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5 Smart Bankruptcy Tips for Acing Your Bankruptcy

Bankruptcy Tips and Tricks

Bankruptcy doesn’t have to be stressful or intimidating. I help dozens of people each month successfully compete the bankruptcy process. Here are some of my top bankruptcy tips for acing your bankruptcy!

1. Be Organized
Trust me, the bankruptcy process will go much more smoothly if you are organized from the start. I have seen many clients rush to do the initial paperwork then realize that they have forgotten a creditor or other piece of information. Don’t be afraid to ask questions or take your time when reviewing your bankruptcy paperwork with your attorney. After all, I wont know if something is missing if you don’t tell me.

2. Take Your Financial Management Classes ASAP
All bankruptcy filers are required to compete two financial management classes: there is one course before filing bankruptcy, and one course before your bankruptcy case is closed by the court. Be proactive and finish the classes as soon as possible to ensure your discharge isn’t delayed. As an aside, did you know that I provide my clients with the mandatory bankruptcy courses for free?

3. Be Prepared for Your Meeting of Creditors
Did you know some bankruptcy trustees will refuse to hear your case if you don’t present your driver’s license or social security card at the hearing? Plan ahead and make sure you have everything you need before your hearing date. You only want to appear at the courthouse once!

4. Close Unnecessary Bank Accounts Before You File
Decluttering your accounts can save you time and stress during the bankruptcy process. Not only will you need to report all of your accounts on your petition, but most trustees will want to see your account statements on the day you filed – even if they’re empty. Some banks will stop sending you statements once you file, so save a trip to the bank and close out the accounts you don’t need.

5. Pay Installment Payments On Time
For many filers, finances are extremely tight, so it is beneficial to elect to pay your court filing fees in installments. However, especially for Chapter 13 filers, it is very important that you pay the correct amount on time. Missing a payment might result in your case being dismissed. My office will send you a schedule of your payments that need to be made to the court, and we strongly recommend that you put these dates on your calendar.

My goal is for each and every client of mine to have a successful bankruptcy with as little hassle as possible. Call me to find out how easy bankruptcy in Sacramento can be! Our office phone number is (916) 333-2222.

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What is a Bankruptcy Asset Case?

Bankruptcy Asset Case

There are two main types of Chapter 7 bankruptcies: asset and no-asset cases. There is a huge difference between the two. Read on to learn more about a bankruptcy asset case.

Legally speaking, a Chapter 7 Bankruptcy is known as a “liquidation” bankruptcy. The bankruptcy court is empowered to liquidate your assets to provide a distribution of funds to your creditors. In more simple terms, your assets can be sold and used to pay off some of your debts in a Chapter 7 bankruptcy. Any debt that remains at the end of your case is discharged and you get a fresh start.

Over 99% of the Chapter 7 bankruptcies that I file are “no asset” bankruptcies. This means that there are no assets for the Chapter 7 Trustee to liquidate. In these cases, no property is taken from the debtor, and creditors receive no distribution of money from the court. Nearly all debts are wiped out and everyone moves on. Simple!

Occasionally a debtor will have too much property to protect (which us lawyers call “exempt”). In this case, the debtor must turn over property to the Trustee. The Trustee then sells the property at an auction, takes a commission, and distributes the rest to creditors.

The thing to remember is that Chapter 7 Trustees earn a commission on any property that they can recover. This incentivizes the Trustees to aggressively root out any hidden assets for the benefit of a debtor’s creditors. A Trustee that can recover property in a case can therefore enhancer his or her own bottom line.

Why would anyone still want to file bankruptcy is they are going to lose property to the Court? Great question! Maybe a debtor will not be able to protect their tax refund, and let’s say it would have been $2,000 this year. But remember, the debtor is discharging their unsecured debt. If they are getting rid of $50,000 in credit cards, this is a good deal! Another favorite asset for Chapter 7 Trustees is a car! Cars are easy to liquidate at auction, so Trustees always enjoy getting their hands on vehicles.

A good Chapter 7 attorney will be able to advise a client before filing whether any funds or property will need to be turned over to the Trustee. This is an important part of deciding whether Chapter 7 or Chapter 13 bankruptcy is appropriate for the client.

Asset Chapter 7 cases can be very complicated. If you need help deciding whether to file for bankruptcy, please call my office and I can walk you through the process. My phone number is (916) 333-222.

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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.

 

 

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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.

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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.

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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. 

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Payday Loans Are Worse Than Gambling

Poker
A sure sign that a person is ready to file bankruptcy is a reliance on payday loans. Let me be clear: these things are flat-out scams. Any loan with interest rates over 100% should be illegal. I’m not entirely sure why our elected representatives have not outlawed these things. Alas, they are a part of life for many people.

Taking a payday loan is often a necessity for someone in a dire financial position. The problem is that while the loan provides immediate relief in a tough time, the consequences of the payday loan are long-lasting.

The fees and interest with these loans are abusive and put desperate people into an even worse position than before the loan existed. This is especially true when people “roll over” their payday loans multiple times. A recent report indicated that over 80% of new payday loans are not paid in full on their first maturity date. And a majority of payday loans have been “rolled over” at least 10 times.

The good news is this: payday loans, just like all other forms of unsecured debt, will be eliminated after a successful Chapter 7 bankruptcy. Of course, payday loan companies don’t want you to know that. In fact, I have heard many stories where payday loan companies have flat-out lied to my clients and told them that the loans were not dischargeable in bankruptcy. Take it from an expert: these predatory loans are absolutely dischargeable in a bankruptcy. Bring it on, payday loan companies!

Everyone deserves a fresh start. If your finances are a mess, don’t turn to predatory payday loan or cash advance companies to try to make ends meet. You would probably have better luck taking that same money to a casino and putting it all on black. At least the casino won’t follow you around for years trying to get more and more of your money.

Don’t fall in the payday loan trap. If your finances need a fresh start, you should skip these scam loans and consider bankruptcy relief. My office can help you get a fresh start. Please call me at (916) 333-2222 to find out more. 

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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. 

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5 Signs You Need to File for Bankruptcy Today

Sacramento Bankruptcy Lawyer Rick MorinOne 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. 

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Top 7 Bankruptcy Myths That Must Die

Sacramento Bankruptcy Lawyer Rick MorinAs 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.

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

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500 Newport Center Drive Suite 610
Newport Beach, CA 92660

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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.