lawsuits end in judgements, and judgements will end in bank levies, wage garnishments and liens on your property.

Chapter 7 bankruptcy will wipe out any car repossession deficiency balance. It will also wipe out the fees, interest and lawsuit costs that typically go along with a car repo. While Chapter 7 Bankruptcy might not be right for everyone with a car repossession, I have seen it really help people with car repossessions in their past.

If someone is demanding that you pay thousands for a car that has already been repossessed, please contact Attorney Rick Morin to discuss Chapter 7 Bankruptcy. He can be reached at the office at (916) 333-2222.

January 19, 2014/by Attorney Rick Morin

Chapter 7 Bankruptcy, Local Bankruptcy News

Chapter 7 Bankruptcy Filing Numbers in December

There were 734 Chapter 7 bankruptcy cases filed in the Sacramento area during December 2013.

This is only counting Chapter 7 cases in the Sacramento Division of the Eastern District of California. The numbers would be higher if I counted cases filed in the Modesto, Fresno and Bakersfield divisions. As you can see, the Eastern District of California covers the northern 1/3 of the State of California.

Filings in December are down 24% compared with last month, November 2013. This is to be expected, as business at the courthouse is typically relatively slow in December because of the holidays.

Of the 734 Chapter 7 cases filed in December, over 90 of the cases were filed “pro se.” A case filed “pro se” means without the assistance of counsel.

If you need more information regarding Chapter 7 Bankruptcy in Sacramento, please contact attorney Rick Morin at (916) 333-2222.

January 14, 2014/by Attorney Rick Morin

Bankruptcy Law, Bankruptcy Rules, Chapter 7 Bankruptcy

Emergency Bankruptcy Can Save Your Bacon

If you were just slapped with a notice of a bank levy, a wage garnishment, or served with a lawsuit, you might be wondering about your options. In these cases, an emergency bankruptcy filing may be appropriate.

Typically I work with my clients over 2-4 weeks to prepare their bankruptcy case for filing. However, in cases where there is a pending wage garnishment or bank levy, my office can turn a case around much faster.

In fact, my office can file an emergency bankruptcy case in as little 6 hours after initial contact with the client.

By filing immediately, a wage garnishment or a bank levy can be stopped in their tracks. This prevents your creditors from taking any money directly from your paycheck or bank account.

As with most bankruptcy filings, an emergency bankruptcy will also halt all court cases that are pending. If bankruptcy is appropriate for your financial situation, filing a case will stop court actions by your creditors. This can save you time and money, and there is no need to wait until a lawsuit goes to judgement in order to file bankruptcy.

Sometimes an emergency bankruptcy filing is called a “skeleton petition” by the Bankruptcy Courts and the Trustees. In essence, an emergency bankruptcy is just the first few pages of the typical bankruptcy petition.

Once filed, the debtor and the debtor’s attorney have 14 days to complete the rest of the bankruptcy paperwork. This condensed time frame can be very intense for both the debtor and the attorney. Despite the rush, it is very important to get the remaining bankruptcy paperwork 100% right.

If you have been served with a notice of a bank levy or wage garnishment, it is important that you not wait until the last minute to file your emergency petition. Payroll departments and the Sheriff’s office need sufficient notice in order to stop pending wage garnishments and bank levies. This is why you often hear my office say the same thing over and over: “don’t delay!”

If you need to file an emergency bankruptcy case in Sacramento, please call Rick Morin at (916) 333-2222.

January 12, 2014/by Attorney Rick Morin

Bankruptcy Law, Bankruptcy Rules, Chapter 7 Bankruptcy

Spousal Waiver in Bankruptcy: What You Need to Know

The audience for this blog post is very specific: Chapter 7 filers in California that are married, but filing bankruptcy without their spouse. If you match this criteria, you need to know about the Spousal Waiver.

A married couple may file bankruptcy together. Both spouses are listed on the Bankruptcy Petition and are both given a discharge at the end of the case. However, spouses are not required to file bankruptcy together. One spouse may file bankruptcy on his or her own. In such a case, the non-filing spouse stays out of bankruptcy.

A spouse using California’s 703 set of exemptions will need to secure the non-filing spouse’s signature on a Spousal Waiver. This is because of specific language in California Law that limits a married couple to using one set of exemptions.

Specifically, the waiver prevents the non-filing spouse from utilizing California’s 704 exemptions while the other spouse’s case is using the 703 exemptions. That’s it. California law is set up this way to prevent a married couple from filing two separate bankruptcies and utilizing both sets of exemptions. This “best of both worlds” approach is not what the Legislature intended when it created the two distinct sets of exemptions.

Typically, getting the non-filing spouse to sign the Spousal Waiver is not difficult. However, it can be a challenge when the two spouses are not getting along. The non-filing spouse needs to be concerned about signing the waiver only if he or she is contemplating filing his or her own bankruptcy case while the other case is still active.

Update: want to know what happens when a spouse won’t sign? Click here for my updated blog post.

The Bankruptcy Court in Sacramento has a PDF Spousal Waiver for download. You can download the waiver form here. The waiver should be filed with the Court and also provided to your Bankruptcy Trustee.

If you have questions regarding the Spousal Waiver in Chapter 7 bankruptcy, please contact Sacramento Bankruptcy Attorney Rick Morin at (916) 333-2222.

January 3, 2014/by Attorney Rick Morin