Chapter 7 Bankruptcy

Riverside, California Chapter 7 Bankruptcy Attorneys
J.L. Borrie & Associates

Representing individuals and businesses in bankruptcy filings throughout the Inland Empire area of Southern California, including Riverside, San Bernardino, Redlands, Colton, Lake Arrowhead, Running Springs, Big Bear, Rancho Cucamonga, Fontana, Highland, High Desert, and Victorville.

A Chapter 7 proceeding is what persons generally mean when they say "bankruptcy." It liquidates or wipes out your personal liability on debts or obligations, with certain exceptions, primarily recent tax debts, child and spousal support. However, older tax debts are frequently dischargeable. If tax obligations are part of your problem, also see Tax Problems.

Eliminating Debt

When you file a Chapter 7 bankruptcy (or any bankruptcy) the court issues an Automatic Stay, which essentially means that upon filing the petition, creditors, including the IRS, collection agents and attorneys, etc, are restrained from trying to collect their debts. Simply put, they cannot send you insulting or threatening collection letters, call you on the phone, sue, garnish your wages, repossess a car, foreclose on your home, or do any other act to collect on the debt. If your wages are already being garnished, the garnishment must stop, and in many cases you can recover all the money taken from your wages within the 90 days prior to the filing of your case. If a creditor is foolish enough to ignore the restraining order, you may bring a contempt of court action against the creditor not only to make him stop, but also for the court to fine him, for costs and fees, and for damages caused by the violation of the automatic stay. Creditors are very well aware of the risks and will not try it if you are represented by competent counsel.

Personal Property You Can Keep

In regards to property you may retain in a Chapter 7 bankruptcy, there are currently two sets of exemptions, which are simply lists of different types of property and the value in each category, that the law says you can keep. We choose the most beneficial to you, based on the value and type of property you own. Further, under most circumstances, there is nothing wrong morally or legally from converting non-exempt property into exempt property, prior to filing your case, provided it is done correctly, done in accordance with the law, and properly perfected. If not done correctly, it can result in a loss of the property, and in extreme cases, can result in the denial of your discharge, so you need seasoned and experienced counsel in making these decisions.

Both sets of exemptions cover things like, clothing, jewelry, furnishings, automobiles, equipment used in trade or business, etc, in varying amounts, but one of the major differences is in the treatment of equity in your residence. One set provides that a married couple may have $75,000 in net equity in your home (in some cases $150,000 depending on age and income) after deducting all encumbrances) while the other set doesn't provide specifically for equity in a residence, but provides for a catch all exemption which allows an additional $21,825.00 exemption in anything you choose, whether it is money in the bank, cash in your pocket, equity in real property etc.

Reaffirming Debts For Property You Want To Keep

If you have debts secured by specific property, such as a car, house, furniture etc., which you want to keep, you can reaffirm the debt and/or continue making the regular payments, or perhaps we can negotiate new payment terms, lower interest, or extend the past due payments.

Liens

There is a unique type of security interest which deserves a brief discussion in the Chapter 7 bankruptcy context. It is a non purchase money security interest in household furnishings. Under state law, it is perfectly legal for creditors to take lien rights in certain household furnishings etc, which you already owned, when you obtained the loan from a finance company. However, in a bankruptcy proceeding, these type of liens can usually be voided. Generally, judgment liens (Judicial liens created by the recording of an abstract of judgment with the county recorder) on your residence can also be voided. In other words, the bankruptcy will dissolve the obligation owed, and a lien avoidance motion, will result in a judgment declaring the liens null and void, so that you retain the property without having to pay any part of the debt. Many lawyers who do not specialize in bankruptcy fail to file these motions, so if you have already filed a bankruptcy and ran into trouble, these motions can still be filed until your case is closed.

Property Transfers

Do not, under any circumstances, transfer, sell, give away, give a security interest, pay off or make any substantial payments on any debts, without first consulting a bankruptcy attorney, since such actions could have a very severe and sometimes irreparable effect when a bankruptcy case is filed. Notice I said Bankruptcy attorney, not a general practitioner attorney. The reason for this, is that general practitioner attorneys who try to handle several different major areas of the law are simply learning each time they take another case. Its okay for him, but it is your financial future in his hands, and it is you that will suffer the consequences, not him. A simple example of why you should do nothing until consulting a bankruptcy attorney is where you are entitled to the $21,825.00 exemption, but because you didn't know you could keep it, you repay your parents the $15,000.00 they loaned you earlier to save it from the bankruptcy trustee or creditors. Instantly, and once the bankruptcy case is filed, irreversibly, you have ran afoul of the preference provisions of the bankruptcy code, and the bankruptcy trustee simply sues your parents to recover the $15,000.00, which he uses to pay all creditors a pro rata share. In other words, the $15,000.00 you could have kept if you had been properly represented will now be taken from your parents, and you will get none of it. (The reason for this is that you cannot claim an exemption on property that you voluntarily transferred before filing) The trustee can go back a full year on transfers to relatives, and three months to non-relative non-insiders. Even worse, under some limited circumstances, the court could deny your discharge entirely for making such a transfer.

There are many other pitfalls, and traps for the inexperienced, which can be very damaging, so again, do absolutely nothing, until you have obtained experienced bankruptcy counsel, which by the way, generally cost no more, and many times will charge less, than the inexperienced general practice attorney, who many times adds a little padding to the fee to cover unexpected and unprepared for problems which he is afraid may arise, but which he lacks the experience to anticipate, prepare for, or avoid entirely.

Pre-Filing Planning

It is our belief that since your legal rights are determined and frozen as of the instant of filing the petition, pre petition planning is crucial in obtaining the best possible results. In many cases it is perfectly legal to manipulate your affairs in order to obtain the best result, providing you know what and how to do it properly. Anyone who files a bankruptcy case without being represented by a bankruptcy attorney (not a general practitioner, let alone a paralegal) is exceedingly foolish, is unlikely to obtain the best results, and is taking very substantial risks in not having all debts discharged, having the discharge denied, or revoked as much as a year after the case is over, or losing your home or other property. Keep in mind, that if certain mistakes are made, and they come to light within a year after you receive your bankruptcy discharge, your discharge may be revoked if the court believes your failure to disclose or other such mistakes were intentional. In other words, a year after you thought the case was over, all your debts would be reinstated, and you will have lost the right to file a bankruptcy for six years.

Reopening Bankruptcy Cases To Avoid Liens

Even after your case is closed, in many instances, your case can be reopened for the purpose of filing motions to avoid judgment liens on your residence, in cases where they were not avoided during the pendency of your case due to lack of knowledge of your attorney. It generally takes about 30 days to reopen your case, and another 30 days to avoid the lien.

Some Frequently Asked Questions Regarding Chapter 7 Bankruptcy

Is my employer notified?

No, not in a Chapter 7, however, if you file a chapter 13 and then fail to make the plan payments, your employer may be notified.

Will the government or utility companies discriminate against me if I file bankruptcy?

The bankruptcy code provides that governmental entities cannot discriminate against persons who file bankruptcy, which becomes important and useful in licensing problems. For example, if your drivers license has been revoked due to an uninsured accident, once the liability for damages arising out of the accident has been discharged, you are entitled to obtain a new license, even though the damages arising out of the uninsured accident will be discharged and unpaid. This provision also applies to contractor licenses. Additionally, it prevents utility companies from terminating service for discharged utility bills.

Should I use a paralegal, typing service or financial adviser instead of a bankruptcy attorney to save money?

We are often asked by persons with relatively simple non business cases if they should consider using one of the cut rate typing services, or so called financial advisers, or paralegals, who seem to have sprung up in every town recently. Unfortunately, the get rich quick hucksters who used to limit their get rich quick schemes to real estate, now are giving seminars to anyone willing to buy their books on how to get rich as a paralegal. The problem is that they haven't the slightest idea of what they are doing, they simply fill out the forms with information you provide, and charge $250 to $1,000.00 or so. It is a criminal offense for any non attorney to provide legal advice. To try and get around that, non attorneys say they only type what you tell them, that they are not giving legal advice, and put you in pro per (in other words, representing yourself), which in some cases you aren't even aware of until the first court hearing. Since you are representing yourself, anything and everything that goes wrong is your fault, and your problem, not the typing service or paralegal because they are just typing what you tell them. This office is routinely retained to straighten out problems general practice attorneys get into, let alone typing services and paralegals. Keep in mind that there are no minimal requirements, and anyone can call themselves a paralegal, even you. If you insist on trying to save a little money by using one of these services, please save this web page to your favorites for when you run into problems. However, keep in mind that the fees we charge for fixing botched cases can exceed what we would have charged had we prepared the entire case from the beginning, and some problems cannot be corrected at any cost.

We offer a free conference of up to one hour with an experienced (a minimum of 10 years) bankruptcy, tax problem, foreclosure and debt resolution attorney (not a junior associate or paralegal) who will fully analyze your specific financial situation, and advise you as to your available options, likelihood of success, and the costs and procedures involved in each alternative.

If you would like someone to contact you regarding your problems or concerns, please choose the appropriate choice below, or call us at 951-686-6432 (toll-free 877-MYATTYS) and mention that you visited our web site for a free, no-obligation conference.