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. 

Bankruptcy CreditorsYou’re done with your bankruptcy! Congratulations on achieving a fresh start on your finances. Now you need to start rebuilding your credit. But wait: a nefarious creditor has started contacting you about one of your pre-bankruptcy debts. What To Do If a Creditor Contacts You After Bankruptcy?

There are a few reasons why a pre-bankruptcy creditor might try to contact you after your case has been discharged. It could be an innocent mistake. You should inform the creditor that you declared bankruptcy and already received your bankruptcy discharge. The creditor will likely want to know your bankruptcy case number for their records. While technically contacting you after your debts have been discharged is illegal (mistake or not), as long as the creditor stops bugging you it’s not that big of a deal.

However, not all post-bankruptcy contact is a result of an innocent mistake. Some creditors are sloppy with their handling of bankruptcy cases and habitually violate bankruptcy law by contacting debtors. In these cases, my office is very aggressive about making sure that the creditor fixes these mistakes.

Other creditors actually intend to violate bankruptcy law and pursue debtors after discharge. They hope that a debtor isn’t familiar with post-bankruptcy laws and they try to trick debtors into paying back a debt. Others will put incorrect items on a debtor’s credit report at an inopportune time, and will demand payment to take the credit item off of the report. These activities are highly illegal and the bankruptcy courts have the power to order sanctions against devious creditors. Placing incorrect items on a credit report is a violation of federal law and gives rise to additional legal claims against a creditor.

I advise all of my clients to be vigilant during and after their bankruptcies for illegal conduct by their creditors. In some cases I can bring legal action against these creditors and obtain damages for the client!

Don’t ignore post-bankruptcy communications from your creditors. Contact me at (916) 333-2222 if you suspect that a creditor is harassing you or ignoring your bankruptcy discharge. 

Sacramento Bankruptcy Lawyer Rick MorinI have been seeing more and more clients with large debts from online loan companies. These loans are proving to be toxic and a fast track to the bankruptcy court.

In a financial jam, a quick infusion of cash might seem like just what the doctor ordered. And in some cases, this is absolutely true. But before accepting a loan, you must first determine whether the terms of the loan are going to cause more pain than they are worth.

Spurred by incessant advertising on TV and the internet, many of bankruptcy clients have at least one unsecured loan through a payday loan company or online lender. These loans carry interest rates in excess of 100% per year. At such a high interest rate, it is nearly impossible for these clients to ever actually repay the loan. I am quite frankly surprised that these abusive loans are even legal — but they are.

The terms of these loans are not the end of the problems either. Most of the loans require the debtor to authorize the lender to automatically withdraw loan payments directly from the debtor’s checking account. In some cases, these payments are scheduled once a week. And because the interest rates on these loans are so high, these payments don’t actually make much of a dent in the principal balance owed to the lender.

Taking out these high-interest loans is typically a desperate move to stay afloat. But no one should have to borrow money on such outrageous terms. Once the online lender starts deducting money each week from a person’s checking account (often putting them negative), the next step is usually a call to my office for bankruptcy.

Bankruptcy can get you a fresh start with your finances. I can get you out of the never-ending cycle of predatory payday and online loans. If you find yourself depending on these toxic financial products to get by, you probably already know that bankruptcy is the real solution to your debt issues.

Please call my office at (916) 333-2222 to discuss what bankruptcy can do for you. You will be surprised by how quickly and easily my office can help rein in your financial issues.

California State Capitol in Sacramento

I have been watching Senate Bill 308 quite closely. The bill would have modernized California’s bankruptcy exemptions to allow debtors additional tools to protect their assets from the reach of creditors. Unfortunately, SB 308 failed to pass this year.

The first half of the 2015-16 California legislative session came to a conclusion on Friday, September 11. All bills headed to the Governor for his signature or veto must have been approved by both the Senate and Assembly by this deadline.

SB 308 started off as a strong effort to modernize California’s bankruptcy exemptions. The bill passed numerous tests, including several committee and floor votes. Along the way, the bill was amended several times to reduce and revise the proposed changes to California exception laws. While SB 308 was not as strong as it was when it began its life in the Senate, the bill still had plenty to offer California bankruptcy filers.

The bill ultimately stalled on the Assembly floor. The bill was generally opposed by Republican legislators and supported by Democrats. Republicans hold such a minority position in the Legislature that their support for the bill wasn’t ultimately needed. So it was a handful of democrats that kept the bill from passing. These democrat legislators didn’t outright vote “NO” on the bill. They instead “took a walk” and did not vote either way. In fact, over 20 legislatures failed to cast a vote on SB 308’s final floor vote in the Assembly.

The bill was strongly opposed by the California Bankers Association and the California Association of Collector. Both groups represent the interests of huge banks and debt collection firms. It is no surprise that they would oppose SB 308.

SB 308 isn’t totally dead. Senator Wieckowski can revive the bill in the second half of the legislative session in 2016. Or he could start fresh with a new proposal altogether. But for now, California exemption laws will remain the same.

If you have questions about Chapter 7 or Chapter 13 bankruptcy, please call my office at (916) 333-2222.

Donald Trump

Donald Trump certainly has been in the news a lot recently. Whatever you think about his politics or show business credentials, the man clearly knows his way around a United States Bankruptcy court.

A brief review of bankruptcy court information reveals that Donald Trump’s organizations have filed at least five bankruptcies since 1990. Each of these bankruptcy cases were filed under Chapter 11. Chapter 11 bankruptcy allows a person or a corporation to reorganize their debts under the supervision of the bankruptcy court.

Most Chapter 11 cases are for very large businesses or wealthy individuals. Think 50 Cent, or General Motors — they both filed Chapter 11 bankruptcy to help reorganize their respective debts.

Donald Trump’s first Chapter 11 case was related to his Taj Mahal casino and resort in Atlantic City. The casino, opened in the spring of 1990, was forced into Chapter 11 in November of that same year, presumably because the business could not support the large amount of debt payments associated with the resort’s construction.

Trump Plaza Hotel was forced into Chapter 11 bankruptcy in 1992 — again because of a crushing debt load.

All things bankruptcy was quiet for Donald Trump until 2004, when Trump Hotels & Casino Reports rushed into bankruptcy court. The bankruptcy filing gave the corporation additional leverage for Donald Trump to work out deals with his creditors. The company emerged from bankruptcy as Trump Entertainment Resorts Holdings.

Trump Entertainment Resorts Holdings needed to declare bankruptcy again in 2009, now having accumulated over $1.2 billion in debt. Trump and his creditors tussled over who would control the resorts and whether Donald Trump’s name would remain on the business. Trump and his creditors ultimately came to an agreement with the assistance of the Bankruptcy Court.

Donald Trump’s most recent bankruptcy filing was in 2014. Trump Entertainment Resorts Inc declared bankruptcy again, how reporting debts somewhere less than $500 million. This bankruptcy case is still open, with the court approving the Chapter 11 reorganization plan in March of 2015.

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.

 

 

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. 

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. 

Debt Collector

My office has been receiving a surprising number of phone calls recently from people thinking about filing bankruptcy with one common trait: they were recently called by a extremely aggressive bill collector. Read more below to find out what you need to know about these bill collection scams in Sacramento.

Bill collectors get a bad rap because of a minority of people in their industry. However, the number of “bad” collectors appears to be in the rise. At least that’s what the phone calls to my bankruptcy law firm seem to indicate.

Potential bankruptcy filers calling my office all tell a similar tale. They defaulted on a debt in the past 10 years or so and never heard from the company again. Then, out of nowhere, they were flooded with aggressive phone calls. Not only to their personal numbers, but to work and to family and friends.

In one case, a client of mine agreed to pay an aggressive collector some money because he was hounding her at work. What the client did not know at the time was the debt was too old — it was beyond the “statute of limitations.” The client had no legal obligation to pay the debt!

Other clients have told me of stories of collectors threatening them with arrest or criminal prosecution for failing to pay a debt. My advice here is the same that I give to my clients: there are very, very few circumstances in which a person can be arrested for failing to pay a debt in America. This is jut another dirty trick that collectors use to try to get any money that they can.

Again, not all collectors are bad apples. In many cases, they are pursuing legitimate debts or judgements. If you receive collection calls, whether they be legitimate or not, it is important that you consult an experienced consumer attorney.

I have helped many clients deal with bill collectors — and bankruptcy isn’t always the path that we go down. I have negotiated debt settlement offers that keep collectors at bay and also avoid the need for filing bankruptcy. Occasionally we determine that bankruptcy is the best available option. Either way, I’m happy to guide clients through this challenging process.

If you have questions about aggressive debt collectors or bankruptcy in Sacramento, please call my office at (916) 333-2222.

Sacramento Bankruptcy Lawyer Rick MorinHere in California, a judgement creditor can garnish your wages. A creditor can take up to 25% of your gross paycheck each pay period. For many of my clients, this is a disaster waiting to happen. Let me tell you how garnishments start, and how to stop it.

Before a creditor can take money from your bank account your garnish your wages, they must first sue you. Sometimes you might not even be aware that you are being sued. For instance, you might have moved recently, or the creditor failed to serve you properly.

The end result of many of these lawsuits is a “judgement.” When the court issues a judgement against you, it means that you have lost the lawsuit and the court has determined that you legally owe someone else money.

Only after a judgement may a creditor be able to garnish your wages.

After a creditor has its judgement, they can seek a “writ of execution.” This is an order from the judge that tells your employer that they must withhold money from your paycheck. Once your employer is served with the writ of execution and levy instructions, they are required by law to start turning over money to the levying officer.

The levying officer is the Sheriff’s office in the county of your employment. The levying officer is tasked with collecting funds from your employer. Once the levying officer has your funds, they turn over the funds to the judgement creditor to satisfy your debt. This will continue each paycheck until the debt is payed off, or you take action to stop the garnishment.

The most effective way to immediately stop your garnishment is to file bankruptcy. Bankruptcy will not only stop the garnishment in its tracks, but bankruptcy also eliminates your obligation to ever pay the debt again. For these reasons, a good percentage of my clients file bankruptcy just to stop a garnishment.

Once you file bankruptcy, I request that the Bankruptcy Court notify everyone involved in the garnishment process. This means your employer, the judgement creditor, the levying officer, and the court that originally issued the judgement. Once everyone is notified, your garnishment will stop!

Because of the devastating effect that a garnishment may have on your personal finances, I can quickly file your bankruptcy case to stop a wage garnishment. Please call my office if you need help stopping a garnishment. My phone number is (916) 333-2222.