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Accurate Answers to Bankruptcy Questions Requires Accurate Information

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One of the most frustrating challenges bankruptcy lawyers and other legal professionals face is obtaining accurate information from clients or other parties.  During a free consultation we will discuss your income, expenses and assets to determine if bankruptcy can help your circumstances.  What if you do not know or are not sure about something?  Well, that is going to significantly change the answers to your questions.  Some things are more important than others, but not knowing how much money you make each month or whether your name is on title of a house will create huge problems.

For example, we recently had a client come in for a free consultation.  One of the issues in this person’s case was whether they were on title to their parent’s home, on the mortgages or on both or vice a versa.  Initially this person told me they were only on the mortgages.  Okay great.  We discussed whether they had ever made a mortgage payment, whether they had ever paid the property tax or contributed to the down payment to purchase the home.

Unfortunately it turns out this person was not only on the mortgages but on title to the house as well and they were on title and the mortgages from the time the house was purchased.  Now wait a second, this is going to change what we had originally discussed during the initial free consultation.  Bankruptcy attorneys can only base their answers to questions upon the information provide and if the information provided is not accurate the advice or answers will not be accurate either.

How hard is it to understand that if you do not know your financial circumstances how can anyone else?  One of the first steps in getting out of financial difficulties is to review your income and expenses in detail.  Look into what your assets are worth.  Then sit down and start making the hard decisions about how to spend your income.

How Do I Dispute Negative Credit History?

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As bankruptcy lawyers we have potential clients and clients ask us about their credit scores and negative history on their credit reports almost daily.  The Fair Credit Reporting Act controls how long negative history can remain on your credit report.  The limit is seven years.  In 2005, Congress reformed the Bankruptcy Code to extend the number of years a Chapter 7 bankruptcy case stays on your credit report to 10 years.  Your negative history regarding the individual accounts should be deleted or fall off in seven years.  If not, then you need to dispute the negative credit history.

How do you dispute negative credit history?  The first think you need to do is go to the Federal Trade Commission’s website and search “credit repair.”  Then scroll down a little and there will be a choice that says “Credit Repair: How to Help Yourself.”  A page of the FTC website will come up that provides step by step instructions on what you need to do.  The FTC even provides a sample letter for you to use and the addresses and contact information for all three credit bureaus.

Basically you need to write a letter to all three credit bureaus disputing the negative history appearing on your credit report.  The FTC provides the names and addresses for each.  Once the credit bureau receives your letter they will conduct an investigation to determine if the history is correct.  Negative history that cannot be substantiated should be removed.  Negative history that should have been removed will only drag down your credit score.

Make the credit bureaus do their job and investigate the negative history on your credit report.  Mistakes are made all the time and can be very costly.  A thirty point difference in your credit score can cost you thousands of dollars in increased interest rates over the life of a loan.  If you have filed bankruptcy then this is especially important.  Most bankruptcy lawyers recommend that their client check their credit reports at least three to four months after the order of discharge is signed by the bankruptcy court.

Individuals Do Not File Bankruptcy When a Business They Own Does

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There seems to be a misconception about when a corporation or limited liability company files for bankruptcy and the business is owned by one or a few individuals.  In the news, talk shows and with speaking with people on the street I hear over and over again such and such has filed bankruptcy.  I think the most common name I hear is Donald Trump.  I had a client at a meeting of the creditors meeting whisper in my ear something about the debtor currently being questioned by the Trustee and then Donald Trumps name.  What she said was as if Mr. Trump had filed bankruptcy too.  As far as I know Donald Trump has never filed for personal bankruptcy and only his casino holdings has ever filed for bankruptcy protection.  This is a huge distinction that is very important.

Corporations and limited liability companies are separate legal entities from the owners.  This is the whole point in creating the business in this form.  Creating a separate legal entity keeps your personal assets safe and protected from the debts or harms created by the corporation or limited liability company.  You must keep up the corporate formalities and run the corporation as a separate legal entity.  You must keeping the assets, expenses and income separate from your own personal finances.  Like many Americans Mr. Trump has many business interests that are set up under various legal entities.  This is smart.  If one business venture does not work out it should not negatively effect or destroy his other interests.  Mr. Trumps venture into gambling has not gone well.

The formerly named Trump Hotels and Casino Resorts (DJT) and now the Trump Entertainment Resorts, Inc. has filed for bankruptcy protection under Chapter 11 three times since 1991.  I cannot imagine the amount of bankruptcy attorneys fees that have been expended in all three cases.  Chapter 11 allows corporations to restructure their debts and allow the corporation to survive and hopefully prosper.  The company still exists so something must have gone right.

For more information about bankruptcy, either personal or business, you may contact one of our bankruptcy lawyers by calling 1-877-963-9543 or providing us your information on-line in a submission form.

Should I File Bankruptcy Before Getting Divorced?

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First of all you should call your divorce attorney or retain a divorce attorney to inquire about how to enforce the divorce decree against your ex-spouse.  This article is not intended to provide information about enforcement of divorce decrees.  What this article is about is a way to just make the drama, frustration and repeated trips to court all go away so you can finally move on with your life without your ex-spouse or the debt.  And yes, filing bankruptcy is part of finally making it all go away.

The issue is that you got divorced, say 2-3 years ago, and the divorce decree split the community debts incurred during marriage between both your spouse and you.  You are now both responsible to pay half of the community debts.  What happens if your ex-spouse does not pay their half?  Will you, the spouse that is making payments, have to pay the half your ex-spouse is failing to pay?  Will your ex-spouses failure to pay cause you to have negative history on your credit report?  Why deal with any of this.

How do you make all this go away?  Believe it or not a bankruptcy can make the divorce process much simpler when debts are taken out of the equation.  Unfortunately many divorcees do not have any assets of significance to divide and there are only debts to deal with.

File bankruptcy before you get divorced and discharge all of the unsecured debts incurred during marriage.  Depending upon your income, expenses and assets you may qualify to file a Chapter 7 bankruptcy and discharge all of your eligible unsecured debts.  You will be able to move on with your life and not look back.  And yes, you have to file bankruptcy to do it.  If you have a domestic support obligation such as child support or spousal support it is not dischargeable under any chapter of the bankruptcy code.  Section 523(a)(5) excepts this type of debt from a discharge.  This is true in both Chapter 7 and Chapter 13 bankruptcy cases.

Filing bankruptcy is no easy decision though and both you and your soon to be ex-spouse have to agree to file bankruptcy.  This is usually where the problems start to arise. Often times the bankruptcy lawyer is caught in the middle.  One spouse refuses to file bankruptcy and saddles both spouses with debts for years to come.  Some spouses just find it easier to pay the debts off than pay an attorney to enforce a divorce decree/order against their former spouse.  This is always an option as well.

What are the Differences Between Chapter 13 and Chapter 11 Reorganizations?

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There are many differences between reorganizing under Chapter 13 than reorganizing your debts under Chapter 11.  This article discusses some of the basic differences between these chapters of the Bankruptcy Code.  This article does not cover each and every difference or go into great detail about the differences.  For more information about your specific circumstances, please consult an experienced bankruptcy attorney in your jurisdiction for more information.

First of all, why file a chapter 11 reorganization case at all?  Section 109(e) of the Bankruptcy Code has something to say about this.  Only individuals may reorganize under Chapter 13, not corporations.  If you own a corporation the only chapter available to reorganize is Chapter 11.  To be eligible to be a debtor under Chapter 13 you must not have unsecured debts exceeding $360,475 or secured debts exceeding $1,081,400.  If you exceed either of these debt limitations you cannot reorganize under Chapter 13 and can only reorganize your debts by filing a Chapter 11 case.

Another huge difference between the chapters is that creditors in a Chapter 11 get to vote on acceptance or rejection of the proposed plan or reorganization.  Creditors in Chapter 11 that are part of the impaired classes, those creditors whose legal rights are being changed in the plan, get to vote on the plan of reorganization.  The different types of debts are listed as classes, secured debts, priority debts and unsecured debts are all split up into classes.  Each class gets to vote and a class of impaired creditors must accept the plan by a majority vote in number of claims and at least two-thirds in dollar value.  In a Chapter 13 the standing chapter 13 trustee recommends confirmation of the plan and the Court confirms the plan if it meets the requirements for confirmation under Section 1325 of the Bankruptcy Code.  Creditors in a Chapter 13 may object to confirmation of the plan.  The Court can either sustain the objection or overrule the objection and confirm/approve the plan.  Creditors commonly object to a plan because of issues over valuation of collateral, the plan is not possible/feasible or the plan of reorganization was not filed in good faith.

So what happens if creditors reject a Chapter 11 plan of reorganization?  Then the debtor must prove the Chapter 11 plan of reorganization is fair and does not unfairly discriminate between treatments of different classes, is equitable and does not discriminate against the class of creditors that rejected the plan.  If the Court agrees, then the Court can confirm/approve the plan of reorganization and cram the plan down the throats of the rejecting creditors.

Add Warren Carlos Sapp to the List of Celebrity and Professional Athlete Bankruptcy Cases

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On March 30, 2012, ex-NFL star and broadcaster Warren Carlos Sapp filed for bankruptcy protection under Chapter 7 of the Bankruptcy Code, Bankr. Case No. 12-17819-RBR, in the Southern District of Florida.  Like many before him bad business deals, unpaid income tax and mounting missed child support payments led to Mr. Sapp’s bankruptcy filing.  Mr. Sapp’s petition lists $6,457,207.92 in assets and $6,724,631.62 in liabilities.

Also like many Americans Mr. Sapp has suffered from the mortgage crisis.  M. Sapp owns two homes in Florida.  One home is worth approximately $149,000 less than what Mr. Sapp owes on mortgage.  The other house has over $1.3 million in equity.  Florida is a state that has an unlimited homestead exemption to protect equity in your home if you are lucky enough to have equity in a home when filing bankruptcy.

Mr. Sapp schedules list quite a bit of personal property including approximately 10 annuities and life insurance policies valued at approximately $1 million.  Mr. Sapp also has a NFL Annuity Program worth $439,450 and NFL Player 2nd Career 401k worth $469,812.  One interesting note, which drives bankruptcy lawyers crazy, is that Mr. Sapp claims in his Schedule B that his 1999 National Championship Ring and 2002 Super Bowl Ring were both lost, not stolen, and neither ring was covered by insurance.

Mr. Sapp’s liabilities include unpaid child support or alimony totaling $885,000 to four different women, Akilah Akins, Angela Sanders, Jamiko Sapp and Sara Matt Lamothe-Kindred.  Mr. Sapp has six kids ranging in age from 3 to 14 years old.  The Internal Revenue Service is one of Mr. Sapp’s major creditors as well.  Schedule E lists unpaid taxes for 2006 totaling $853,003 and 2010 totaling $89,775.

Mr. Sapp’s financial condition may become a lot worse.  Mr. Sapp’s current monthly income includes the NFL Network: last contract payment ($45,000), CAA Sports: one-time appearance fee ($48,000), CAI Studios ($2,000) and Literary Agency East, book advance, ($18,675).  If the NFL Network does not choose to renew their contract with Mr. Sapp it will result in Mr. Sapp having a negative monthly cash flow of approximately over ($100,000).  His single largest monthly expense is child support and alimony totaling $75,495 per month.  This represents about 60% of Mr. Sapp’s monthly expenses.

Like many Americans struggling with bills because of lost employment or a reduction in pay Mr. Sapp is no different.  It is not about how much money you make each month, but how much you spend.  Hopefully Mr. Sapp will have his contract renewed with the NFL Network.  Without that income Mr. Sapp is going to have a hard time moving on financially.

Did Stockton, California File Bankruptcy Under Chapter 9?

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No, not yet. On February 28, 2012, the Stockton City Council voted to begin the confidential neutral evaluation process.  Like many municipalities across the nation Stockton is being squeezed by increased retirement costs, bond payments and decreased revenue from property tax, sales tax, business license and utility user tax.

California recently passed a law, AB 506, or Government Code Section 53760, that provides two possible paths to municipal bankruptcy under California law.  One path is the “Neutral Evaluation Process.”  The other path is declaring a fiscal emergency and adopts a resolution by a majority vote of the governing board pursuant to Government Code Section 53760.5.

What is the Neutral Evaluation Process?

The Neutral Evaluation Process (“NEP”) is initiated by the request of the public entity and giving notice by certified mail to all interested parties.  The interested parties then have 10 business days from the receipt of the request for NEP to respond.  If the interested parties choose to participate in the NEP then the public entity and interested parties need to agree on whom the neutral evaluator will be and what process will be used to resolve the dispute.  If the no evaluator can be agreed upon within 7 business days after the parties agree to the NEP then the public entity shall select five qualified neutral evaluators and provide their names, references and backgrounds to the participating interested parties.  The participating parties then have 3 business days a majority of the participating parties can strike up to four of the neutral evaluator proposed by the public entity.  If the participating parties strike less than four of the proposed neutral evaluators, then the public entity may choose which of the remaining evaluators will be selected.

A neutral evaluator should have experience and training in dispute resolution and should meet at least one of the following qualifications: (1) At least 10 years of high-level business or legal practice involving bankruptcy or service as a United States Bankruptcy Judge; (2) Professional experience or training in municipal finance and one or more of the following issue areas: (A) Municipal organization; (B) Municipal debt restructuring; (C) Municipal finance dispute resolution; (D) Chapter 9 bankruptcy; (E) Public finance; (F) Taxation; (G) California constitutional law; (H) California labor law and (I) Federal labor law.

The NEP can only last 60 days from the date the evaluator is selected unless the parties agree otherwise.  The public entity will pay for half of the costs of for the evaluator.  The NEP will end if any of the following occur: (1) The parties execute an settlement agreement; (2) The parties reach an agreement or proposed plan of readjustment that requires the approval of a bankruptcy judge; (3) The neutral evaluation process has exceeded 60 days following the date the neutral evaluator was selected, the parties have not reached an agreement, and neither the local public entity or a majority of the interested parties elect to extend the neutral evaluation process past the initial 60-day time period; (4) The local public entity initiated the neutral evaluation process pursuant to subdivision (a) and received no responses from interested parties within the time specified in subdivision (b) and (5) The fiscal condition of the local public entity deteriorates to the point that a fiscal emergency is declared pursuant to Section 53076.5 and necessitates the need to file a petition and exercise powers pursuant to applicable federal bankruptcy law.  If the NEP is unsuccessful then the public entity may file for protection under Chapter 9 of the Bankruptcy Code.  See California Government Code Section 53760.3.

What is declaring a Fiscal Emergency?

A public entity may also file for bankruptcy protection under Chapter 9 in California if the public entity declares a fiscal emergency and adopts a resolution by a majority vote of the governing board at public hearing.  At the public hearing, a finding that the financial state of the local public entity jeopardizes the health, safety or well-being of the residents of the public entity. See California Government Code Section 53760.5.

Stockton, California Participating Parties in the NEP

The City of Stockton, California has started the NEP and the participating parties are as follows: Association of Retired Employees of the City Of Stockton; Assured Guaranty; California Public Employees Retirement System (CalPERS); Dexia Credit Local, New York Branch; Franklin Advisers, Inc.; Jarvis/MUD case; Mid-Management/Supervisory Level Unit (Management B&C Employees); National Public Finance Guarantee Corp.; Operating Engineers’ Local 3; Price case; Stockton City Employees’ Association (SCEA); Stockton Firefighters’ Local 456; Stockton Fire Management Unit; Stockton Police Management Association; Stockton Police Officers’ Association (SPOA); Union Bank, NA; U.S. Department of Housing and Urban Development; Wells Fargo Bank, National Association, as indenture trustee for the following bonds: (1) Redevelopment Authority of the City of Stockton Revenue Bonds, Series 2004 (Stockton Events Center Arena Project) (2)Stockton Public Financing Authority Lease Revenue Bonds, Series 2004 (Parking and Capital Projects) (3) Stockton Public Financing Authority 2006 Lease Revenue Refunding Bonds, Series A (4) Stockton Public Financing Authority Variable Rate Demand Lease Revenue Bonds, 2007 Series A and 2007 Series B (Taxable) (Building Acquisition Financing Project) (5) City of Stockton 2007 Taxable Pension Obligations Bonds, Series A and Series B (6) Stockton Public Financing Authority Lease Revenue Bonds, 2009 Series A (Capital Improvement Projects) (7) Stockton Public Financing Authority Variable Rate Demand Water Revenue Bonds, Series 2010A (Delta Water Supply Project).

Stockton and the participating interested parties have selected a neutral evaluator and are beginning the negotiation process.  Hopefully the parties can find some common ground and avoid having to file bankruptcy under Chapter 9.

For more information about the municipal bankruptcy process under California law or information from a bankruptcy attorney you may reach us toll free at 1-877-963-9543.

Personal Injury Claims and Bankruptcy

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If you have unfortunately been injured in a car accident, injured at work or at a business you were shopping at you could have a personal injury claim.  So if you have filed a lawsuit or are planning on filing a lawsuit what happens to your personal injury claim if you file for bankruptcy protection with the help of an experienced bankruptcy attorney under Chapter 7 or Chapter 13 of the Bankruptcy Code?

The first issue is do you actually have a personal injury claim?  There have been many attempts to bootstrap other types of causes of action as exempt under a personal injury theory.  For purposes of this article the person filing for bankruptcy was in fact injured in a car accident and suffered damage to their arm requiring surgery.  This hypothetical person is also thinking about suing the person who hit their car and caused the injury.  Unfortunately they are also thinking about filing for bankruptcy since they have not been able to keep up with their credit card payments given that they cannot work as much due to their injury.  This is a personal injury in which the California exemptions can be applied, either Section 704.140 (a-b) or Section 703.140(b)(11)(D).

So if you receive a multi-million dollar personal injury settlement can you keep every penny and still get rid of your debts in bankruptcy?  The answer is it depends.  Under the 703 California Exemptions you can protect a personal injury claim up to $22,075.  This is only for your injuries and not for pain and suffering or pecuniary (financial) loss.  Under the 704 California Exemptions a personal injury claim is exempt up the amount reasonably necessary for the maintenance and support of the judgment debtor’s spouse and dependents.  Which set of exemptions you use will depend upon the nature of the injury and the possible recovery.  If you were unfortunately seriously injured and require around the clock care you will most likely need every penny of a personal injury recovery.  Keeping every penny would be reasonably necessary for your support and maintenance.  The other extreme is if you are in a car accident and merely break an arm and do not have any long-term problems as a result.  If you receive $30,000 somehow it may not all be reasonably necessary for your care and support.

Hopefully you will not be injured so severely that you are entitled to millions of dollars of compensation.  There are personal injury awards that can be protected when filing bankruptcy.  It all depends upon your circumstances at the time you file for bankruptcy protection.  The good news is that there are exemptions to protect personal injury awards and claims.

Affordable San Jose Bankruptcy Lawyer

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Do you need a San Jose bankruptcy lawyer?  We regularly file bankruptcy cases for residents of San Jose and Santa Clara County.  All of our free no obligation consultations last about thirty minutes to an hour.  We offer personal service for a reasonable fee.  We provide personal service by providing you with our direct email addresses for questions or issues.  When you call our offices you will speak with my partner, Kitty J, Lin, or me, Ryan C. Wood.  We have both filed hundreds of bankruptcy cases and we can answer your questions quickly.  Why waste time transferring calls, taking messages or getting wrong answers to your legal questions from non-lawyers.  We believe the most convenient and efficient way to communicate with you is directly.  You will not be dealing with inexperienced and unlicensed legal assistants or uncertified paralegals like at other firms.

The main goal during your free no obligation consultation is to make sure your questions are answered.  If bankruptcy is not right for you for whatever reason we will discuss your options.  Bankruptcy is not always the answer for everyone who had debts.  If you are being sued by a credit card company or behind on your mortgage payments bankruptcy can definitely help.

Bankruptcy is all about your income, expenses and assets.  Bankruptcy in most cases is a quantitative process and not a qualitative process.  Under most circumstances the reasons why you have unfortunately fallen on hard times will not determine whether you qualify to file a Chapter 7 case and discharge your unsecured debts like credit cards, your income, expenses and assets will though.  These are the things we will be discussing during your free consultation.

In 2005 the Bankruptcy Code was changed and the Means Test was created.  The Means Test takes a six-month average of your income, multiples the six-month average by 12 and compares that number to the median income for the number of people in your household for your state.  The Means Test also uses some local standards and some national standards for expenses such as house, utilities, food and other expenses.  One of the problems with the Means Test is it uses the median income for your state.  It really should use the median income for the county in which you live.  There are a lot of counties in most states, so using a median income for counties is probably unmanageable.  It is not perfect, but it is what we have to determine if you have disposable income available to pay back some or all of your debts.

Give us a call toll free at 1-877-9NEW-LIFE (877-963-9543) to schedule your free consultation and find out if bankruptcy is right for you.

Do You Need a San Mateo County Bankruptcy Lawyer?

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Do you need a San Mateo County bankruptcy lawyer?  You have come to the right place, West Coast Bankruptcy Attorneys.  We offer free no obligation consultations to find out if bankruptcy is right for you.  All consultations are with experienced attorney, my partner, Kitty J. Lin, or me, Ryan C. Wood.  We have both filed hundreds of bankruptcy cases throughout the Bay Area.  Please read more about us under “Firm Profile.”

Ms. Lin has practiced exclusively bankruptcy law since becoming a lawyer some years ago.  She has filed hundreds of cases and met with thousands of clients.  I have been involved with all aspects of bankruptcy even while attending law school.  I worked for a boutique creditor’s rights law firm and then began filing bankruptcy cases for small business owners and individuals after obtaining my license to practice law.  I have experience in all aspects of collection law which benefits you as the client.  I also served at the Staff Counsel for David Burchard, the Standing Chapter 13 Trustee for the Santa Rosa and San Francisco Divisions of the United State Bankruptcy Court for the Northern District of California.  This experience also is invaluable.

Our fees are based upon the complexity of your bankruptcy case only.  If you do not own any property, are unemployed or earn less than $3,000 a month you should qualify to file a basic no asset Chapter 7 case.  We also follow the fees guidelines for Chapter 13 cases for all four divisions of the United States Bankruptcy Court for the Northern District.  Actually we usually charge less than what is actually allowed in most cases.

When you call us you will either talk to Ms. Lin or myself.  Why waste time transfer calls or having an inexperienced unlicensed legal assistant answer your questions.  Get the answer to your questions immediately.  You will also receive our direct email addresses for questions and communication.  You will see throughout our website, “Personal Service for a Reasonable Fee,” and we live up to it.  We have plenty of testimonials and reviews from happy client’s debt free clients.  That could be you too.

Give us a call toll free at 1-877-9NEW-LIFE (877-963-9543) to schedule your free consultation today.