Vespa

Chapter 13 bankruptcy cases are considered “reorganization” bankruptcies. The case will last between 3 and 5 years, and during that time the debtor will repay at least a portion of that debt. Chapter 13s are great for many debtors, but they can be cumbersome because many large life decisions require court approval.

For instance, if you want to obtain a new car loan during Chapter 13, you must first seek court approval. Here is how it works. 

Let’s say that your existing car dies or you just decide that you need something different. Outside of bankruptcy, you would go to a car lot and make a deal. You might obtain financing on your own or through the dealer. In any event, the transaction will take a few hours.

During Chapter 13 bankruptcy, you are not allowed to incur new debt without court approval. In Sacramento, the car buying process isn’t so easy.

You first have to make a deal on a specific car and arrange for financing. You literally do all of the paperwork up to the point where you would sign and drive away with the car.

You then take these final details to your Chapter 13 attorney. The attorney then has to seek court approval. The process is called a “Motion to Incur Debt.” The court rules here in Sacramento typically require at least 14 days notice between when you file your motion and when it is approved by the court. During that 14 days, your car might be sold to someone else! Most car dealers won’t hold the vehicle.

Because you’re in bankruptcy, your credit might not be very good. I’m finding that clients aren’t able to obtain loans on their own with terms that the court will accept. That’s right — the court reviews the car loan details to make sure that it is appropriate for your case.

Judges here in Sacramento are loath to approve car loans with high interest rates. On the one hand, this makes perfect financial sense. High interest rates on car loans are very predatory and take advantage of people with bad credit. However, it can be frustrating to have the court deny your request to purchase a vehicle on credit, especially if your previous car died or is no longer running.

To get around these requirements, some bankruptcy filers find a credit-worthy consignor, or even have a family member take out a loan in their name. These aren’t always good options, but some creativity might be needed to get yourself out of a jam.

I am a Sacramento Bankruptcy Attorney. I help many people with Chapter 13 reorganizations. Please call my office at (916) 333-2222 if you have questions about Chapter 13 in Sacramento. 

Sacramento Bankruptcy Trustee

Unlike what you see on TV, in bankruptcy court you rarely meet your judge. Instead the court assigns your case to a “trustee” for administration. Trustees usually have previous experience with bankruptcy court and come from backgrounds in law or accounting. The role of the Sacramento Bankruptcy Trustees is to remain impartial and to ensure that you are playing by the rules.

The bankruptcy trustee assigned to your case will spend most of their time reviewing your bankruptcy paperwork and other required documents. After I file your bankruptcy case, I am required to submit certain financial statements to the trustee. These are things like bank statements, tax returns, and pay stubs. Some trustees in Sacramento require additional documentation, and we comply with each trustee’s specific requests in every case.

In addition to reviewing your documentation, your trustee will also administer your bankruptcy “Meeting of Creditors.” This is an informal court hearing where the trustee will ask you questions about your case. The goal of the trustee at the Meeting of Creditors is to: 1) ensure that you are being truthful with the court; and 2) discover whether there are any assets that could be recovered for the benefit of your creditors.

In fact, the trustee’s most important duty is to evaluate your property and assets. If they find any hidden or assets or “non-exempt” property it is their obligation to tell the court – and your creditors. In the rare case that non-exempt assets are discovered, the bankruptcy court could require you to turn over those assets to the Bankruptcy Trustee. Keep in mind that this happens very rarely. My office evaluates every bankruptcy case carefully for non-exempt assets to ensure that there are no surprises.

Even though they are not judges, bankruptcy trustees have considerable power in a bankruptcy case. The trustees in Sacramento have considerable experience and know their jobs very well. It is best to be proactive and disclose everything to your attorney before filing bankruptcy to avoid issues down the road.

If your looking to file bankruptcy in Sacramento and have questions about filing or your situation, please call our office at (916) 333-2222.

Sacramento Bankruptcy Court

The Sacramento Bankruptcy Court is a big place with multiple floors, departments and functions. I’m going to briefly describe the Court from top to bottom for folks who have never been there before.

The first thing that you need to know is that the Sacramento Bankruptcy Court is not a stand-alone court. The Bankruptcy Court is located at 501 I Street in Sacramento, also known as the Robert T. Matsui Federal Courthouse. The courthouse houses the Federal District court, the Bankruptcy Court, and various other governmental offices.

Security

To get into the courthouse, you first must go through security. The security setup at the courthouse is very similar to the airport. They have two lines for metal detectors, and everyone entering the courthouse must first go through security. Some types of shoes and belts will set off the metal detectors, so be prepared to remove shoes, belts, and large items of jewelry.

Besides the obvious stuff, the security will not allow cameras into the courthouse. So leave your cameras behind. Cell phones and smart phones are fine, but you should make sure that you silence them before entering the courthouse.

Clerk’s Office

The Bankruptcy Clerk’s Office is located on the Third Floor of the courthouse. This is where you may file paper documents with the court, obtain information regarding the status of your bankruptcy, or pay your bankruptcy filing fee. The Clerk’s Office is not allowed to give you legal advice. That is what your attorney is for.

Tip: if you are paying the bankruptcy filing fee with installments, make sure that you bring exact change to the court. The Clerk will not issue change, and they only accept cash.

Bankruptcy Help Desk

Also located on the Third Floor is the Bankruptcy Help Desk. Volunteer attorneys (including me) are available each Friday from 9 am to 12 pm. The volunteer attorneys are allowed to answer general questions regarding the bankruptcy process. They also allowed to provide assistance with the bankruptcy forms. While specific legal advice cannot be provided, many attendees find a visit to the help desk to be very productive.

Hearing Rooms

In every bankruptcy case, there is a “meeting of creditors.” Each debtor is required to appear to the meeting of creditors to answer basic questions about their bankruptcy. The meeting of creditors is administered by the Bankruptcy Trustee. As the name implies, this is also an opportunity for your creditors to appear and ask questions of you.

Meetings of creditors occur in hearing rooms located at on the 7th Floor of the courthouse. There are three separate hearing rooms, and hearings could be going on simultaneously in all three rooms — depending on how busy the court is at a given time.

The hearing rooms are less formal than the actual courtrooms, and the meeting of creditors is generally less formal than an actual court session as well.

Courtrooms

The Sacramento Bankruptcy Court has five courtrooms dedicated to bankruptcy proceedings. The courtrooms are located on the Sixth and Seventh floor. These courtrooms look just like you would expect a federal courtroom to look like, and the proceedings here are very formal. In most consumer bankruptcy cases, you as the debtor aren’t required to appear before a judge. Most cases are administered from start to finish by the Bankruptcy Trustee.

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

Declare Bankruptcy

I often consult with people that have waited far too long to declare bankruptcy in Sacramento. Unnecessary delays can be dangerous for a few reasons. But I want to focus on one reason that could cost you big money.

If you own a home in Sacramento, you are used to wild fluctuations in house values. Property can rapidly appreciate here — and most homeowners don’t complain about that fact. When it comes to filing for bankruptcy, a homeowner needs to pay special attention to the value of his or her house.

House values in Sacramento have come back to the point that many homeowners now have “equity” in their homes again. “Equity” is calculated by subtracting the total loans / liens on your house from the market value. So if your house is worth $300,000 on the market, but your mortgage balance is only $250,000, you would have $50,000 in “equity” in your house.

Home equity is an asset for bankruptcy purposes just like cash in the bank. You must exempt, or protect, this asset when you declare Chapter 7 bankruptcy. If you do not exempt your equity, or if the equity is more than the allowable exemption, the bankruptcy Trustee would have the ability to sell your house for the benefit of your creditors.

Because house prices are appreciating again in Sacramento, waiting too long to declare bankruptcy could result in you having too much equity in your house. If you don’t want the court to sell your house in a Chapter 7 bankruptcy, you would have to consider a Chapter 13 reorganization. In a Chapter 13, you will have to repay a portion of your debts over time. Even with too much equity in your home, everything will be protected in a Chapter 13 — but you do have to repay some debts as a result.

This is why I often tell people not to delay when considering declaring bankruptcy. A delay could price you out of a Chapter 7 bankruptcy, or it could result in an aggressive creditor seizing your assets.

The sooner you start the bankruptcy process, the sooner it will be over! Call my office if you have any questions about Chapter 7 or Chapter 13 bankruptcy in Sacramento. My number is (916) 333-2222.

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. 

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.

My office now has a new phone number. You can reach me at (916) 333-2222.

Sacramento Bankruptcy Lawyer Rick MorinThere were 1,021 Chapter 7 Bankruptcy cases filed in the Sacramento area during May 2014. That is a very slight decrease from April 2014 and ends the four-month series of increase of bankruptcy filings in Sacramento.

Of the 1,021 new Chapter 7 cases, 121 were filed by pro se debtors. That works out to be almost 12% 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 235 practicing Chapter 7 Bankruptcy attorneys in Sacramento last month. The top Chapter 7 filer had 71 cases — almost 8% of the total attorney-filed caseload. 186 of the 235 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.

Sacramento Bankruptcy Lawyer Rick MorinAccording 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.

Sacramento Bankruptcy Lawyer Rick MorinThe 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.