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California Supreme Court Holds Community Property Presumption Wins Versus Recorded Title Presumption

By Ryan C. Wood

I have been writing about the community property presumption versus the recorded title presumption for years now as applicable to filing bankruptcy.  We finally have the law interpreted by the California Supreme Court to put an end to certain arguments.  That is unless the legislature decides to weigh in and change the law that was interpreted.  I would like to thank all of the bankruptcy attorneys that fought for individual rights and the rights of how people chose to take title when purchasing real property during marriage.  Unfortunately I could see the future and knew the community property presumption would win the argument.

The California Supreme Court issued its opinion today in In re Brace. The entire opinion for In re Clifford Brace, Case No. S252473 can be found at:

In re Clifford Brace S252473 Opinion

The California Supreme Court held:

  1. Evidence Code section 662 does not apply when it conflicts with the Family Code section 760 community property presumption.
  2. When a married couple uses community funds to acquire property with joint tenancy title on or after January 1, 1975, the property is presumptively community property under Family Code section 760 in a dispute between the couple and a bankruptcy trustee.
  3. Under Family Code Section 852, joint tenancy titling of property acquired by spouses using community funds on or after January 1, 1985 is not sufficient by itself to transmute community property into separate property.

So that is the trifecta of slamming the door on filing a bankruptcy petition and only listing half the value of the bankruptcy filers real property purchased during marriage and title taken as joint tenants.  I can hear the collective bankruptcy attorney groan for those that care.

UNLESS the community property presumption can be rebutted………… Good luck with that given the notarized, signed and recorded title alone is not enough.  What more is needed? 

I do not like this opinion as it relates to my bankruptcy clients and their ability to discharge their debts under the Federal Bankruptcy Code.  I do believe this decision ultimately helps to do as the California Supreme Court provides on Page 25: “Seeking to curb the risk of fraud, undue influence, and litigation arising from informal agreements between spouses that purported to change the character of property, the Legislature enacted our present-day transmutation statutes.” 

I do believe the intent of this holding is for good; that spouses to be treated equally when it comes to property rights under California Law; which has not always been the case regarding women’s rights to own property and exercise their rights regarding their property.  I am all for equally bad or equally good treatment for all.  What people do not get is that your bad treatment is actually the same for everyone, so it is for all purposes equal.

The opinion by the California Supreme Court assumes you do not know what you are doing when purchasing a house during marriage and taking the title as joint tenants.  There limitless examples of circumstances in life that you must be bound by your choice.  You mark yes on a test and the correct answer is no and that is that.  You got the question wrong.  It is so fair, simple and consistent.  Every time an analysis of the circumstance is interpreted it is a binary result, a “1” or a “0.”  Why is taking title as joint tenants not the same analysis?  Why is it made more complicated?  Why are the purchasers of the property during marriage in California not bound by their chosen taking of title good or bad for them?    

Interpretation of Law Assumes You Do Not Know What You Are Doing  

I will try and keep this a vanilla as possible, but you need to be protected from yourself whether you agree or not.  This is what law does.  It does keep us safe and does a pretty good job doing it.  From having a safe food supply to forcing you to wear a seatbelt the law is keeping you safe and saving you from yourself.

So too is the interpretation of law and the community property presumption versus the recorded title presumption.  If you are married and purchasing the real property with community funds then why would the purchase of the house create two separate property interests?  Community funds were used for the down payment and for the mortgage payments, property taxes, maintenance and insurance so the character of the property naturally has to be community property upon divorce or death.  What about when filing for bankruptcy?

The Community Presumption Can Be Rebutted

This is nothing new.  Personally I think a notarized, signed and recorded deed saying the property is held as joint tenants should all that is necessary to rebut the presumption that the property is community property.  Of course this would be good for the two humans that are married and took title as joint tenants when filing for bankruptcy so naturally that cannot be correct.  What more is needed to rebut the presumption? 

Interpretation of Family Code Section 852 Simply Does Not Exist

Call me crazy but I take a holistic view the interpreting the law and the world.  The way California Family Code Section 852 is interpreted drives me crazy.  I have this issue with all kinds of laws and rules for this type of interpretation.  This is not an issue of which came first, the chicken or the egg?  The issue is condition precedent.  A contract law reference to an event or state of affairs that is required before something else will occur. In contract law, a condition precedent is an event which must occur, unless its non-occurrence is excused, before performance under a contract becomes due, i.e., before any contractual duty exists.

For example here in the Northern District of California the United States Bankruptcy Court has General Order No. 32.  This rule is about how pay statements for the 60 days prior to the bankruptcy case being filed must be turned over to the trustee assigned to the case and not filed with the Court.  General Order No. 32 also provides procedure to be followed if the pay statements cannot be provided and to explain why and estimate the gross income and net income in lieu of providing the actual pay statements.  The condition precedent to General Rule No. 32 being applicable is the existence of W-2 income resulting in the issuance of pay statements.  If a person is not employed or self-employed THERE ARE NO PAY STATEMENTS TO PROVIDE AND NO PAY STATEMENTE EVER EXISTED TO PROVIDE.  No part of General Order No. 32 addresses the nonexistence of pay statements yet over and over again I have various parties telling me we have to provide a declaration providing there are no pay statements to provide pursuant to General Order No. 32.  No, no and no.

The same is true regarding the interpretation of California Family Code Section 852.  There is a condition precedent to transmuting an asset from community property to separate property or separate property to community property.  That condition precedent is the actual temporal existence of the character of the property first then that asset is by writing is characterized as the spouses property in a different way; community or separate.  How can that happen when the real property in question was purchased during marriage and the title was taken as joint tenants?  When was the house ever titled or characterized as community property for it to be then transmuted between spouses as separate property?  IT WAS PURCAHSED AS SEPARATE PROPERTY AS EVIDENCED BY THE NOTARIZED, SIGNED AND RECORDED TITLE.  You say what if down payment for the house was community property to begin?  I say what if the down payment was the separate property of one spouse?  Great, I say trace back where the money came from to purchase the house, but please start with recognizing the notarized, signed and recorded title as the starting point given that really exists in reality.  Do not start with a legal fiction, a presumption created to change reality.  This is also not a divorce.  It is a bankruptcy filing in which only the filing spouses community assets are liable to community debts.    

The California Supreme Court says we do not care what the title says either way given the house was purchased by a married couple during marriage so you all better have some sort of writing to let everyone know how you want this property treated upon divorce, death and the filing of bankruptcy.  Okay, how romantic.  Maybe this is why over 50% of marriages fail.  All marital transactions must be memorialized in writing throughout the marriage to provide evidence of the spouses intent play by play to overcome various presumptions that many married couples have no idea exist until there is a problem.  

CA Family Code Section 852

(a) A transmutation of real or personal property is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.

(b) A transmutation of real property is not effective as to third parties without notice thereof unless recorded.

(c) This section does not apply to a gift between the spouses of clothing, wearing apparel, jewelry, or other tangible articles of a personal nature that is used solely or principally by the spouse to whom the gift is made and that is not substantial in value taking into account the circumstances of the marriage.

CA Family Code Section 760

Community Property: Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.

CA Family Code Section 2581        

For the purpose of division of property on dissolution of marriage or legal separation of the parties, property acquired by the parties during marriage in joint form, including property held in tenancy in common, joint tenancy, or tenancy by the entirety, or as community property, is presumed to be community property. This presumption is a presumption affecting the burden of proof and may be rebutted by either of the following:

(a) A clear statement in the deed or other documentary evidence of title by which the property is acquired that the property is separate property and not community property.

(b) Proof that the parties have made a written agreement that the property is separate property.

CA Evidence Code Section 662

The owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof.

Why Credit Card Interest Rates Should Be Capped

By Ryan C. Wood

Credit card interest rates should be capped for the same reasons we have laws to make sure the food supply is safe and why we have seatbelts in our vehicles.  It is all about consumer protection.  It is just that simple and laws about our credit “products” are no different.  I recently noticed another bill was put before Congress to legislate at the federal level interest rate caps on creditor cards for consumers.  Maybe this time the law might actually get passed and signed.  I have written all kinds of articles about how we need credit and short-term loan reform in a number of areas. I am hopeful, but I doubt any real progress will be made in the near future to limit taking advantage of people that need short-term loans to pay for food or housing. Even as a bankruptcy attorney I have advocated for years to legislate protection regarding debts………

How Did We Get To 30 Percent Interest Rates To Begin With?

Each state has usury laws to protect consumers from unreasonable or unconscionable interest rates and contracts.  I have previously discussed “Why Are Credit Card Interest Rates So High” given there are state usury laws that are supposed protect consumers from unconscionable interest rates. Big business can easily find all kinds of ways to skirt existing legislation or change protections that protect individual consumers. I could list hundreds of examples and it is nothing new. It is unfortunate that over the years it has just become worse and worse to the tune of millions of dollars in disparity.  We just see higher and higher shameless interest rates.   

Why Are Credit Card Interest Rates So High?

Payday Loans and Title Loans

In a prior article I wrote: “Why Payday Loans and Title Loans Need More Regulation and Not Less.”  I used the term loan shark not less than twelve times.  It is just the truth and why and how can this continue?  In this particular article I mention how there are laws to make sure there is no price gouging in the event of a natural disasters given people are vulnerable at that time………  These laws are protections resulting from a natural disaster. For some reason we do not want to protect consumers when they have a personal disaster whether in their control or not . . . . .

Why Payday Loans and Title Loans Need More Regulation and Not Less

The lending and credit practices in place right now are absolutely loan sharking and should be illegal period.  In the meantime let us discuss how things have run amuck. 

I have also questioned and complained about “How Can 1,000 Percent Interest Be Legal?” Well it should not be period.

How Can 1,000 Percent Interest Be Legal?

Why Are Unconscionable Contract Laws Not Enforced

Arguably, or just my opinion, most payday loans, title loans and potentially credit card agreement terms are unconscionable contracts. In California we have Civil Code Section 1670.5 providing that if a part of a contract or contract is found to be unconscionable the court may refuse to enforce the provision of the contract or contract. Proving a contract is unconscionable is no easy task but generally the contract is overly harsh, unduly oppressive or unfairly one-sided. Unconscionable contracts are agreements that are unreasonably favorable to the credit card company or bank given they are clearly the more powerful party in the transaction.  Contracts or agreements that are overly harsh or unduly oppressive or are so one-sided as to shock the conscience should not be enforced.  Again, arguably 20-30% interest shocks the conscience.  Can we not agree that 1,000% interest is shocking? What is the limit?  In some industries there is no limit on mark-up of goods or services.  In our system the market is supposed to determine price of goods or services.  At the same time there are all kinds of examples of regulation that manipulate market conditions to the detriment of some parties and the benefit of others.  It is very difficult to agree on what is right or wrong, but can we all agree that we as consumers are supposed to have protections from parties we have no bargaining power with……….

Regulation For A Safe Food Supply

No one really complains about regulations that ensure our food supply is safe from production to sale.  We all actually take it for granted.  If we have more financial regulations to ensure the safe distribution of borrowed funds is it so different?  Nope.  They are just different industries and products.  We need better regulation to ensure safe borrowing for the benefit of consumers.  People are getting sick on bad meat (bad credit agreements) and it is not okay.

Capping Credit Card Interest Rates [AGAIN] Is A Great Start

I cannot say this about all laws that are changed, but generally how we treat many circumstances under the law have been developed over hundreds of years of trial and error. As a bankruptcy attorney there has been some form of debt relief by law, Bankruptcy Code, to obtain the discharge of personal liability of debts. We have modified the Bankruptcy Code over time but never entirely done away with it. Do you think debt and credit is something new? It is not. There is absolutely nothing new about one party as lender and another as the borrower. Why cannot we not learn from history so we are not doomed to repeat bad history? We more or less have done away with interest rate caps even though for hundreds of years under state usury law we capped interest rates to protect consumers. I ask you what has changed to warrant eliminating caps on interest rates? If there anything? Is there no more capitalism with a conscience possibly?

I see capping credit card interest rates like legislating that cars must have seatbelts or regulation to ensure safe food supply.  It is just that simple.    

Should I Rent To Someone Who Has Filed Bankruptcy?

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YES, YES and YES.  The reality is an apartment building owner or manager should rent to those who have filed for bankruptcy protection because it is in their best financial interest.  Let me tell you why it makes financial sense given just not discriminating against other humans on THIS basis may not be enough motivation. You are in the business of renting rentals and getting paid each month so why not rent to whomever is most likely to do that. Will a mindless, soulless and heartless corporation rent to someone that filed for bankruptcy protection? I have found there are more problems with large corporate ran apartment complexes given the humans that work there are “just doing their job.” Which means they “just follow” the corporations rules and procedures to ensure they remain employed regardless of what reality actually is or harm caused.  And yes, still do your due diligence and request pay statements to make sure they can afford the rent though with first, last month’s rent and security deposit.

Link to YouTube video below:

Why You Should Rent to Bankruptcy Filers

What Is The Reality?

The reality is an apartment building owner or manager should rent to those who have filed for bankruptcy protection because it is in their best financial interest. For one, the potential renter has no debt (or very little). Two, the renter with a bankruptcy wants to rebuild their credit. Three, they are not eligible to obtain a discharge for many years depending upon the chapter of bankruptcy they filed and when. Four, it is not legal to discriminate against bankruptcy filers . . . . this is a stretch though in reality. If you are an owner or manager of an apartment building and want to decrease your accounts receivable and delinquent rent payments please rent to those who have no debts . . . make sense right? Of course as a bankruptcy attorney I am biased right? Or is this drum I keep beating just true and make sense? If someone is just following the law they should not be looked upon as bad or discriminated against right? We can all agree that all types of discrimination are bad right?

One: Bankruptcy Filers Have No Debts

Okay, so this is a little more complicated but is true in some circumstances.  If the bankruptcy filer has a vehicle loan, student loans or owed not dischargeable taxes they may still have some debts after a discharge in bankruptcy. In a Chapter 7 bankruptcy they will not have any general unsecured debts like credit cards though after discharge. For examples:
1. Prospective Renter 1: $70,000 gross income with $40,000 in credit card debt and no bankruptcy on credit report.
2. Prospective Renter 2: $70,000 gross income no creditor debt and a bankruptcy on credit report.

Oh by the way, they both work for the same company and have the same experience etcetera. This is a simplistic example but exactly what I am trying to point out. Which prospective renter is a higher risk of not paying the rent or legally forcing you to hold to bag if rent payments are missed?

So are you going to go with the person that is struggling to pay credit card debts that have high interest rates that were once illegal and they are getting squeezed harder and harder each month to pay basic living expenses? Or rent to the person that followed the law and discharged debts to make sure they can pay their rent each month and eat?

Or are you going to illegally discriminate against my clients for following the law and obtaining a discharge according to the law written by your elected Congress and signed into law by your elected President of the United States of America? I hope you choose to not discriminate.

Two: My Clients Want To Rebuild Their Credit

No one wants to file bankruptcy and I can assure you after receiving a discharge my clients want to rebuild their credit. As a bankruptcy attorney I feel I have an obligation to provide education too. We have a number of Consumer Financial Protection Bureau free pamphlets (yes they are free; all you have to do is request them; another reason to choose our services) on a table in the front of our office include: Know Your Rights When A Debt Collector Calls; How To Spot Frauds and Scams; How To Find The Best Credit Card; and How To Rebuild Your Credit. My clients have been put through hell already with missed payments, harassing phone calls and the stress of paying the bills each month. They do not want go through it again and they want to rebuild their credit. As an apartment owner or manager you can encourage my past client to enroll in a bill paying service that reports to all three credit bureaus so that paying rent also helps rebuild credit. How about no discrimination but incentification of on-time regular rent payments that is mutually beneficial? You do want on-time regular payments of rent each and every month right? You should consider it.

Three: We Can Only Get A Chapter 7 Discharge After 8 Years From Last Chapter 7 Case Filed

Once someone files for chapter 7 bankruptcy and discharges all of their eligible unsecured debt they cannot obtain a chapter 7 discharge again for eight years. So what happens if they do not pay their rent? Well, the apartment manager/owner has every legal option available to enforce the debt. You do not have to worry about the renter filing for bankruptcy protection the day before you are supposed to evict them or discharge the unpaid rent. So why not rent to someone with a bankruptcy on their credit report?

Four: It Is Against The Law To Discriminate Against A Bankruptcy Filer

Section 525 of the Bankruptcy Code provides some specific protections. You cannot be terminated or discriminated against by a private employer. You also cannot be denied student loans. This is a very simplistic explanation of Section 525, but it exists. What about not renting to someone because there is a bankruptcy on their credit report? This kind of discrimination falls under an apartment owner/manager not renting to someone with three noisy kids or two dogs. You cannot not rent to someone because of their kids, but some other “pretext” or excuse, if any, will be given for the discrimination other than the actual horrible discriminating reason.

So rent to someone with a bankruptcy on their credit report and give them a chance just like some other human I am sure gave you a chance at some point in your life. Pay it forward. I really have no realistic hope that mindless, heartless soulless corporations will change any of their policies in this area………

50 Cent’s Bankruptcy By The Numbers As Of January 2016

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There has been a lot of mass media attention regarding 50 Cent’s personal Chapter 11 bankruptcy case. First though, a company that 50 Cent owns, SMS Promotions, LLC, also filed for bankruptcy protection under Chapter 11. The mass media is for some reason incapable of understanding that when a corporation or LLC files for bankruptcy protection the individual owners have not filed for bankruptcy. Corporations and limited liability companies are separate legal entities from the owners. That is the whole point in forming the corporation or limited liability company. Unlike Donald Trump, 50 Cent in fact has filed a personal bankruptcy case under Chapter 11, Bankruptcy Case No. 15-21233, in the District of Connecticut, Hartford Division. Donald Trump has NEVER filed for personal bankruptcy protection. Second, as of January 29, 2016, the bank account set up for the bankruptcy case, the debtor-in-possession account, has $7,449,764.30 in cash. So if 50 Cent chooses to pose for a picture with around $50,000 in cash spelling the word broke that would be analogous to me or one of my clients posing for a picture of one dollar bills spelling the work broke. I will say it is a bad look, period.

The following is an analysis of 50 Cent’s disclosed income, expenses, assets and debts based upon court documents filed by 50 Cent’s bankruptcy lawyers and creditors in the bankruptcy case.

50 Cent’s INCOME and EXPENSES

In a Chapter 11 bankruptcy reorganization a debtor must commit their monthly disposable income for the benefit of those who are owed money for a term of a minimum of five years. 50 Cent’s current monthly income and future monthly income and expenses are very important then. In Chapter 11 cases the bankruptcy filer is required to file with the bankruptcy court monthly operating reports. The reports provide the income, expenses and assets of the debtor while the bankruptcy case is progressing. These reports help creditors and the United States Trustee determine if reorganization is possible and whether the bankruptcy filer is takings steps to “right the ship” by decreasing or eliminating unnecessary expenses.

50 Cent’s January 2016 operating report provides monthly income from wages of ($1,538.68), royalties ($26,531.06) and other miscellaneous income called other receipts of ($77,000) for a total monthly income of $105,069.74. 50 Cent’s expenses for the month of January 2016 exceeded his income by about $13,000. So arguably 50 Cent does not have any monthly disposable income to pay each month for the benefit of creditors in a Chapter 11 plan of reorganization. That is if Jan. 2016 is representative of 50 Cent’s future income and expenses. 50 Cent’s creditors believe 50 Cent’s income is more and his expenses should be reduced.

On the expense side there are some high numbers as compared to the rest of us who are not on TV or in the movies. 50 Cent lists the following expenses for the month of January 2016:

Mortgage Payments $17,354.44
Real Estate Taxes $8,419.11
Utilities $12,879.73
Insurance $33,215.49
Auto Expense $3,507.59
Lease Payments $5,744.75
Repairs and Maintenance $6,593.70
ALIMONY/CHILD SUPPORT $12,097.00
Fitness Expense $3,000.00
Security $11,369.00

TOTAL EXPENSES: $118,255.81
TOTAL INCOME: $105,069.74
($13,186.07)

For the month of January 2016 if 50 Cent had not transferred $77,000 in cash from his bank accounts he would not have been able to pay his monthly expenses with his monthly income. So arguably there are some issues with 50 Cent’s ability to reorganize his debts based upon his monthly income. 50 Cent’s creditors argue that 50 Cent is underreporting his income given he has not disclosed income from recent appearances and performances since filing for bankruptcy protection. We shall see.

50 Cent’s ASSETS

In a sophisticated Chapter 11 reorganization like 50 Cent’s there are assets that are extremely difficult to value. How much is a business entity worth? What someone will pay you for it? Or is the book value the proper valuation? 50 Cent owns or allegedly has an interest in over 32 corporations or limited liability companies defined as “Related Entities” by creditors. There are also about 10 businesses defined as “Additional Entities” by creditors. The values of these business interests are extremely difficult to evaluate and 50 Cent’s creditors argue that the values of these entities are more than what was provided/disclosed in 50 Cent’s bankruptcy petition and schedules. As of Jan. 29, 2016, 50 Cent provides his total assets are worth $16,411,498.64.

50 Cent owns three pieces of real property: (1) primary residence located at 30 Poplar Hills Drive Farmington, CT 06032 with an estimated value of $8.25 million and mortgage of about $1 million owed to Suntrust Bank; (2) investment property located at 8 Gale Drive Valley Stream, NY 11581 with an estimate value of $572,000 and no debt; and (3) an investment property located at 3286 Northside Pkwy, Unit 302 Atlanta, GA 30327 with an estimated value of $464,000 and no debt. 50 Cent’s real property is worth about $8,286,000.

50 Cent’s vehicles have a scheduled total value of $500,618.00 and are as follows:

1966 Chevrolet Coupe
2015 Chevrolet Suburban
2010 Rolls Royce Phantom Drophea
2005 Chevrolet Suburban
2008 Dodge Sprinter
2003 Chevrolet Suburban
2012 Suzuki Kizashi Sport

One of the personal assets creditors of 50 Cent point out is missing from the bankruptcy petition and schedules is the trademark “50 Cent” which 50 Cent owns. Creditors argue that the trademark is very valuable and should be listed as a personal asset of 50 Cent.

50 Cent’s DEBTS

As of January 29, 2016, 50 Cent provides his debts total $32,390,319.34. The debt is comprised of $987,070.53 in secured debts, $770,412.00 in unsecured priority debts and $30,390,319.34 in general unsecured debts. The largest debt is a general unsecured debt owed to Sleek Audio, LLC, totaling $18,131,668.65 resulting from a judgment in a lawsuit over the design and sales of headphones. The other largest general unsecured debt is owed to Lastonia Leviston totaling $7,000,000 resulting from a judgment in a lawsuit about the alleged release of narrated sext tape by 50 Cent.

The unsecured priority debts are for domestic support totaling about $856,000 and taxes owed to the Internal Revenue Service totaling $175,067.91 and the State of New York totaling $1,379,687.

Status of the Chapter 11 Bankruptcy Reorganization

Right now both 50 Cent and three creditors, Sleek Audio LLC, Lastonia Leviston and Suntrust Bank, have proposed a Chapter 11 Plan of Reorganization. Of course the creditors plan provides for repayment of all of 50 Cents debts during the plan based upon his current income, assets and future earning potential. I have not yet reviewed the plan filed by 50 Cent and his bankruptcy attorneys.

Another Day, Another Scam Trying to Screw Our Bankruptcy Clients Out of Money

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It is unbelievable the amount of mail our bankruptcy clients receive after they file for bankruptcy protection because they filed for bankruptcy protection. The different types of mail they receive are even more concerning.

New Scam – THE LETTER YOU RECEIVE MAY NOT BE FROM NATIONSTAR LLC AND IT IS NOT NATIONSTAR LLC’S FAULT

If you have no debts with Nationstar LLC and you receive a letter that says it is from Nationstar LLC there is probably a problem. We just had a client, and us, receive a letter from some crook representing the letter is from Nationstar LLC. It is not of course, but the letter looks very legitimate. The phone number on the letter is 1-877-343-5602. If you are reading this because you received this letter please go to www.ftc.gov and file a complaint on-line or mail in a complaint with a copy of the letter you received. Unfortunately I did not initially identify this as a scam letter. The letter looks like other letters we legitimately receive from Nationstar LLC. The letter will have the correct address for the client and correct address for the bankruptcy attorney that filed the case including the correct bankruptcy case number. There will also be an account number on the letter. So, I emailed my client and asked the client what is going on here? We were not aware that Nationstar LLC was a creditor in this client’s bankruptcy case. So the client called the phone number listed above. Apparently almost all of the options to choose from are to make payments. Okay, that seems odd. So then apparently our client got a human being on the phone and she smartly started to ask them questions about what is going on here. THEY ASKED HER FOR HER SOCIAL SECURITY NUMBER!! Every now and then a creditor calls my office and tries to get me to disclose the last four digits of our client’s social security number. Never will we provide this information over the phone to someone who called us. Our client again smartly told them more or less to jump in a lake. I do not know how the call ended, but clearly when you call 1-877-343-5602 it is just another scam to steal identifies and collect payments fraudulently. How sad. Hopefully bankruptcy attorneys far and wide will Google 1-877-343-5602 and find this article or some other warning so they too can counsel their clients to ignore the fake letter.

Required Course When Filing Bankruptcy

As you may already know there are two required courses that must be completed when filing for bankruptcy protection. The first course is completed before the case is filed and the second course is completed after the case is filed. The first one is not a problem. How can some company send our bankruptcy client information on how to complete the first required course before the case is filed? It is not possible. So we are safe there. The problem is after the case is filed. Once the case is filed our client’s mailing address is now part of the public sphere and available to advertisers. So what happens? Our clients receive letters in the mail that they must complete the second required course. The letter includes scary language that is misleading and tries to fool our clients into completing the second required course with them for almost 5 times the cost our clients should pay for the same course when using the course provider we recommend to them. So, thank you Sage Personal Finance for marketing to our clients without their permission and trying to charge them 5 times the cost of the second required course. It just proves to our clients how much we care about them and how we will not let them get ripped off. Keep up the good work!

Credit Card or Personal Loan Applications

Everyone likes to rant that bankruptcy causes lenders to lose money blah, blah, blah. Really? So why do all of our clients receive credit card applications and personal loan applications in the mail even before they receive an order of discharge discharging their eligible debts after filing for bankruptcy protection? Hmmmm? Arguably the only thing lenders lose is gravy or icing on the cake. Why you ask? Because when you can charge interest at a rate that used to be illegal under state usury laws the borrower ends up paying three to four times the amount ever borrowed if not more. So arguably lenders only lose gross profits they should not be legally able to charge consumers to begin with. Think about it. Anyway, one the types of mail our clients receive are applications for the extension of credit.

How Do I Value My Stuff or Property When Filing Bankruptcy?

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Well, there really is no real good answer except do not intentionally undervalue the stuff you own. Value is in the eye of the beholder? Yes, sometimes that is true. Most of the time you just do the best you can and provide the fair market or replacement value of the asset. I do not know how much your used stapler that you bought in 1992 is worth. What about your house? The best we can do is look at comparable sales and how the market is at that moment in time. If the market is hot, like it is in San Mateo County, the listing price could be bid up by thousands of dollars. So was the house worth what it was listed for or what the house sold for?

Be Careful Filing A Chapter 7 Bankruptcy Case If The Client Owns A House

In the Bay Area and San Mateo County home prices are on the rise. So if you own a home and the value is close to what you owe be very careful filing a Chapter 7 bankruptcy. California has generous homestead exemptions to protect equity in primary residences, but what if there is a bidding war on the house and the price is bid up by twenty thousand dollars? Will you still be able to protect the equity and keep the house or will the house be sold out from under you in the chapter 7 bankruptcy case? The Chapter 7 Trustee assigned to the case will want to list the house for sale and let the market determine the value and see what happens. The Chapter 7 Trustee has a duty to administer the bankruptcy estate and liquidate unprotected assets for the benefit of creditors. Liquidating and disbursing funds to creditors is also how chapter 7 trustees make more money. Chapter 7 trustees get paid a percentage of the assets disbursed to creditors. So not only does the chapter 7 trustee have a duty to investigate your assets and liquidate them, but they have a financial interest in liquidating unexemptable assets also. If the chapter 7 trustee does seek to list the property for sale you can try and buyout the bankruptcy estate, oppose the listing of the property for sale or convert the case to Chapter 13 and pay the equivalent unprotected equity to creditors over 3 or 5 years to make sure you keep the home.

Do Not Intentionally Undervalue Your Assets

So after reading the preceding paragraph you may have the thought that you can just decrease the value of the asset to an amount that can be protected. Please delete that thought and never think it again. It is a dangerous game to play if you choose to manipulate the value of your assets. Just ask Jesus Bencomo. Mr. Bencomo filed for bankruptcy protection under Chapter 7 of the bankruptcy code for the first time in May of 1998. No real property was listed in his first bankruptcy case. On January 16, 2013, Mr. Bencomo’s bankruptcy lawyers filed his second Chapter 7 bankruptcy case listing in Schedule A that he owned real property located in Norwalk, California. Mr. Bencomo valued the real property at $175,000 with secured debt totaling $145,879. So there is approximately $29,121 in equity to protect. After the conclusion of the 341(a) Meeting of the Creditors the duly appointed Chapter 7 Trustee Wesley Howard Avery filed a motion with the court to employ a real estate broker to list and sell Mr. Bencomo’s house.

The trustee’s motion provides the value of the Norwalk property as around $305k to $333k. Two weeks later Mr. Bencomo’s bankruptcy attorneys amended the Schedule A to list the value of the Norwalk property as $245,000 with secured debt now totaling $214,929.27. Eventually the court approved the employment of the real estate broker.

The Chapter 7 trustee also filed an adversary proceeding, lawsuit in conjunction with the main bankruptcy case, objecting under Section 727(a)(2)(A) and (a)(4)(A). Section 727(a)(4)(A) provides that the debtor’s discharge may be denied where: (1) the debtor made a false oath in connection with the bankruptcy case; (2) the oath related to a material fact; (3) the oath was made knowingly; and (4) the oath was made fraudulently. Retz v. Sampson (In re Retz), 606 F.3d 1189, 1197 (9th Cir. 2010) (citation and internal quotation marks omitted). The adversary proceeding complaint alleges that Mr. Bencomo is an experienced real estate broker and therefore knew at the time of filing that the value of the Norwalk property was in the $300k range. Basically the Chapter 7 trustee is arguing Mr. Bencomo knowingly and intentionally undervalued the Norwalk property. Mr. Bencomo’s conduct in his first bankruptcy case became an issue in the second. Apparently Mr. Bencomo transferred the house out of his name, than back into his name, but failed to record the deed until 2002 and he failed to list the property in his first bankruptcy petition. Evidence of Mr. Bencomo’s prior bad conduct in the first case can be used in the second as impeachment evidence. So, the court ruled in the chapter 7 trustee’s favor and held that Mr. Bencomo knowingly made a false oath regarding the value of his house and that this is material. Mr. Bencomo was denied a discharge.

How To Avoid or Prevent the Necessity of Filing for Bankruptcy?

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One of the most common remarks we here from clients is, “I never thought I would file for bankruptcy protection.” Our response is usually, “No one ever does.” They probably never thought the bad thing that happened to them or, their family, that led to having to file for bankruptcy protection would happen either. Bad things happen every day that are not in our control. So unfortunately for some there is no avoiding the necessity of filing for bankruptcy. For example: being laid off from a job, medical debts, debts resulting from car accidents or a natural disaster. While these circumstances are not traditionally in our control there are plenty of other pieces of the financial puzzle that are within our control.

Credit Cards/Payday Loans/Cash Advances/Vehicle or Title Loans

These four types of debts are primarily the types of debts that can have incredibly high interest rates. If you have never heard of usury laws you are not alone. Each state has or had usury laws to limit the amount of interest a lender could charge a borrower. The laws are designed to protect all of us from unfair or unconscionable interest rates. These laws have been weakened over and over again in the name of greed and corporate profits. For more detailed information please read “How Can Credit Card Companies Charge Such High Interest Rates?” http://www.westcoastbk.com/blog/2012/07/how-can-credit-card-companies-charge-such-high-interest-rates/ So the law now allows for the ridiculous and unconscionable interest rate as high as 29% on some credit cards. If you do not pay off the credit card each month that has a high interest rate the underlying debt will balloon quickly. Spread that problem around four or five different credit cards are you are heading in the direction of a bankruptcy lawyers office unfortunately. So do your best to limit the use of creditor cards and especially the use of your highest interest rate credit cards. Payday loans and cash advances are even worse. The highest interest rate I have ever seen on an actual loan documents was over 1,000%. Somehow this is legal. Standard vehicle loans can have generous interest rates. Title loans are when your vehicle is paid in full, but you take loan and use the vehicle as collateral. The loan company will take your pick slip/title until the loan is paid in full. Title loans are traditionally horrible for the borrower. Again, very high interest rates and title loan companies rarely keep very accurate records regarding payments and accrued interest.

Home Mortgages

Do not buy too much house. Other than banks handing out questionable loans and fraudulent appraisals artificially increasing the value of homes, the next largest factor as to why so many people lost their homes in my opinion was because they bought too much house. That means they purchased a house that was too large and too expensive given their income and expenses. The cause of this was mostly interest only mortgages and adjustable rate mortgages. So do not buy too much house. If you income is reduced 20% will you still be able to afford your mortgage payment each month? How long can you pay your mortgage if you are laid off? We all hope that these unfortunate events do not happen to us, but they happen to everyone without discrimination.

Taxes

The thing with taxes is you have to pay them, period. So just let the government have the money upfront so you do not have an issue when it comes time to file your taxes each year. In California the Franchise Tax Board is does aggressively collect unpaid taxes. The FTB will garnish your wages and attached a tax lien to your home if you own real property. If you have changed your deductions on your paycheck to artificially increase your net income each month you are creating a tax debt each paycheck. Will you have the money to pay the taxes at the end of the year? No, you will not because you changed your deductions to increase your net income because you are currently having trouble paying your bills. Do not change your deductions to artificially increase your net income. It is a recipe for disaster. If you take an early distribution from a retirement account pay the penalty/taxes at the time you have the money taken out. Do not defer the penalty/taxes to when you have to file your return. Again, this is a recipe for disaster. Every bankruptcy attorney will tell you that ERISA and other qualified retirement accounts (Tax Deferred) are 100% protectable when filing bankruptcy under almost all circumstances. So another reason to not raid a retirement accounts because you can keep the retirement money and still discharge your debts.

If you are having difficulty paying your bills each month bankruptcy might be the best option to get back on track financially.

Can A California State Court Judgment or Arbitration Award Be Used In Bankruptcy Court?

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A sequence of events that takes place is a person lends money or credit is extended and then the borrower for whatever reason cannot continue to make payments and breaches the repayment agreement. The creditor then sues them in California Superior Court. There are numbers of ways to obtain a judgment, but a judgment is entered against the borrower in state court. Or an arbitration award is entered against the borrower. Can the judgment or arbitration award be used against the borrower if the borrower chooses to file for bankruptcy protection? Can the judgment be used to make the debt owed not discharged? This is an issue of issue preclusion. Can a judgment or arbitration award be entered against the borrower in Bankruptcy Court? Will the Bankruptcy Court require litigation of the same issue already decided by the judgment or arbitration award?

Like the answer to many legal questions bankruptcy attorneys must answer, the correct answer is it depends upon the judgment or language of the arbitration award. The Bankruptcy Appellate Panel for the Ninth Circuit recently discussed this issue in Richard Scott Urban vs. BCS West, LLC; BAP No. SC-13-1047. According to California state law California courts may apply issue preclusion only if certain requirements are met and if the application of issue preclusion furthers the public policies underlying the doctrine. The doctrine of issue preclusion is the theory that issues already decided in state court should or must be recognized by federal courts pursuant the Full Faith and Credit Clause of the United States Constitution. Under California law requires that (1) whether the issue sought to be precluded from relitigation is identical to that decided in the former proceeding; (2) whether the issue was actually litigated in the former proceeding; (3) whether the issue was necessarily decided in the former proceeding is final and on the merits; and (5) whether the party against whom preclusion is sought was the same as, or in privity with, that party to the state court proceeding. If these requirements are met California courts must further consider whether any overriding concerns about the fairness of the former proceeding are present or consistent with sound public policy.

Regarding an arbitrary award Federal Bankruptcy Courts can give California arbitration awards preclusive effect if the arbitration proceeding was held in an adjudicatory manner. Arbitration awards that have been confirmed by California courts have been given preclusive effect in Bankruptcy Court too. California judgments are more likely to be given preclusive effect given that they are more likely to satisfy the actually litigated factor listed above. Many arbitrations are not held in an adjudicatory manner.

One of the most important factors is the wording of the judgment or arbitration award and the facts that came to light in the California State Court matter. One of the main areas of Bankruptcy cases that California State Court judgment are used for issue preclusion purposes area in adversary proceedings to determine whether a debt or claim is discharged or if the debtor should receive a discharge of their debts at all. A bankruptcy attorney may not have been retained to represent the creditor or debtor in the California State Court litigation. The wording of the judgment or arbitration award will be extremely important for the Bankruptcy Court’s analysis if issue preclusion can be used. In Urban case the Bankruptcy Appellate Panel held that the arbitration award was ambiguous. In Federal Bankruptcy Court the question of whether all of the requirements for a debt to be deemed not discharged is an uphill battle and any ambiguity in the California State Court case will be decided in favor of the debtor or bankruptcy filer. What is proven in the California State Court will most likely not be exactly the same as a fraud charge, breach of fiduciary duty or willful or malicious injury. If you believe a person you are suing is going to file for bankruptcy protection in the future you must carefully craft your allegations and the wording of any judgment or arbitration award so that it can be used in bankruptcy court.

Detailed Look and Examination of Ex-NFL Football Player Jamal Lewis’ 2012 Bankruptcy Filing – Part III

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This is Part III in a series of blog articles analyzing and discussing the bankruptcy filing of former NFL player Jamal Lewis. Many celebrity bankruptcy cases are routine and not very interesting. Unfortunately for Jamal Lewis as bankruptcy cases go his is extremely interesting.

In Part II F.Xavier Baldera and Regions Bank asked the bankruptcy court for relief from stay to initiated the foreclosure sale of the 2007 Fountain Lightning 47’. The court of course granted their request since Mr. Lewis did not make payment to them to quite some time. But wait, there is far more to the F.Xavier Balderas and Regions Bank story. On July 6, 2012, prior to the case being converted to a case under Chapter 7, F.Xavier Balderas and Regions Bank filed a joint motion to extend the deadline to file a complaint to determine the dischargeability of the debt owed to them by Mr. Lewis. This means these creditors believe they have grounds to sue Mr. Lewis and obtain a judgment ruling that any debt owed to them should not be discharged in the bankruptcy case of Mr. Lewis. F.Xavier Baldera and Regions Bank want more time to gather evidence and determine if they should sue Mr. Lewis or not. This is basically as bad as it gets when filing for bankruptcy protection. It is one thing for a creditor to be given relief from the automatic stay. It is a whole other story when a creditor is trying to make a debt not ever go away. The whole point in filing for bankruptcy is to make debts go away forever. On July 6, 2012, the court granted their motion for more time. The deadline for F.Xavier Baldera and Regions Bank to file an adversary proceeding against Mr. Lewis was extended to September 14, 2012. There is more to come about F.Xavier Balderas’ and Regions Bank’s issues with Mr. Lewis. For now we need to discuss the other creditors and their interests in the bankruptcy estate of Mr. Lewis.

4. Navistar Financial Corporation

On July 6, 2012, Navistar Financial Corporation filed its motion to extend the deadline to file an adversary complaint pursuant to 11 U.S.C. §523 to object to the discharge of the debt owed to Navistar Financial Corporation. Navistar is an unsecured creditor in Mr. Lewis’ case listed in Schedule F as having a claim regarding possible personal guarantee on a business debt. No dollar amount is listed as owed. There is more to come regarding this creditor and whether or not they sue Mr. Lewis.

5. Hit-Em Hard Corporation

On July 11, 2012, Hit-Em Hard Corporation filed a stipulation for extension of the deadline to file an adversary complaint against Mr. Lewis pursuant to 11 U.S.C. §523 to object to the discharge of the debt owed to them. Hit-Em Hard Corporation is an unsecured creditor in Mr. Lewis’ case listed in Schedule F as having a claim regarding possible personal guarantee on a business debt. No dollar amount is listed as owed. There is more to come regarding this creditor and whether or not they sue Mr. Lewis.

6. Alpha Jordyn, LLC

On July 11, 2012, Alpha Jordyn, LLC, filed a stipulation for extension of the deadline to file an adversary complaint against Mr. Lewis pursuant to 11 U.S.C. §523 to object to the discharge of the debt owed to them. A stipulation is an agreement between two parties. Alpha Jordyn, LLC contacted Mr. Lewis’ bankruptcy lawyers and they agreed to an extension of the deadline. Alpha Jordyn, LLC, is also an unsecured creditor in Mr. Lewis’ case listed in Schedule F as having a claim regarding possible personal guarantee on a business debt. No dollar amount is listed as owed. There is more to come regarding this creditor and whether or not they sue Mr. Lewis.
So now F.Xavier Baldera and Regions Bank, Navistar Financial Corporation, Hit-Em Hard Corporation and Alpha Jordy, LLC, have until September 14, 2012, to sue Mr. Lewis and prove the debts owed to them should not be discharged in his bankruptcy case.

7. Transportation Alliance Bank

On August 8, 2012, John A. Thompson on behalf of Transportation Alliance Bank filed a motion for relief from stay. Transportation Alliance Bank is an industrial loan corporation with its principal place of business located in Utah. Transportation Alliance Bank alleges that Mr. Lewis owns a one-half undivided interest in real property located at Section 21, Township 12 – North, Range 21-West, Refugee Lands in Franklin County, Columbus, Ohio and more commonly known as Fort Rapids Water Park. Fort Rapids Water Park is an indoor waterpark with hotel accommodations and conference rooms. Transportation Alliance Bank alleges that Mr. Lewis took title to the property, as a joint tenant with a third party named Brownlee Reagan by warranty deed dated July 20, 2010. For some reason Mr. Lewis’ schedules of assets does not list Fort Rapids Water Park as an asset in Schedule A, but Schedule D does list Transportation Alliance Bank as having a second secured priority interest with the claim secured by Fort Rapids Indoor Waterpark Resort. Transportation Alliance Bank perfected its security interest by recording deed of trust against the waterpark on October 29, 2010. Keep in mind that Mr. Lewis filed for bankruptcy protection a mere 17 months later. The terms of the loan to Mr. Lewis by Transportation Alliance Bank were interest only payments to be made for 47 months with a balloon payment at the end of the 47 month term. As of April 10, 2012, Transportation Allican Ban is owed $2,338,803.58 by Mr. Lewis.

According to Transportation Alliance Bank Mr. Lewis only made the interest only payments until December 22, 2010, a couple months after receiving the loan. It also appears that on or around the same exact time Mr. Lewis was obtaining a loan from Transportation Alliance Bank he was also obtaining a loan for $5.1 million from Tennessee State Bank and using the same waterpark property as collateral to secure this loan too. It appears that the Tennessee State Bank won the race to record their security interest with assignment of rents before Transportation Alliance Bank recorded their deed of trust. Arguably then as, Mr. Lewis’ schedules of debts indicate, Transportation Alliance Bank has a second priority interest and Tennessee State Bank has the first position. In Transportation Alliance Bank’s motion for relief from stay they allege that the combined amount of the loans secured by the waterpark exceed the value of waterpark. They argue that Mr. Lewis is failing to adequately protect them due to Mr. Lewis no longer making interest only payments to them. In addition to receiving no payments, their loan being underwater or under secured, they argue the waterpark property is not necessary for Mr. Lewis to reorganize her debts in bankruptcy. When this motion for first filed Mr. Lewis was still in a Chapter 11 case. The case had not yet been converted to Chapter 7. While Transportation Alliance Bank’s motion was awaiting hearing Mr. Lewis converted his case to Chapter 7. Given the above facts Transportation Alliance Bank has grounds to obtain relief from the automatic stay and foreclosure on the waterpark pursuant to Ohio state law. There is more to come regarding Transportation Alliance Bank’s claim against Mr. Lewis totaling approximately $2.4 million.

To recap, this case started out as a Chapter 11 reorganization of debts case but was quickly converted to a case under Chapter 7. Mercedes Benz Financial Services USA, LLC agreed to allow Mr. Lewis to keep the 2010 Mercedes-Benz CL63 AMG with adequate protection payments from Mr. Lewis of $2,320.00 per month. Porsche Financial Services, Inc. asked permission from the court and received relief from the automatic stay to repossess the leased 2010 Porsche Panamera. F.Xavier Baldera and Regions Bank, Navistar Financial Corporation, Hit-Em Hard Corporation and Alpha Jordy, LLC, have until September 14, 2012, to sue Mr. Lewis and prove the debts owed to them should not be discharged in his bankruptcy case. Now Transportation Alliance Bank is asking the court for permission to foreclose on Mr. Lewis interest in a waterpark located in Ohio.

This concludes Part III. There are still six parties to discuss and find out what their interests are in Mr. Lewis’ bankruptcy case.

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.