The decision to file a Chapter 7 or Chapter 13 bankruptcy comes after thoroughly evaluating one’s financial situation as well as options for bringing debts under control.  Most likely you will be deciding which chapter to file only after weighing the pros and cons of each option.

The fact that most people choose to file a Chapter 7 doesn’t mean that that this solution is the best solution in all cases.  Indeed, Chapter 13 bankruptcy may be better suited to provide the protection and debt-relief for debtors with property they want to protect (which includes secured debt).

Usually people who file a Chapter 13 bankruptcy can combine the automatic stay feature with a the debt restructuring plan (containing a 3-5 year payment plan) to re-establish their financial stability.  When these features are combined with extended property protections, it becomes an attractive option for anyone seeking to avoid repossession or stop foreclosure.

To further help you understand why a repayment plan may suit you best, here’s a list of 12 reasons why many people favored a Chapter 13 bankruptcy:

We hope this list will be helpful to you as you discuss in detail your individual situation and as you decide the next steps in your debt relief plan.

Financial Freedom Law focuses on Chapter 7 and Chapter 13 debt relief and invites anyone who is spending too much time dealing with creditors, and not enough time dealing with the next steps to financial recovery, to call or email to discuss your individual circumstances.

Please contact our Sacramento office at 916-313-9069 or via email at info@california-bankruptcyattorney.com

• What is Consumer Credit Counseling?

It is an approximately 1-1.5 hour course that can be done either online or via the telephone

• Do I have to pay for Credit Counseling?

Credit Counseling does cost money.  The amount depends on which provider you use.  It costs more to do the course by phone then it does to do it online.  Some providers cost far less than others, but they require more steps and take longer to issue the required certificate.  It is helpful to ask your Attorney about who they recommend as they will typically steer you towards who has the best prices and service.

• What do I need to provide when I take this course?

You will be asked about your monthly income, your monthly expenses, and about your debts.  It is helpful, though not required, to have your pay stubs, credit report, and or bills on hand, but it is also okay to just estimate, there is no pass or fail.

Once you have completed entering all of your information, you will likely be asked to call and speak to a Credit Counselor by phone.  Depending on the provider you chose to use, they may try to talk you into signing up for their debt management program, where they offer to negotiate with your creditors to decrease your debts and put you on some kind of payment plan.  You are NOT required to do this.  You let them know that you just want your certificate of completion and provide the contact info where you want it sent.  The Certificate of Completion is what is actually filed along with your Bankruptcy Petition.

• How do I find a Credit Counseling Provider?

An experienced Bankruptcy Attorney’s office will also have Paralegals and other  Professionals who can point you in the right direction.  Our office makes referrals based on cost, customer service and past experience.

• When should I complete the Credit Counseling?

Keep in mind that the certificates are good for only 180 days.  If you are on a long payment plan with an attorney, you haven’t fully committed to filing bankruptcy, or any other reason that could delay the filing process for more than a couple months, it is best to hold off.  But if you are anxious to file and have retained an attorney, it is best to get that part out of the way so it doesn’t delay your filing in any way.

Remember, there are numerous documents that you are required to provide when filing for bankruptcy, including pay stubs, tax returns, and the Credit Counseling Certificate of Completion.  It is best to retain an Attorney to ensure that you are aware of all of the requirements and that everything is filed correctly.  Financial Freedom Law is an office of compassionate and experienced Bankruptcy Professionals.  Please contact our Sacramento office serving Dixon at 916-313-9069 or via email at info@california-bankruptcyattorney.com

This is the most common first questions heard during the first interview of people seeking help from my bankruptcy practice in the Sacramento area.

Bankruptcy does offer an action plan to overcome overwhelming money problems – that’s my experience in working with people as their “agent for debt relief”

Bankruptcy is the plan, but first I have to ask a few questions – 12 to be exact:

On a MONTHLY basis, could you supply the following financial details about your everyday life?

1)    What are housing expenses? [go ahead and include utilities, you need them to run the house]

2)    What are transportation expenses? [car, gas, public transportation]

3)    What are food expenses? [just food, not toothpaste or napkins]

4)    What are debt expenses (balance, plus interest)

5)    How much added to credit cards [what are you buying on credit]

6)    How much saved or given to charity [it’s a non-material acquisition]

7)    How much spent on upkeep [clothes, home repair, home furnishings, other decoration/upkeep of person or environment -- you and your environment deserve to be lookin’ good]

8)    How much spent on entertainment [sports, golf, movies, night on town]

9)    How much spent on education [could be book purchase, internet training, memberships]

10) How much spent on health-related activities [gym memberships, supplements, special food]

11) How much spent on gifts or other contributions to family or friends [special occasions]

12) How much spent on whatever is classified as “miscellaneous” [could be technology, office supplies, cell phone, whatever is not 1-11]

Maybe you’d like to get a notebook or binder and use a page for each of the twelve categories?

It doesn’t have to be a perfectly accurate total.

How about just one more question: what’s your basic take-home monthly pay (cash) from your job or business venture?  [It’s easy when you have a job to tally the score – but your income minus expenses gives this income figure for a business venture.

Take a breather – you are very close to knowing where you stand right now as far as your finances.

Okay, got the income figure? Just jot it down here:

1)    Monthly income

2)    Add numbers 1-12 and put total here

3)    Subtract #2 from #1

TOTAL MONTHLY (plus or minus MONEY ________)

Done?  Congratulations, you’ve just overcome being overwhelmed by your money problems.  How can I call this a successful conclusion to your money problems when we haven’t even discussed how a Chapter 7 or Chapter 13 might be a perfect fix for your circumstances?

Impossible to Worry and Take Action at the Same Time

It’s a simple neurological fact of brain design – you can’t be stuck and worried about a situation at the same time you are facing the facts about it and making an inventory of options.  We are either avoiding or confronting facts.

Confronting facts may be difficult, even painful, but so is winning a title basketball game!  Ask any athlete how he/she became a winner . . . they’ll tell you the basic truth: “just stay in the game.”

To learn more about your options if your left over monthly income is in the MINUS category or barely breaking even contact us

The best way to protect assets during bankruptcy is to retain the services of a knowledgeable bankruptcy lawyer. Your attorney’s analysis will enable you to complete a Chapter 7 or Chapter 13 bankruptcy, the first step in achieving the debt relief you need to pursue your financial goals.  Please contact our Sacramento office serving Florin at 916-313-9069 or via email at info@california-bankruptcyattorney.com

Only you know the details of your daily life –whether your efforts to earn money, pay expenses, and save for future expenses are reasonable and ordinary, given the unique challenges you face due to your specific circumstances.

We all know that these are challenging times due to economic conditions here and globally.  But people who are in debt are at a disadvantage because debt payment gobbles up income, especially since debt is not just the amount of money you originally borrowed, but also interest charges and other penalties.  These added amounts increase every month that you can’t pay off the full balance, and creates a vicious cycle that leaves you unable to get out of debt.

If you realize that it is possible to pay a minimum monthly payment on a debt and it will take 30 years to pay off.  Find a debt calculator and play the pay-off game.  It will open your eyes to the fact that it is possible to make less than a full monthly payment and for 12 months and still owe the same amount of debt at the end of these 12 payments!

This is called “crippling debt” or a debt trap because you’re either spinning your wheels and getting nowhere, or you’ll be paying this debt off for thirty years and pay the original principal amount many times over.  This is a fact.

If you feel that your debt problem is crippling your ability to earn, spend, and save in a reasonable manner, then bankruptcy may be a necessary part of the picture.  Of course, you’ll want to consider your options carefully.  You’ll also want to be aware that waiting months and years to finally decide to pursue a needed bankruptcy will mean that you have wasted income and assets that you could have put to other uses:

Bankruptcy laws are here to help qualified debtors get a fresh start. You could use the assets and income you use now to battle overwhelming debt to make more money (invest in equipment or training).  Or you could spend your resources (time and money) on improving health or relationships, or other creative ways which are valuable to you in terms of your personal goals for you or your family.

Nothing prevents you from paying your debts discharged in bankruptcy if you choose after you have gained the ability to create increasing wealth, rather than being doomed and helpless in an ever-increasing downward spiral of debt and lack of disposable income.

The advice of an experienced bankruptcy attorney can help you determine your options and action plan in light of your income, assets, and the nature of your debts.  This analysis will enable you to complete a Chapter 7 or Chapter 13 bankruptcy, the first step in achieving the debt relief you need to pursue your financial goals.  Please contact our Sacramento office serving Parkway-South Sacramento at 916-313-9069 or via email at info@california-bankruptcyattorney.com

What is your financial stress telling you?

Stress from financial change, insecurity, and decrease or loss of income effects everyone differently.  That’s because there’s basically three ways to interpret stress in your life.

Stress can:

1)    Motivate Problem Solving and Action:

Stress from problems may motivate some people to find solutions to their problems.

2)    Trigger Emotional Pain, including worry, shame, and defeat:

Yes, for some people, stress about debt and lack of income to pay debt may lead to feelings of worry, shame, defeat, which feeds the unreasonable belief that they are out of options.

3) Lead to false generalizations such as “I’m a failure or weak,” and thus freeze further action:

Some people, due to their beliefs and background experiences, may feel that “there is nothing worse than to file bankruptcy.” People who put themselves into the “failure” category will most likely wait until their situation degenerates into a crisis with serious consequences to their health or relationships before they seriously consider bankruptcy as a workable option.

What is bankruptcy? Just see what the U.S. government website has to say on the subject:

“Bankruptcy laws help people who can no longer pay their creditors get a fresh start – by liquidating assets to pay their debts or by creating a repayment plan”

Does a “fresh start” sound like it could be the best solution to your out-of-control debt situation?

If so, you’ll probably want to follow up with answers to questions like these:

• How to make an informed decision about your next step by exploring alternatives to personal bankruptcy.

• Find out about the assistance the attorney provides, as well as how to prepare documents for evaluation.
• Decide whether a Chapter 7 or Chapter 13 bankruptcy as your best option
• Understand what assets you are able to exempt and whether or not to expect “liquidation of assets and distribution to creditors”, and your case trustee’s role in this process
• Learn about what happens at your Section 341 meeting of creditors.
• Learn important steps in rebuilding credit after completing personal bankruptcy, including how to prepare a budget.

The advice of a bankruptcy attorney can help you determine your options and action plan in light of your income, assets, and the nature of your debts.  This analysis will enable you to complete a Chapter 7 or Chapter 13 bankruptcy, the first step in achieving the debt relief you need to pursue your financial goals.  Please contact our Sacramento office at 916-313-9069 or via email at info@california-bankruptcyattorney.com

FROM: Your Bankruptcy Help Team

RE: The facts of ordinary Chapter 7 or Chapter 13 bankruptcies are vastly different than the sensational (and, to you) fantasy life of celebrities with millions in assets and with creditors owed millions of dollars

Q:  What do these headlines have in common?  A:  They report the exception, not the rule

“Make Me An Offer: Trustee Can Sell Aston Martin Owned By Madoff Brother”

“Bankruptcy judge orders sale of Peter Madoff’s $270K vintage Aston Martin”

“Peter Madoff’s Aston Martin to Be Auctioned to Pay Victims”

Headlines lure readers by being sensational and entertaining.  But all headlines are not necessarily reporting facts of life that apply to ordinary people.

These three news articles from the New York Post, Business Week, and The Wall Street Journal easily catch our attention when they publicized the sale of the 270 thousand dollar Aston Martin automobile going on the auction block to return a portion of money to victims of a fraudulent investment scheme.

People read about celebrity bankruptcies because such news stories get attention, but such stories create false impression about ordinary processes of bankruptcy, and how really unspectacular the process of resolving consumer debt problems through filing either a Chapter 7 or Chapter 13 bankruptcy actually is.

Q: In a typical Chapter 7 bankruptcy will my “assets” be “distributed” to my creditors?

A: The majority of Chapter 7 bankruptcies are “no-asset” cases, which means that all of the debtors assets are exempted.  Exemptions vary by location, some use state exemptions and some use federal.  For example, in California, you can use the federal “703” exemptions.  In this case, the majority of assets inside your home, including furniture, appliances, electronics, wearing apparel, collectibles and hobby equipment is 100% exempt through the “personal property” exemption.  There is $3,775 to protect equity in your vehicle, and $1,425 to protect your jewelry.  Anything over these amounts can be protected by the $21,825 “Wildcard” exemption.

Q: How are un-exempted assets, if any, distributed to my creditors?

A: When your bankruptcy is filed, a Trustee is appointed. In a Chapter 7 bankruptcy, the Trustee’s main job is to review your Bankruptcy Petition and to sell any non-exempt property you have. Don’t worry! Most people don’t lose anything. Besides, we will let you know before your bankruptcy is filed if you are in danger of losing any property.

Discussion:  The whole purpose of filing bankruptcy is to get debt relief from bills you cannot pay. Under current consumer bankruptcy law, there are two types of bankruptcy where a debtor can either repay creditors under a repayment plan [Chapter 13] or surrender un-exempt assets to the Trustee to sell and repay creditors [Chapter 7].

These are the facts:

1)    About 70% of bankruptcies are Chapter 7 bankruptcies [aka “straight bankruptcies”] and

2)    Most of those are no-asset cases;

3)    A “no-asset” bankruptcy involves a Chapter 7 bankruptcy where the debtor has no assets to liquidate and unsecured creditors receive no distribution of money.

The bottom line for you: It is unlikely that a Bankruptcy Trustee will be selling your car or any other assets to distribute the proceeds among your creditors.

The best way to protect assets during bankruptcy is to retain the services of a bankruptcy lawyer. Your attorney’s analysis will enable you to complete a Chapter 7 or Chapter 13 bankruptcy, the first step in achieving the debt relief you need to pursue your financial goals.  Please contact our Sacramento office at 916-313-9069 or via email at info@california-bankruptcyattorney.com

• If a Chapter 7 debt discharge bankruptcy is being planned, the automatic stay will hold off any foreclosure until the Lender obtains Relief from the Automatic Stay or possibly until the discharge of the Chapter 7 case, typically 2-5 months. This could possibly buy the homeowner enough time to catch up with their payments and save the home from foreclosure.
• If the homeowner is significantly behind on the home mortgage, a Chapter 7 will buy the debtor a few months to find a new place to live.  A Chapter 7 bankruptcy will also be of help if the debtor is burdened with significant amounts of credit card debt and other unsecured loans, and it erases the burden of continuing to owe money to the lenders after the home has been foreclosed.
  • Using a Chapter 7 case to relieve the obligation to repay unsecured bills may free up enough monthly income to help keep the house.
  • The homestead exemption (which protects a certain amount of equity) that is available in the debtor’s home state may be large enough to prevent the house from being surrendered to the bankruptcy trustee. (you must also continue to make the mortgage payments on your home if you want to keep your home).
• If the debtor has sufficient income to make payments toward all secured debts, then a Chapter 13 debt reorganization bankruptcy may be a better option.
  • The automatic stay of the bankruptcy holds off any foreclosure during the repayment plan period, and no interest accrues on the debt until the Chapter 13 plan is over and discharged.
  • Working with an experienced bankruptcy attorney, the debtor might be able to strip off any second and;
  • or third liens from the home if the first mortgage has used up all the available equity on the underwater property.

In either case, preventing a foreclosure or getting out from under an underwater mortgage may be better than simply losing the home with no proceeds to show for it. The discharge of the bankruptcy also eliminates the risk of owing the lender for any deficiency between the price the home brings upon sale and the value of the mortgage loan.

Financial Freedom Law is an experienced, compassionate partner that can help you decide among many options, depending on income, assets, the nature of your debts, and the goals you may have after completion of a Chapter 7 or Chapter 13 bankruptcy.  Please contact our Sacramento office at 916-313-9069 or via email at info@california-bankruptcyattorney.com

Are debt collectors getting pushier?  More and more say “yes” as a growing percentage of people are facing insurmountable debt problems, often accompanied by overly aggressive collection efforts from debt collection agencies.  Many consumers report that harassment by collectors is in fact one of the main reasons they finally decided to seek either Chapter 7 or Chapter 13 bankruptcy protection.

• Creditors seem to assume that debtors can come up with extra money to pay their debts if only they become “strongly motivated” to do so.  Unfortunately, many debt collectors are resorting to overly aggressive collection efforts.
  • Debt collectors often take advantage of the guilt or fear that consumers feel when they can’t keep up debt payments.
  • Some overly aggressive collectors are in the habit of contacting debtors every day, multiple times a day, and late at night in order to harass or frighten consumers into making larger debt payments.
  • Some will go even farther and contact every possible phone number, calling debtors at work or even harassing their family members and colleagues.
  • One woman recently reported that a debt collector was looking for a person with a name similar to hers.  Despite multiple attempts to convince the debt collector that he was not talking to the right person, the woman continues to receive contacts from the debt collection agency.
  • One debtor tells of an aggressive rent-to-own furniture store: a few days after missing just one payment, debt collection agents showed up in a moving van to repossess the rented furniture.
• The Automatic Stay of a bankruptcy will prohibit creditors and debt collectors from contacting you. This protection goes into effect as soon as the bankruptcy is filed, and puts a stop to almost all collection attempts, including most wage garnishments and lawsuits.
• Just the act of hiring a Bankruptcy Attorney will decrease creditor harassment.  Once the attorney is retained you can direct creditors to their office (ask the attorney for their contact info), and someone from the office can confirm that they will be filing on your behalf

Financial Freedom Law focuses on Chapter 7 and Chapter 13 debt relief and invites anyone who is spending too much time dealing with creditors, and not enough time dealing with the next steps to financial recovery, to call or email to discuss your individual circumstances.  Please contact our Sacramento law firm at 916-313-9069 or via email at info@california-bankruptcyattorney.com

• John M. Restrepo, chairman of the Nevada State Economic Forum, recently filed a Chapter 7 debt discharge bankruptcy in Nevada.   Restrepo reported $905,000 in debt and $360,000 in assets.  The economist attributes his debt situation to the restructuring of his consulting business due to the recession.

• Restrepo had to change his business from a full time staff of eight to only one part-time employee and a number of freelance consultants.  While his business remains an ongoing concern, the main reason Restrepo filed for personal bankruptcy is that he, perhaps unwisely, exhausted his personal savings and retirement funds in order to keep his consulting firm open.

• Restrepo makes economic forecasts for the city of Los Vegas and the state of Nevada, but even he was unable to predict the intensity of the Great Recession when the subject was much closer to home. Perhaps his biggest mistake was using up personal savings to prop up a business that was losing money, instead of realizing that his business needed to be restructured.

This case is a good lesson for all of us, no matter how stable you might think your finances are now, it is a good idea to evaluate your situation from time to time.  If you see that debts are starting to out-pace income, seek financial advice before the situation gets out of control. Perhaps you need only to have the help of a trusted friend or relative to take an objective look at your budget.  Others made need professional advice in order to get to the point controlling and overcoming the debt that’s taking over their life.

Financial Freedom Law is an experienced, compassionate partner that can help you decide among many options, depending on income, assets, the nature of your debts, and the goals you may have after completion of a Chapter 7 or Chapter 13 bankruptcy.  Please contact our Sacramento law office at 916-313-9069 or via email at info@california-bankruptcyattorney.com

• Is your “free checking account” one that only used to be FREE? Economic times change and these days it is more likely that your bank charges a monthly fee for what used to be a FREE checking account.  If you need to keep a large minimum balance on the account to avoid service fees, then you might want to consider other local banks or online banks with lower or no minimum deposit requirements.
• Credit card balance transfer fees can cost. At some point after your bankruptcy you might open a small credit card to rebuild your credit score with.  It’s likely that you will get offers for an even better sounding card – one where you can transfer the balance on your old card and save interest charges.  But you may be better off not opening the new card if balance transfer fees, annual fees, and activation fees eat up all of the potential savings from the lower interest rate.
• Retail store discount cards: You might find yourself ready to pay for your purchase at the checkout counter of a local store.  Suddenly the sales clerk informs you that you qualify to save 10% on today’s purchase – if you sign up for an in-store credit card right now.  The fees on the card may exceed any savings you are offered as a sign-up bonus. Plus by signing up on the spot you rarely have time to look over the full details of the offer to check for hidden terms and fees.
• Late fees: now that you have a financial fresh start through bankruptcy, don’t waste it on late fees for credit cards or any other bills.  Keeping track by whatever means, checking online bank balances, or even keeping a slip of paper in wallet or purse to track expenses as you spend on a daily basis.  Awareness means control:  when you get near the limit of what you can afford without juggling bills or getting late fees – then you can accurately make a buying decision.

Financial Freedom Law is an experienced, compassionate partner that can help you decide among many options, depending on income, assets, the nature of your debts, and the goals you may have after completion of a Chapter 7 or Chapter 13 bankruptcy.  Please contact our Sacramento law firm at 916-313-9069 or via email at info@california-bankruptcyattorney.com.