Give my assistant Christian a call at 619.202.7511. He will be able to speak with you and line up a quote. .

Chapter 7 Overview

Bankruptcy Chapter 7

Who files Chapter 7 bankruptcy?

Quick answer: people who, because they don’t make too much money, qualify to wipe out some or all of their debt while still keeping all of their property.

You have to qualify for Chapter 7. In the vast majority of cases this is the type of bankruptcy that you want to qualify for. Why?

1. It’s less expensive.
2. The process is over in 100 days. (A Chapter 13 case can last 3 to 5 years.)
3. Almost all clients wipe out all of their unsecured debt and keep all of the things that they own.

What are the income limits in order to qualify for Chapter 7 bankruptcy?

1. If you are single and earn less than $56,580 per year, you automatically qualify for Chapter 7.
2. If you are married without children and earn less than $72,327 per year you automatically qualify for Chapter 7.
3. If you are married with one dependent and earn less than $82,000 per year you automatically qualify for Chapter 7.
4. If you are married with two dependents and earned less than $94,505 per year you automatically qualify.

What if my income is over? Am I automatically disqualified from filing the simpler, less expensive Chapter 7 bankruptcy?

No. You can still qualify for Chapter 7 if you fail what is known as the “means test.” Basically, expense categories applicable to you are run through a formula to determine if, in the eyes of the bankruptcy court, you have any money left over at the end of the month after covering payments for all of your necessities of life. The “means test” can be very unfair. One person with the same amount of income as another person can pass the test while the other fails simply because one of the persons has certain types of expenses and the other does not. As a general rule, your income can be way over the amount that automatically qualifies for bankruptcy and you will still qualify for Chapter 7 if you have some combination of the following types of expenses: a car loan, a health insurance payment, child care costs, educational costs for a child, extraordinary monthly medical expenses, child support or alimony payments, back taxes, a mortgage payment, mortgage arrears, charitable deductions, union dues, disability insurance payments, health savings account payments or you take care of an elderly or infirmed family member.

Even if I qualify for Chapter 7, when would I want to file under Chapter 13, instead?

1. If you are behind on your mortgage or are way behind on your child support payments and need up to 60 months to get caught up.
2. If you have a second mortgage on your home and the home is worth less than the balance of your first mortgage. Here, in a Chapter 13 case, in addition to all of the other debts that you could wipe out, you can also wipe out the second mortgage.
3. You need a guaranteed low or no interest repayment plan to repay current state and federal income taxes.
4. You need the protection of the bankruptcy court for up to five years.

Once the Chapter 7 case is filed, can creditors still take my money, garnish my wages, sue me, continue with a lawsuit or even call me?

No. Once the case is filed no further collection activities can be taken against you without a court order. And “collection activities” is broadly construed. It means no more phone calls. No more letters. Wage garnishments and bank levies must stop. If you have been sued, that legal proceeding is stayed, and if the debt is wiped out in bankruptcy that legal proceeding is terminated without you having to do anything other than complete the bankruptcy process.

Penalties are severe if a creditor breaks these rules, so once you get your bankruptcy case on file you will quickly realize that “the sky really is blue.” And, unlike any other firm, you don’t have to pay us in full in order to get your case filed. We make getting access to relief as easy as possible.

What are the main goals of a Chapter 7 bankruptcy?

1. Wiping out as much debt as possible.
2. Keeping everything that you own.
3. Obtaining a better car and a better car loan and leaving an “ugly” car loan behind. By “ugly” we mean a high interest rate, a loan balance that is much higher than the value of the car, or both.

What debts can I wipe out in a Chapter 7 bankruptcy?

Note: wiping out as much debt as possible in a Chapter 7 case is one of the three main goals of the process (the others being keeping everything that you own or have an interest in and leaving an ugly car loan behind.)

1. The list is long. Credit card debt, payday loans, medical bills, monies owed pursuant to most judgments, personal loans, bank overdraft charges, most older income taxes, bad business debts, overpayments of unemployment or disability compensation, old car loans, deficiency balances on repossessed or voluntarily surrendered vehicles, old mortgages on foreclosed or surrendered properties, unpaid monies related to renting a house or apartment.
2. What debt is not dischargeable—that list is relatively short. Recent taxes, most government fines, back child support and alimony, almost all student loans, claims for personal injury or death if you were intoxicated, credit obtained by fraud. And a few others that rarely arise.

Can I keep what I own and still wipe out my debt?

Short answer: 99% of the people we have represented keep everything they own and wipe out all the debt that can be wiped out.

Who doesn’t keep everything that they own?

People who have property that we cannot find an exemption for. General rule of thumb if you don’t own real property and have lived in California continuously for two (2) years: you will keep your furniture, furnishings, clothing, up to $2,000 worth of jewelry, all monies in a retirement plan PLUS $6,000 of equity in any number of vehicles and $28,250 of ANYTHING else.

If you own real property, you can shield your retirement plan, your jewelry, $3,000 in equity in any number of vehicles PLUS the equity in your house as follows:

1. $75,000 if you’re single.
2. $100,000 if you’re married or single with another family member living with you.
3. $175,000 if certain age or age and income requirements are met.

What can I do if I have more property than I can exempt?

Typically, you can legally convert the property that is not exempt or protected by an exemption category by converting it into property where there is an available exemption category.

What are my options in a Chapter 7 case with regards to my car loan?

Four options:

1. Reaffirm the car loan as is and keep making the same payment pursuant to the same contract.
2. Surrender the car back and wipe out the loan.
3. “Redeem” the car. Rarely used. Here, you can pay the current lender, in one lump sum, the value of the car and the balance of the loan is wiped out. Easier said than done. Typically, the lender will ask the court to set value which means additional fees to get the court’s opinion and if the court doesn’t agree with your valuation and you decide not to go forward with the redemption at the price the court sets, you gambled and lost the attorney’s fees paid.
4. Get another car either while you are still in bankruptcy or after getting out and surrender the current car back to the lender and wipe out that debt. As hard as this is to believe: it is a lot easier to get a car/truck either during bankruptcy or shortly thereafter than you might think.

What do we typically recommend with “ugly” car loans? We recommend that you do anything other than reaffirm that debt. It is a lot easier than you think to get another car so don’t think you’re stuck with the car you have.

What is the process in filing a Chapter 7 case?

The steps would be as follows:

1. Schedule a free consultation.
2. If you decide to go forward, we will go over the entire bankruptcy petition with you. We do not use questionnaires.
3. At the end of the first meeting, we will send you an e-mail with a final list of information and documents that we need to file the case.
4. At the second meeting, the petition is finalized, reviewed and signed. The case is typically filed within 1 to 2 days of final review.
5. Roughly one month after the case is filed, there is a short hearing with a court official. Basically, the official, known as a trustee, wants to confirm that you have listed all of your assets, debts, income and provided all other necessary information and supporting documentation. In almost all of our cases, the meeting with the court official, or trustee, lasts between three and five minutes.
6. After the hearing, creditors have 60 days to complain if that’s what they want to do. We have helped over 1000 people since 2005 and it is extremely rare that a creditor in one of our cases complains. In other words, once the case is filed the dischargeable debts are dead and gone. The process just needs to run its course.
7. Between the hearing with the court official and the expiration of the 60 days, we work with you to keep or surrender your car, and other minor details.
8. At the end of the process, the court processes the final paperwork and we hope you become yet another client who posts a positive review about your experience with us on Yelp or Google!

What can I expect at my free initial consultation and typically how long does it take?

We will answer your questions, let you know what your options are and discuss with you how much it would cost to pursue each of your options. In order to do this, we obtain information from you on the following topics and then take the time necessary to make sure we understand fully your situation with regards to each of these topics:

1. Your total income from all sources.
2. The nature and amount of your debts.

a. Do you own a home?
b. Do you have a car payment?
c. What type of debt you have.
d. Whether any of that debt was incurred within the last 90 days.
e. Whether you have borrowed any money from family and, if so, whether you have repaid any of that borrowed money within the last year.
f. Whether you owe any back taxes or have student loans.

3. The nature and value of any property that you own or have an equity interest in.

The typical initial consultation lasts anywhere from 30 to 45 min.

Are you ready to take that first step onto the road to financial well-being?

Call today to schedule a free consultation to discuss the particulars of your case. We will take the time on the phone to get a clear understanding of your case, and if we can help, we will work with you to find a time as soon as possible to have you come in to discuss your case in greater detail with an experienced bankruptcy attorney. 

Chapter 13 Overview

Bankruptcy Chapter 13

Who files for Chapter 13 bankruptcy?

The following individuals either have to or choose to file under Chapter 13:

1. People who make too much money, don’t qualify for Chapter 7 and, in the eyes of the bankruptcy court, have something left over at the end of the month after covering payments for all of their necessities of life. For example, if you have $40,000 in debt and you have $200 left over each month (in the eyes of the bankruptcy court), you would have to pay that $200 for five (5) years, or a total of $12,000. The difference between what you pay ($12,000) and what you owe ($40,000) is forgiven at the end of the five years.
2. If you are behind on your mortgage or are way behind on your child support payments and need up to 60 months to get caught up.
3. If you have a second mortgage on your home and the home is worth less than the balance of your first mortgage. Here, in a Chapter 13 case, in addition to all of the other debts that you could wipe out, you can also wipe out the second mortgage.
4. You need a guaranteed low or no interest repayment plan to repay current state and federal income taxes.
5. You need the protection of the bankruptcy court for up to five years.
6. You have filed for bankruptcy and received a discharge within eight (8) years and have run into problems where you need bankruptcy court protection.

What are the benefits of a Chapter 13 case?

There are many, as follows:

1. If you can’t wipe out your unsecured debt like credit cards in a Chapter 7 case because you make too much money, then you have to file under Chapter 13. In a Chapter 13 case, you would only have to pay each month that amount you have left-over after covering all of your necessities of life.
2. If you make so much money that you have to repay all of your unsecured debt, in a Chapter 13 case you would get an automatic “debt consolidation” plan. You would have up to 60 months to repay AND no matter what the credit card company says, you would only have to pay between 0 and 5% interest. A Chapter 13 case is, frankly, the best debt consolidation plan available. Obviously, it is better to simply wipe out all the credit card debt in a Chapter 7 case and be done with the process in 100 days, but if you make too much money and don’t qualify for Chapter 7, Chapter 13 offers the best repayment or consolidation arrangement.
3. Creditors cannot call you or anyone else, send you mail, sue you, levy on your bank account, garnish your wages or do take any other collection activities against you for the time you are in bankruptcy. Bottom line: peace of mind.
4. For a creditor to get some or all of their money, they have to file what is known as a “proof of claim.” If they don’t, then they don’t get paid anything. For example, assume $50,000 in debt but a creditor holding $25,000 of that debt does not file a proof of claim. They get nothing. If you’re required to repay all of your debt, then by that creditor not filing you now only have to repay $25,000. Huge potential savings- right out of the gate.
5. If you have a second mortgage and the house is worth less than the first mortgage, you will leave the bankruptcy only owing on the first mortgage. Couple that with wiping out all or most of your credit cards and other unsecured debt and you’ll be in a much better place financially.

How long does a Chapter 13 case take and how much more expensive is it?

Case takes between three (3) and five (5) years to complete. The court sets the “presumptive” fee at $3,600 for individual and $4,000 for business related cases. Total fees are negotiable. You do not have to pay the entire fee up front to get your Chapter 13 case filed. The amount of each down payment varies.

What happens with a car payment in a Chapter 13 case?

If you have owned the car for more than 910 days, the new loan amount will equal the vehicle’s value and the interest rate will be reduced to under 5%. Example: Loan of $20,000. Value $10,000. Loan more than 910 days old. Interest rate 15%. In a Chapter 13 Plan, you would repay $10,000, paid over five (5) years at under 5% interest.

Couple the new car loan with stripping off a second mortgage on your home and repaying credit cards at 5% or less, and probably repaying only a portion, and you can see how a Chapter 13 case can radically better your finances.

What is the process in filing a Chapter 13 case?

The steps would be as follows:

1. Schedule a free consultation.
2. If you decide to go forward, we will go over the entire bankruptcy petition with you. We do not use questionnaires.
3. At the end of the first meeting, we will send you an e-mail with a final list of information and documents that we need to file the case.
4. At the second meeting, the petition is finalized, reviewed and signed. The case is typically filed within 1 to 2 days of final review.
5. Prepare and file the Chapter 13 Plan. The Plan identifies who you will pay, how much you will repay them and at what interest rate.a. Your monthly payment for the following items is generally equal to 1/60th of the total.

i. Back taxes. Typically interest required at 5% or lower.
ii. Back child support. Typically interest required at 5% or lower.
iii. Home loan arrearages. Typically no interest required.
iv. Car payment arrearages. Typically no interest required.
v. Unpaid attorney’s fees. No interest required.

b. Calculate amount owed for your car or car payments.

i. If your car loan is more than 910 days old, new loan amount equals the value of the car and the interest rate reduced to 5% or below.

c. Factor in any lease payments.
d. Factor in payment to unsecured creditors IF you have money left over after covering the costs for all of your necessities of life.
e. Identify any property subject to a loan that you want to return to the lender. Pay nothing on that debt.
f. Let the court know that you plan on stripping off a second mortgage if the value of your house is less than the balance on your first mortgage.

6. Roughly one month after the case is filed, there is a short hearing with a court official. Basically, the official, known as a trustee, wants to confirm that you have listed all of your assets, debts, income and provided all other necessary information and supporting documentation. In almost all of our cases, the meeting with the court official, or trustee, lasts between three and five minutes.
7. If the trustee accepts the petition as filed, then a hearing will be set to have the judge confirm your repayment plan. Often, however, the trustee will require additional information and will continue the hearing.

What can I expect at my free initial consultation and typically how long does it take?

We will answer your questions, let you know what your options are and discuss with you how much it would cost to pursue each of your options. In order to do this, we obtain information from you on the following topics and then take the time necessary to make sure we understand fully your situation with regards to each of these topics:

1. Your total income from all sources.
2. The nature and amount of your debts.

a. Do you own a home?
b. Do you have a car payment?
c. What type of debt you have.
d. Whether any of that debt was incurred within the last 90 days.
e. Whether you have borrowed any money from family and, if so, whether you have repaid any of that borrowed money within the last year.
f. Whether you owe any back taxes or have student loans.
g. The nature and value of any property that you own or have an equity interest in.

The typical initial consultation lasts anywhere from 30 to 45 min.

Are you ready to take that first step onto the road to financial well-being?

Call today to schedule a free consultation to discuss the particulars of your case. We will take the time on the phone to get a clear understanding of your case, and if we can help you, work with you to find a time as soon as possible to have you come in to discuss your case in greater detail with an experienced bankruptcy attorney.

Wage Garnishment Overview

What effect does filing a bankruptcy case have on a wage garnishment?

Once your bankruptcy case is filed, the wage garnishment stops. Why? Because once a bankruptcy case is filed, a federal court judge issues an order automatically “staying” ANY further collection activity. We send a copy of the bankruptcy filing to the employer. We send a copy to the attorney for the creditor that is trying to garnish the wages. The employer immediately stops (or by law should stop) the wage garnishment. The creditor’s lawyer typically also will send notice to the employer to terminate the wage garnishment. Bottom line, if not immediately then within days the employer and the creditor and our office are all on the same page, and the wage garnishment stops.

The key is getting the case on file as quickly as possible. If you work for a small company, then it’s easy to get in contact with the payroll department and with that person at your employer who has the power to stop the wage garnishment. If you work for a large company, things can take longer, especially if your payroll department is in another city or state. Getting the case on file quicker gives us more time to work through the bureaucracy and get the notice of filing to the person at your company who makes the final decision on whether or not to deduct monies from your paycheck. Also, you want your employer to have the notice not just before your pay day, but before your payroll is run. For example, you might get paid on Friday, but payroll is run on Tuesday. You would want to get your case on file no later than Monday by noon so there is time to get the notice to the employer before they run payroll on Tuesday.

• Note: There are different types of wage garnishments.

While all garnishment activities must stop once the case is filed, what finally happens with the wage garnishment depends on the type of debt that led to the wage garnishment in the first place. The most common types of debts that lead to wage garnishments are as follows:

1. Back taxes- state or federal.
2. Child support.
3. Judgment liens. (Credit card company sued, obtained a judgment, found out where you work and started garnishment proceedings in order to collect on their judgment.)
4. Student loans.

By far, the most common type of debt that leads to a wage garnishment is a judgment lien obtained by a credit card company, personal loan or other contract based debt. These are the most common and they are also the most easily dealt with. In the vast majority of cases, once the case is filed not only does the wage garnishment stop but the underlying debt is wiped out at the conclusion of the bankruptcy case. Here, the wage garnishment is stopped upon filing and it never comes back. Debt gone. Wage garnishment gone, as well.

Wage garnishments caused by back tax debt, child support or student loans are different. In many cases, once the case is filed the back tax debt is wiped out so the wage garnishment goes away. The same cannot be said for child support or student loans. Those wage garnishments typically come back once the chapter 7 bankruptcy case concludes. Because of the complexity of the law applicable to tax, student loan and child support based debts, it is best to schedule a free consultation to discuss these issues in greater detail. Bottom line: if the wage garnishment cannot be stopped, permanently, once and for all, Chapter 7 or Chapter 13 offer a wide range of options for limiting the impact of the wage garnishment on your and your family’s finances.

We will be providing you with email updates every step of the way.