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How To Amend Bankruptcy List of Creditors

Sacramento Bankruptcy Lawyer Rick MorinYour bankruptcy petition should be as perfect as possible before it is sent to the court. However, issues can arise after filing. A common problem is the failure to list all creditors. Here is how to amend your bankruptcy petition to fix that problem.

Listing All Creditors is Important

When a bankruptcy petition is submitted to the court, the court mails an official notice to your creditors. The court can only send the notice of bankruptcy to creditors that it knows about. The court relies on debtors to supply the list of creditors.

Creditors can be listed on Schedule D or E/F of the bankruptcy petition. Schedule D is reserved for secured creditors. Schedule E/F is reserved for unsecured creditors.

Occasionally, a debtor forgets to list one or more creditors on the initial paperwork. Or maybe a new collection notice shows up after the bankruptcy has been filed. Good news: the courts permit you to amend your bankruptcy petition after filing.

How To Amend Bankruptcy List of Creditors

  1. List the legal name, address, and debt amount of the new debt on the appropriate bankruptcy schedule.
  2. Write a big “A” next to the name of the creditor. This tells the clerk of the court which debts are being added.
  3. In the Eastern District of California, you are required to prepare an Amendment Cover Sheet. You can download this form from the court website.
  4. Prepare a new Master Address List that contains only the name and address of the new creditor. There is a helpful tool on the court website that helps with this.
  5. Prepare a Proof of Service. You are required to mail the amendment and a copy of your 341 Notice to each creditor that you are now including in the bankruptcy along with two other parties listed below. You must file a Proof of Service with the Court to show that you have mailed the notice to the appropriate parties.
  6. Prepare three envelopes: one addressed to the new creditor; one addressed to your bankruptcy trustee; and one addressed to the United States Trustee’s Office. Include a fully copy of the amendment along with an unsigned Proof of Service. Put these in the mail.
  7. Sign your Proof of Service. You can now take your Amendment Cover Sheet, Amended Schedule, Master Address List, and Proof of Service to the Court for filing.

As you can see, making an amendment to your bankruptcy petition does take some work. It isn’t difficult to do, but the right steps must be followed. Skipping a step can result in an invalid amendment. This means that the new debt might not be included in your discharge.

I help make bankruptcy easy by handling the process from start to finish for my clients. Please call my office at (916) 333-2222 if you want to discuss how bankruptcy can help you. 

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Don’t Hide Assets From The Bankruptcy Court

Sacramento Bankruptcy Lawyer Rick MorinRapper and occasional actor 50 Cent has been in the news recently. 50 Cent declared bankruptcy in New York. He was on the losing end of a civil lawsuit and chose to file for bankruptcy to restructure his debts.

50 Cent is big on the social media. He was recently hauled before the United States Bankruptcy Court to explain recent social media posts. These Instagram posts showed the rapper posing with large amounts of cash. Why is that a problem? 50 Cent did not declare a large amount of cash on his bankruptcy paperwork. Hiding assets from the bankruptcy court is a very big deal.

Complete Disclosure is Required in the Bankruptcy Court

Bankruptcy filers owe the court and creditors an absolute duty of full disclosure. A typical consumer Chapter 7 bankruptcy petition consists of over 60 pages of documents. These documents require disclosure of assets, creditors, and income information. Answers to numerous questions about the debtor’s financial affairs are also required.

All bankruptcy documents are signed under penalty of perjury. People that lie on the bankruptcy forms or attempt to hide assets can find themselves being investigated by the FBI. Lying or hiding things during the bankruptcy process is a federal felony.

Simply forgetting something isn’t an excuse. In most cases, bankruptcy filers are in control of the timing of their bankruptcy. My office works closely with debtors to ensure the accuracy of their paperwork before it is sent to the court. Extra diligence prior to filing pays dividends during the bankruptcy process.

How to Avoid Trouble

Currently I do not ask debtors whether they have a large stack of money sitting on their bedroom floor. Maybe I should start. Typical assets that are easy to forget about include:

  • Assets that belong to you but are in the possession of another person.
  • Intangible assets such as lawsuits, potential lawsuits, pending bonuses, and tax refunds.
  • Security deposits paid to landlord at the beginning of a tenancy.
  • Savings bonds.
  • Pre-paid debit cards.
  • Seldom-used bank accounts.

When declaring bankruptcy, make sure to take the time to answer all of the required questions carefully. I help people in the Sacramento Area successfully get through the bankruptcy process. Please call (916) 333-2222 to discuss your bankruptcy options. 

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Continued Garnishment After Bankruptcy Filing

Sacramento Bankruptcy Lawyer Rick MorinOne of the most powerful provisions of bankruptcy law is called the “automatic stay.” The automatic stay prevents your creditors from taking action against you once you have declared bankruptcy. But what happens if you have a continued garnishment of your wages even after you file for bankruptcy?

By law, your creditors are required to cease all collection activity immediately upon the filing of your bankruptcy case. For my clients that have wage garnishments or bank levies, I always send a notice to the creditor once the bankruptcy is filed. This is followed up by the official notification sent from the United State Bankruptcy Court. The official notice usually goes out about a week after filing. By doing this, it will be difficult for the creditor to say that they never received notice of the bankruptcy.

Not all creditors take appropriate action after receiving notice of a bankruptcy. Some creditors are lazy. Some creditors just don’t care. Some creditors are just too big and the bankruptcy notification gets lost in the shuffle. No matter the excuse, the result to the bankruptcy filer is the same — continued collection activity even after the bankruptcy.

Any post-filing collection activity can be sanctioned by the bankruptcy court. In most cases, I make an attempt to reach out to the creditor to remedy the problem. If the creditor is not responsive, I can file a motion with the bankruptcy court to sanction the creditor for its willful violation of the automatic stay.

If the conduct of the creditor is egregious, the court will often issue a penalty against the creditor. Yes, you read this right. In some cases, you can recover money from a creditor that flouted the bankruptcy rules!

Bankruptcy laws are written to protect both debtors and creditors. My clients always play by the rules, but not all creditors do. I have personally gone after creditors that haven’t followed the rules and won judgements in my client’s favor.

Don’t delay any longer. Call my office at (916) 333-2222 to discuss your bankruptcy options. 

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4 Common Myths About Sacramento Bankruptcy

Bankruptcy Myths Sacramento

As a bankruptcy lawyer in Sacramento, I hear all kinds of misinformation about bankruptcy. Here are the top five myths about bankruptcy that I hear on a regular basis.

Myth 1. I can’t keep my car when I file bankruptcy

It is extremely rare for a person to lose their car during the bankruptcy process. In a typical bankruptcy, the bankruptcy filer doesn’t lose any of their property, much less their car. In most cases, your car is protected from being taken by the bankruptcy trustee. If you are worried about losing your car when you file for bankruptcy, you should discuss your situation with a qualified bankruptcy attorney.

Myth 2. My wage garnishment won’t stop until the end of my bankruptcy

When a person declares bankruptcy, all collection activity has to stop immediately! This includes wage garnishments and bank levies. A garnishment must cease immediately upon the filing of the bankruptcy case. You don’t have to wait until your bankruptcy discharge (at the end of the bankruptcy) to get relief from garnishments. This is why it is important to file your bankruptcy case as soon as you know that a garnishment is about to hit your paycheck. The sooner you file, the better chance you will have at keeping all of your wages to yourself.

Myth 3. The judge is going to criticize the reasons why I got into bankruptcy

This is completely untrue! For the most part, nobody cares why you are in need of bankruptcy assistance. Bankruptcy filers are there for numerous reasons, including job loss, medical issues, gambling, tax problems, or just making poor financial decisions. The important part is that you “play by the rules” in the bankruptcy court by following the requirements of the bankruptcy code.

Myth 4. Bankruptcy is too expensive for me

My law firm strives to make bankruptcy as affordable as possible. While each bankruptcy case is complex and requires serious work to complete successfully, we are able to provide real value to our clients. Lastly, the cost of not filing for bankruptcy is the real problem. If you’re endlessly paying high interest credit cards, payday loans, having money garnished from your wages, or are facing lawsuits, you should seriously consider whether bankruptcy is a better alternative than doing nothing.

If you have questions about declaring bankruptcy in the Sacramento area, please call my office at (916) 333-2222.

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What Happens to Tax Refunds in Bankruptcy 2016?

Tax Refunds and Bankruptcy Sacramento

It is that time of year again. If you earned wages in 2015, your employer will be sending you a W-2 any day now. Hopefully you will be getting some type of tax refund from either the Franchise Tax Board or the IRS. How does that affect a bankruptcy case?

Tax Refunds in General

The main reason that you would receive tax refunds is because you over-withheld taxes from your paycheck. I would rather over-withhold rather than end up owing each year. Many people use their tax refunds as a type of savings account.

Your tax refund is considered an asset. Someone, the government, owes you money. Until such time that you have received your money back from the government, your tax refunds are considered an “account receivable.”

Tax Refunds and Bankruptcy

As an asset, your tax refund must be disclosed and accounted for in your bankruptcy filing. If you don’t take the appropriate steps to protect your tax refund, the bankruptcy trustee assigned to your case can intercept and take your refund from you.

For most bankruptcy filers in California, tax refunds can be protected under California’s “wildcard” exemption. This exemption allows a bankruptcy filer to protect a certain amount of assets of any type, whether it be cars, cash in the bank, or even a tax refund.

For bankruptcy filers using 704 exemptions to protect significant amounts of equity in a home, the wildcard does not apply. This can leave a tax refund without an exemption and subject to intercept by the bankruptcy trustee. If you’re protection a large equity cushion in your house, surrendering one year’s tax refund is a reasonable tradeoff.

Bankruptcy filers using the 704 exemptions to protect a house should carefully look at their tax withholding. If typically receive a large tax refund each year and you anticipate having to declare Chapter 7 bankruptcy, it would be wise to re-evaluate your tax withholding. You can make adjustments to ensure that there won’t be a tax refund to take.

Thinking about filing for bankruptcy in the Sacramento area in 2016? Call my office at (916) 333-2222 to discuss your bankruptcy options. Don’t delay!

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Uber Bankruptcy Sacramento

Uber Bankruptcy Sacramento

The number of people driving for Uber and Lyft these days is increasing rapidly. I have noticed many bankruptcy filers in my office reporting that they are working, at least part time, for Uber and Lyft. What does this have to do with bankruptcy? Let me tell you!

You Must Disclose All Income in a Chapter 7 Bankruptcy

Failing to disclose a source of income to the bankruptcy court can create some issues. Not everyone considers driving for Uber or Lyft to be a source of income, especially if they are just driving sporadically. However, all sources of income, even minor ones, must be disclosed.

Because there are income limits to Chapter 7 bankruptcy, extra income from Uber or Lyft can create issues. If you’re already close to the Chapter 7 Means Test limits, extra income can push you over the edge and into a Chapter 13 bankruptcy. There are some strategies to deal with this issue, but it is important to disclose all of your income sources to your attorney when you first meet.

Driving for Uber during the middle of your Chapter 7 case can also create some issues. In some cases, the bankruptcy trustee assigned to your case won’t want you running a business during your bankruptcy. This is because the bankruptcy trustee owns your liability during the pendency of your case. If you drive for Uber and file Chapter 7 bankruptcy, your attorney needs to check with your assigned Trustee to determine whether that will be a problem for them.

Extra Income in a Chapter 13 Can Increase Your Monthly Repayment

The goal of a Chapter 13 is to repay at least a portion of your debts over time under the supervision of the bankruptcy court. The court averages your monthly income over the preceding six months to determine what they think you should be able to afford to repay to your creditors.

If you are reporting extra income from Uber or Lyft during this six month look back period, your Chapter 13 payment might have to increase. But not everyone drives for Uber on a regular schedule. If you have sporadic side income from a Uber or Lyft, you should make sure that your attorney understands how often (or not) that you are out there driving.

Details really matter in a Chapter 13 bankruptcy case. You don’t want to be stuck in a Chapter 13 plan that you cannot afford. Make sure you discuss any extra income or side jobs with your attorney before you file your bankruptcy case.

I help consumers and business owners deal with debt and their finances in Sacramento. Please call me at (916) 333-2222 to discuss your bankruptcy options today. 

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Fresh Start Bankruptcy 2016

Fresh Start 2016

We all made it through the holidays and now it is 2016. Many people from the Sacramento area will be calling my office over the next few months to discuss moving forward with a fresh start bankruptcy in 2016. Here is why.

The New Year is not just a time for reflection on the previous year, but a time when we all make plans for the upcoming 12 months. Many of my clients are struggling financially for one reason or another and have decided to take the plunge with bankruptcy to get that fresh start.

From unexpected medical bills, job losses, incessant creditors, garnishments and bank levies, there are numerous reasons why people all over Northern California are seeking bankruptcy protection. My office takes pride in delivering top-notch legal services to these individuals and businesses.

Chapter 7 Bankruptcy

A Chapter 7 Bankruptcy here in Sacramento will eliminate your unsecured debt and give you breathing room from aggressive collection action. While the decision to declare bankruptcy is a difficult one, I universally hear from my clients that it was the right choice.

The bankruptcy process takes about 90 days from start to finish. For bankruptcy filers that start the process in January or February, this means that their cases will conclude in the spring. After their bankruptcy discharges, my clients can look forward to a debt-free 2016 and the ability to take control of rebuilding their credit.

You’re Not Alone

Did you know that approximately 1,000 people declare bankruptcy in the Sacramento Bankruptcy Court each month? If you are having trouble with your debt situation, you are not alone. Chapter 7 Bankruptcy is the solution to your debt woes. You will be surprised by how easy and cost-effective bankruptcy can be.

Please call my office at (916) 333-2222 to schedule an in-office bankruptcy consultation. I will personally meet with you to discuss your options and explain the best way to obtain a fresh start in 2016. 

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5 Bankruptcy Things You Need to Know Before Christmas

Sacramento Bankruptcy Lawyer Rick MorinWith Christmas just around the corner, many of you will be squeezing your paycheck to cover the extra expenses of gifts for friends, family, and coworkers. This struggle can lead to a hard look at your finances for the new year, and maybe even deciding that 2016 if finally the year to become debt free.

However, Christmas can be a tricky time if you are planning on filing for bankruptcy in the new year.

1. Watch Your Spending: Of course, it’s normal to spend more on average during the holiday season. But for many, it is also the time to finally pay back friends and family for help throughout the year. Maybe paying back mom and dad for letting you stay at their house while you were between jobs, or finally paying off that loan to your significant other to fix your car. Giving back to family and friends can feel like the right thing to do, but large payments can be construed as a preferential payment. In some cases the Court will go after loved ones to get that money back during a bankruptcy.

2. Watch Out for That Christmas Bonus: When filing for bankruptcy, the Court will look at your average monthly income for the last 6 months. This average is very important and will determine what chapter of the bankruptcy code under which you are allowed to file. So, if your income is already on the cusp of the means test, a large bonus might push you over the Chapter 7 limits and into a Chapter 13 reorganization.

3. Gifts: Have any gift items that have been passed down to you or inherited? Your great aunt’s fur coat? Your uncle’s signed baseball cards? Well during bankruptcy, you must disclose all of your personal items and their worth. In order to protect these family heirlooms, always inform your attorney of their existence before the signing — even things that you might consider to not have any real value.

4. New Year, New Forms: This last year the US Bankruptcy Court release new bankruptcy filing forms. These new forms went into effect on December 1st of this year.  The Court will not accept bankruptcies submitted using the old forms. Prevent frustration and delay and make sure that your bankruptcy is filed on the correct forms.

5. Increased Prices: Bankruptcy prices might change in 2016. If you want to become debt free in 2016, get started today.

We hope that you have a great Christmas and a happy New Year. Please call the office at (916) 333-2222 if you have any questions about getting a fresh start through bankruptcy in 2016.

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Chapter 7 Bankruptcy Dismissed Credit Report

Sacramento Bankruptcy Lawyer Rick MorinOn occasion I will get a call from someone that filed their own bankruptcy without an attorney. For one reason or another, the bankruptcy case didn’t fly and was dismissed by the court. The question is usually this: how do I remove the dismissed bankruptcy from my credit report?

The short answer is “you can’t.” Credit report agencies will likely still report that you declared bankruptcy, including the filing date and also the disposition of the bankruptcy case. In my experience, whether the bankruptcy resulted in a discharge or a dismissal doesn’t matter to the credit bureaus.

This is important. A bankruptcy filing will impact your ability to obtain credit in the short term. I usually advise my clients that the main impact on creditworthiness is during the first two years after filing Chapter 7 bankruptcy.

However, the results can be worse for a person with a dismissed bankruptcy. Not only do they get “negative points” for having a bankruptcy on their record, but they didn’t receive any of the benefits of a bankruptcy discharge. In this way, they are a worse credit risk than a person that was successful in Chapter 7 bankruptcy and obtained a discharge.

Think about it this way: a bankruptcy discharge can in fact be a positive factor for a potential creditor. A discharge means that you do not have as many obligations for your monthly income. A person with a fresh start will be able to better handle any new debt extended to them after a bankruptcy.

The deciding factor for a creditor evaluating a post-discharge debtor for new credit will squarely fall on this: what has the debtor done since receiving a discharge? Have they fallen into bad habits, or are they showing that they can handle their finances appropriately?

My main point is this: if you’re going to go through the trouble of declaring bankruptcy, make sure that you do it right the first time. If you are having trouble deciding whether or how to file bankruptcy, you should consult with an experienced Sacramento bankruptcy attorney for assistance.

Please call my office at (916) 333-2222 for a friendly bankruptcy consultation. My law firm can help guide you through the difficult bankruptcy process from start to finish. 

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Filing Bankruptcy in December? You Need to Read This.

Sacramento Bankruptcy Lawyer Rick MorinSomething big happened this month in the bankruptcy universe. The official forms provided by the United States Bankruptcy Court completely changed as of December 1, 2015.

Unlike official forms in other types of legal proceedings, these bankruptcy forms — often called the “petition and schedules” — are mandatory for all bankruptcy filers. Said another way, it is not possible to declare bankruptcy without using the official forms provided by the Court.

The folks who control what the forms look like have been working for a number of years to modernize the paperwork. For the most part, the content and questions of the forms have not drastically changed. Instead, changes are related to formatting and wording. The court also has separate forms for individual bankruptcy filers and corporate bankruptcy filers. The form numbers have changed as well.

The most obvious change people will notice is that a standard Chapter 7 bankruptcy petition is now much, much longer. Because of formatting changes, a typical bankruptcy will have an additional 10-15 pages of paper — maybe even more.

Most bankruptcy law firms utilize software that allows for the efficient production of the bankruptcy forms. I use “BestCase” here in my office. The software translates the data that I provide and places it in the appropriate spots on the bankruptcy forms. Pro se individuals can download forms bundles from the Bankruptcy Court that allow you to enter data directly onto the forms — but calculations are not done for you.

Don’t be caught off guard. If you are filing your own bankruptcy, from here on out you must use the new bankruptcy forms. The old forms are considered invalid and may not be accepted for filing by the clerk of the bankruptcy court. This is especially important if you are rushing to file to stop a garnishment or foreclosure — using the wrong forms could have disastrous results.

If you are filing for bankruptcy in the Sacramento area, you should call my office. I represent bankruptcy filers for Chapter 7 and Chapter 13 and can guide you through the process step by step. You can reach me at (916) 333-2222.

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

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Newport Coast, CA 92657

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The content on this website is intended for informational purposes only and should not be construed as legal advice. Any testimonials or endorsements do not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.