Chapter 7 Bankruptcy – Page 9 – Law Office of Rick Morin, PC

Bankruptcy Law, Chapter 7 Bankruptcy, Creditors

How to Surrender a Car in Bankruptcy

Tow Truck Did you know that you can easily surrender your car in a Chapter 7 bankruptcy? You can escape high loan payments, punishing interest, and avoid lawsuits.

If you lease or finance a car and attempt to surrender the car outside of bankruptcy, your lender will likely charge you all sorts of fees. Many times, a lender will sue a borrower for the “deficiency balance” of the loan.

A deficiency balance is the amount of money you still owe the lender even after surrendering the car. Deficiency balances can easily be many thousands of dollars after the dust has settled. It doesn’t matter if you voluntarily surrender your car or whether it is repossessed — often time there is a debt owed.

Surrendering a car during the bankruptcy process is completely different. At the outset of your case, we notify the Bankruptcy Court and your lender that you intend to surrender your vehicle.

After your case is started, your lender may attempt to talk you out of surrendering your car. They would prefer that you keep the car and continue making payments. However, the decision is 100% yours to make.

Some lenders may wait until after your bankruptcy case is over to retake possession of your car. Others are more aggressive and will seek the return of the car before your bankruptcy is over.

Once you make the decision to surrender your car in the bankruptcy, it is best that you start making alternative transportation arrangements. Most lenders will communicate with my office or my clients directly to set up a day and time to voluntarily surrender the car. Others, like Wells Fargo, are very inconsistent and have mislead my clients in the past. Therefore, once the surrender date approaches, it is wise to remove all of your possessions from the car just in case it is taken without your knowledge.

If you are not sure what you want to do with your car, the safest bet is to indicate that you want to keep the car and continue making payments. You have until the end of your bankruptcy case to change your mind. In fact, this is fairly common.

Please call my office at (916) 333-2222 if you have any questions about surrendering your car in a Chapter 7 Bankruptcy in Sacramento.

July 6, 2014/by Attorney Rick Morin

Bankruptcy Law, Bankruptcy Rules, Chapter 7 Bankruptcy

Sacramento Bankruptcy Filing Fee Installment Request

I have written about the cost of Chapter 7 Bankruptcy in Sacramento as well as recent increases to the filing fees here in town. One question I often get is whether the Bankruptcy Filing Fee can be paid in installments. The answer is yes!

Currently the Chapter 7 Bankruptcy filing fee is $335. This amount does not go to the attorneys. Rather, it is the fee that the United States Bankruptcy Court charges to start a new bankruptcy case. Think of it as the “price of admission” to bankruptcy court.

Part of the fee pays for the court itself, including staff and facilities. Part of the filing fee compensates the Chapter 7 Trustee that is assigned to your case.

While bankruptcy can be expensive both in attorney’s fees and the court filing fee, there are ways to help reduce the burden. One option my clients ask for is the Chapter 7 Bankruptcy Filing Fee Installment Plan.

At the start of a case, we can ask the Judge to pay the filing fee over time. This can be helpful to a person that needs to file a case immediately to stop a wage garnishment or bank levy. Most of the time the requests are granted.

Currently, the Bankruptcy Court will allow a person to request up to four installments. Because the filing fee is $335, that works out to be just over $83 per month over four months.

Typically I will propose to the Court that the first payment be due one month after the filing of the case. Each subsequent payment is due a month after that, until all $335 has been paid in full.

A person considering the payment plan for filing fees needs to be careful! The Bankruptcy Court can close your Chapter 7 case if you do not make all of your payments on time. Or, if at the end of the case, you owe any money to the court, they will dismiss your case without discharge. If this happens, you will have to pay additional attorney’s fees and a new filing fee to reopen your case — just to pay your remaining balance.

If you have any questions about the filing fee for Chapter 7 Bankruptcy in Sacramento, please call my office at (916) 333-2222.

June 30, 2014/by Attorney Rick Morin

Bankruptcy Law, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

Bankruptcy Can Get Your Driver’s License Back

Chapter 7 Bankruptcy is an important tool that can get you a fresh start. But did you know that bankruptcy can help you get your driver’s license back here in California?

NOTE: Many people call my office not having read this entire post. This trick works only for civil judgements, NOT criminal restitution, unpaid child support, traffic tickets or parking tickets.

The DMV has the authority under California Vehicle Code section 16370 to suspend your driver’s license for the non-payment of certain auto-related judgement debts.

These types of debts are typically related to a car accident where the drive did not have insurance. California law requires that all drivers have the appropriate level of insurance to be on the road.

When a non-insured driver causes an accident and is later sued for damages, this can result in a judgement. If the person does not pay the judgement, the DMV can be notified. This will lead to the suspension of your driver’s license until you pay the judgement.

Most judgements are considered unsecured debts. All unsecured debts are wiped out (called a discharge in legal terms) in a Chapter 7 Bankruptcy. This means that even though you were sued and the state court ordered you to pay someone else, this debt will be discharged in your bankruptcy case.

Remember: Federal bankruptcy law prohibits any person or entity from taking collection activity against a person that has discharged their debts. Withholding a driver’s license against a person merely because they owe a debt can be considered a collection activity. Because Federal law trumps California law, the DMV can not hold up your driver’s license merely because you owe a debt from a car accident. Therefore, filing bankruptcy can help you get your driver’s license back.

Once your Chapter 7 Bankruptcy case is complete, you can contact the DMV to inform them that your judgement has been discharged. The DMV will ask for proof of insurance and some other paperwork. Once this paperwork is complete, the DMV will lift the 16370 hold on your license.

It is important to note that this process does not apply to judgement debts from DUI accidents. Bankruptcy law is clear that DUI-related debts are not discharged in a Chapter 7 Bankruptcy case.

If you need help filing bankruptcy to get your California Driver’s License back from the DMV, please contact my office. I can be reached at (916) 333-2222.

June 9, 2014/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Local Bankruptcy News

Medical Bills: The Top Cause of Bankruptcy

According to this article from CNBC, medical bills are the biggest cause of bankruptcies. There are many reasons why people seek bankruptcy protection. Unexpected medical bills can be especially devastating. Why struggle with medical debt if you don’t have to?

Medical bills can be difficult to deal with for a number of reasons. First, they typically come as a large surprise. A person might be involved in a bad car accident or fall victim to a devastating illness. These events are impossible to plan for. Second, unless a person has good insurance coverage, serious injury or illness can be very expensive.

I have seen clients with medical bills well over $100,000. It can take a very long time to pay off such a large debt. And that is if your medical provider will let you make payments without interest. Most won’t.

Filing bankruptcy because of medical debt is a difficult decision. If your medical bills are a large burden on your life and impacting your recovery, bankruptcy can help alleviate this stress.

A person thinking about bankruptcy because of medical debt has a very important decision to make. No one should take the decision to file bankruptcy lightly. However, bankruptcy is an effective tool that allows a person to get their life back on track.

Some people think that medical bills are not dischargeable in bankruptcy. This is not true. Almost all medical debt is considered “unsecured debt.” With a few exceptions, all unsecured debt is wiped out in Chapter 7 bankruptcy — including medical bills.

A fresh financial start is critical for people recovering from catastrophic injury or illness. Don’t let the stress and uncertainty of large medical bills delay your recovery. Bankruptcy can provide immediate relief.

Please contact my office if you have any questions about bankruptcy and medical bills. I can be reached at (916) 333-2222.

May 26, 2014/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Local Bankruptcy News

Increased Bankruptcy Filing Fees in Sacramento

The Bankruptcy Court in Sacramento recently alerted Sacramento Bankruptcy Attorneys to changes to the bankruptcy filing fees for Chapter 7 and Chapter 13 bankruptcy cases.

Effective June 1, 2014, the bankruptcy filing fee will go up for the most commonly filed bankruptcy cases in Sacramento.

The filing fee for a new Chapter 7 case will be $335. The old filing fee was $306.

The filing fee for a new Chapter 13 case will go up to $310. Previously, the Chapter 13 filing fee was $281.

You can see a list of all of the changes made to the fee schedule at the Eastern District of California’s website.

As a service to my clients that have signed up for their bankruptcy prior to the fee change, I will be crediting the filing fee difference. Clients retain my firm after the June 1, 2014 date will be required to pay the increased filing fee for their Chapter 7 or Chapter 13 bankruptcy.

Please contact my office should you have any questions about the new bankruptcy fee schedule in Sacramento. I can be reached at (916) 333-2222.

May 20, 2014/by Attorney Rick Morin

Chapter 7 Bankruptcy, Local Bankruptcy News

Chapter 7 Bankruptcy April 2014

There were 1036 Chapter 7 Bankruptcy cases filed in the Sacramento area during April 2014. That is a slight increase from March 2014 and continues the upward trend on bankruptcy filings in Sacramento.

Of the 1036 new Chapter 7 cases, 122 were filed by pro se debtors. That works out to be about 11% of all Chapter 7 cases. “Pro se” means that the debtors filed their cases without the assistance of an attorney or law firm.

There were 234 practicing Chapter 7 Bankruptcy attorneys in Sacramento last month. The top Chapter 7 filer had 43 cases — almost 5% of the total attorney-filed caseload. 173 of the 234 practicing Chapter 7 Bankruptcy attorneys filed five or fewer Chapter 7 cases during March.

I am always available to discuss Chapter 7 or Chapter 13 Bankruptcy. Please contact my office with any questions. I can be reached at (916) 333-2222.

May 6, 2014/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

Don’t Bank at Wells Fargo

There are many moving parts when a person is considering filing a Chapter 7 or Chapter 13 bankruptcy. One important consideration is where you have bank accounts.

To be blunt: Wells Fargo is the worst bank on the planet. Just this week Wells Fargo repossessed a car of one of my clients. They did so without warning, despite telling both me and my client that they would set up a time to voluntarily surrender the car.

By taking my client’s car without warning, my client was stranded with no way to pick up her children from school. Thanks, Wells Fargo.

Adding insult to injury is the fact that my client and I had tried for months to surrender this car. Wells Fargo insisted upon receiving the Court’s permission before doing so. That’s fine. But then swooping in during the middle of the day and taking my client’s car full of her personal property? That’s not OK.

Wells Fargo “customer service” and their “bankruptcy department” were of absolutely no help. Dealing with mega banks like Wells Fargo is only slightly more fun than hitting your hand with a huge hammer.

The story above is just one reason why you should not bank at Wells Fargo, especially if you are filing bankruptcy. I advise all of my clients to close any bank accounts at which the client owes money. This is because most banks will close your accounts anyways. Some, like Wells Fargo, are known to freeze any money in your accounts upon the filing of a bankruptcy.

It is important to get all of your ducks in a row prior to filing your case. As you can see, banking arrangements should be at the top of your list. It may be difficult to open a new bank account after the filing of your case. It is a good idea to open your new checking and savings accounts prior to filing.

Please call my office if you have any questions about the steps you should take prior to filing Chapter 7 or Chapter 13 Bankruptcy in Sacramento. I am happy to help. I can be reached at (916) 333-2222. And remember, don’t bank at Wells Fargo.

April 26, 2014/by Attorney Rick Morin

Bankruptcy Law, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

Spousal Waiver in Bankruptcy: What Happens if Your Spouse Won’t Sign?

Spousal waivers in California bankruptcy cases are not an issue when both spouses file bankruptcy together. However, bad things can happen when one spouse files bankruptcy on their own without first having the non-filing spouse sign the waiver.

As I covered back in January, California law requires that the non-filing spouse sign a spousal waiver if the filing spouse elects to use California’s 703 bankruptcy exemptions. The waiver is there to prevent two spouses from filing separate bankruptcy cases and electing two use California’s 703 and 704 exemptions at the same time.

Occasionally, a person will want to file bankruptcy when they are separated, but not yet divorced. A debtor in this situation must be careful. There can be grave consequences in a Chapter 7 Bankruptcy if the debtor can not obtain their spouse’s signature on the spousal waiver.

A majority of my bankruptcy clients elect to use California’s 703 exemptions because of the “wildcard exemption.” The wildcard exemption can be used to protect any asset in a bankruptcy, including cash in bank accounts and impending tax refunds.

The problem that can arise with spousal waivers is this: a debtor files a Chapter 7 bankruptcy using California’s 703 exemptions. The debtor files the case without first obtaining the signed spousal waiver. After filing the case, the debtor is unable to get the non-filing spouse to sign the spousal waiver.

The non-filing spouse may object to the waiver for any number of reasons, including that they just don’t want to get along with their spouse.

Without a valid spousal waiver signed and submitted to the Court, the Bankruptcy Trustee can object to the debtor’s use of the California 703 exemptions. This would force the debtor to switch to California’s 704 exemptions. As an example, if the debtor was attempting to exempt a $5,000 tax refund, being forced to use the California 704 exemptions would result in the debtor losing the tax refund.

Before filing a Chapter 7 Bankruptcy with only one spouse, it is critical to obtain the non-filing spouse’s signature on the spousal waiver. This can prevent the loss of assets to the Bankruptcy Trustee. As a bankruptcy attorney, I will not rely on a promise from one spouse that they will sign. I will not file the case without first obtaining the signature.

If you have any questions about Spousal Waivers in Chapter 7 Bankruptcy cases in Sacramento, please contact my office. I can be reached at (916) 333-2222.

April 22, 2014/by Attorney Rick Morin

Chapter 7 Bankruptcy, Local Bankruptcy News

Chapter 7 Bankruptcy March 2014

There were 995 Chapter 7 Bankruptcy cases filed in the Sacramento area during March 2014. That is about a 20% increase from February 2014.

Of the 995 new Chapter 7 cases, 109 were filed by pro se debtors. That works out to be about 11% 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 232 practicing Chapter 7 Bankruptcy attorneys in Sacramento last month. The top Chapter 7 filer had 47 cases — over 5% of the total attorney-filed caseload. 173 of the 232 practicing Chapter 7 Bankruptcy attorneys filed five or fewer Chapter 7 cases during March.

I am always available to discuss Chapter 7 or Chapter 13 Bankruptcy. Please contact my office with any questions. I can be reached at (916) 333-2222.

April 6, 2014/by Attorney Rick Morin

Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Creditors

Bankruptcy Alternatives: You Have Options

Bankruptcy isn’t always the right fit for people in financial distress. Luckily, there are bankruptcy alternatives that can provide relief under the right circumstances.

Bankruptcy is intended to provide relief for innocent people who find themselves in unfortunate circumstances. Typical issues that lead to bankruptcy include the loss of a job, an investment gone south, or the cumulative effects of too much debt.

Not everyone wants to file bankruptcy. Others don’t qualify for a Chapter 7 Bankruptcy and Chapter 13 Bankruptcy isn’t the right fit. Luckily, there are alternatives that might provide some relief.

Bankruptcy Alternative: Voluntary Debt Repayment Plan

One alternative is to work out a debt repayment plan directly with your creditors. Depending on your creditor, this might be a viable option. Other creditors aren’t so willing to help a distressed consumer.

The time to work out a repayment plan is prior to the creditor filing a lawsuit. Without proper representation, a lawsuit by your one of your creditors will typically result in a judgement including attorney’s fees, interest, and court costs. With a judgement in hand, not many creditors will be willing to work out a favorable deal.

Bankruptcy Alternative: Restructure Your “Bad” Debt

Another option is restructuring your debt. This is an option for a person that finds him or herself with too much “bad” debt. When I say bad debt, I mean high-interest debt or debt that is draining too much of your monthly income.

A person in this situation may try to restructure the debt by obtaining a new loan at more favorable terms from a different creditor, and then using those funds to pay off the other loan. A high interest car loan comes to mind. A person seeking to restructure their debt must do so before their credit is impacted by late pays, no pays or collection activity. So it isn’t always an option.

Bankruptcy Alternative: Do Nothing!

This other bankruptcy alternative might sound like bad advice. But sometimes it is the best option: do nothing. You might have heard a lawyer say that a person is “judgement proof.” What they are really saying is that the person has no assets or income worth taking. All the judgements in the world won’t get any money out of such a person.

Ignoring the phone, changing bank accounts, or even moving, can help provide short-term relief from your creditors. But beware: I have seen judgement creditors come back 10 years post-judgement and wipe out thousands of dollars from a client’s bank account. Without any warning! Hiding only works for so long.

Choosing the right tool for a given task is very important. Ultimately, it is up to you to determine how best to manage your finances and legal affairs. I really enjoy answering questions regarding Chapter 7 or Chapter 13 bankruptcy or bankruptcy alternatives. Please call my office at (916) 333-2222 for a free bankruptcy consultation.

March 16, 2014/by Attorney Rick Morin