Tuesday, 17 December 2013

How Christmas Debt Leads to Bankruptcy

I recently joined a group of business people from Clovis for lunch a couple of times per month. At the end of the lunch, each business tells the group their monthly "specials". I have joked that I was not running any specials because my clients were waiting until after buying Christmas presents before filing bankruptcy. It is a sad joke, but true. Here are some statistics:

The average person spends just under $1,200 over the holidays – including food, gifts and travel
At least 23% of that was paid for by credit card
6 million people borrow to pay for Christmas each year
When paying by credit card, people tend to spend 112% more than if paying with cash
One third of bankruptcies filed in March site overspending at Christmas

A lot of the tips for staying in your budget for this Christmas are too late to apply for this Christmas. However, as we head into the last week before Christmas, stay committed on not overspending for the last week. Just because you are over budget now, does not mean you can give yourself permission to continue the spending spree. Each dollar spent over than that you can afford will take twice effort and discipline to pay in January, February and March. Tell yourself you are going to start be a financially disciplined person today! You will thank yourself in January. Happy Holidays!

Attorney Ken Jorgensen is located in Clovis, California. He handles personal, property and business disputes, including bankruptcy and eviction cases. You can find out more about Ken on Facebook, or at his websites, www.fresnolawgroup.com and www.fresnobankruptcylawgroup.com. He can be reached at jorgensenlaw@gmail.com or by telephone at 1-559-324-1882.

Photo Credit:
http://www.flickr.com

Monday, 11 November 2013

Sued By Creditors Bureau USA? Consider Hiring an Attorney.

Often when I meet with clients who are dealing with Creditors Bureau USA I can see the worry and exhaustion in their eyes. Many creditors have earned a bad named for unethical practices.

Many times here in Fresno County people who get sued by Creditors Bureau USA will try and represent themselves. How quick they find out why practicing law is a full time profession – they get flooded with paperwork both from Creditors Bureau USA and from the Fresno Superior Court.

On your own, you will struggle to find out what all this means.  For instance, if you have not already attended the Case Management Conference, you will learn that it is not trial, but a meeting with the Court's staff to set up a trial date.  Thus, it is not the end, but, but only the beginning.

If you aren’t sure what the paperwork means you end up spending all of your evenings searching the Internet hoping to find information that is useful. Maybe you are doing that now.

But it doesn’t have to be that way. Frankly, one of the greatest benefits of hiring an attorney to help you with your Creditors Bureau USA lawsuit is peace of mind.  You can hire a lawyer full time and you get your life back. You can hire a lawyer for consultation services, so you can quickly get on track and know you are doing things right.

Hiring an attorney like me is not going to break the bank.  It will cost money, but it will be worth it.  There are attorneys like myself that have alternative billing practices (as compared to most attorneys), that will make it some what easier to get an attorney involved.

So the question you have to ask yourself is if it will be worth hiring an attorney, at least on a consultation basis. The alternative is spending hours wondering if you are doing it right.  I am biased.  Truly, though, you are much more likely to get a favorable outcome.

Photo credit: http://www.flickr.com/photos/betsssssy/

Tuesday, 5 November 2013

Challenges Ahead! Filing Chapter 7 Bankruptcy Gets Tough on November 15, 2013.

Bad news for families needing to file bankruptcy in Fresno! Beginning November 15, 2013, families will need to make almost $500 less per year to qualify to file chapter 7.

In order to qualify for a Chapter 7 bankruptcy, most families have to pass the "means test". In very simple terms, the "means test" takes a family's "net" income and measures it against established guidelines. Those guidelines become tougher beginning November 15, 2013.

If you are single, the new median family income is $47,798. It used to be $48,415. A family of 2 is allowed $62,009. It was $63,030. A family of three is $66,618. It was $67,401. A family of four is now allowed $75,111. It used to be $75,656. If you have a larger family, add $8,100 for each member in excess of 4. You can view the guideline table at the United States Department of Justice's website:http://www.justice.gov/ust/eo/bapcpa/meanstesting.htm

If you are contemplating filing Chapter 7 bankruptcy and you are close to these means test numbers, it would be wise to file Chapter 7 before November 15, 2013.

The new "means test" data changes frequently. These numbers should be good until April 15, 2014.

Photo Credit: http://www.flickr.com/photos/nathanf/

Tuesday, 8 October 2013

Online Payday Loans

Online payday loans

Here is a question that was recently asked:

Hello! I'm currently using a consumer law firm outside my state to settle multiple online payday loans I made several months ago. They are taking over $500 a month that goes to a dedicated account set up but they don't really try to tell me where my payments goes to. I won't be able to find out if all my debts were settled up until I finish the 10 month program. Rt. now I'm in a situation that I can't even make the monthly payments anymore. I just need to know if I did the right thing. Is there an alternative solution to my dilemma? Thanks!

In my experience, these types of companies charge too much in fees and take to long. Hence, their clients do not have much success as the first responding attorney noted.

I offer this service to my clients, however, they need to have the money saved up to offer a compromise. Otherwise, I believe that I am doing a disservice to the client. The key to debt settlement is to offer between 15% to 80% of the total value of the debt. If your disciplined enough, cancel your contract and set aside the $500 per month in a bank account. When you reach 50% of the debt level, call the company to offer a payment. Be careful however, they do not have to accept the offer and they have a right to sue you for the full amount, plus interest and maybe attorney fees too.

Too often the clients do not have enough money to "settle" their debt. If the debt is too much, then it is time to start talking about the dreaded "B" word, bankruptcy.

Photo credit: http://www.flickr.com/photos/pinkmoose/

Tuesday, 1 October 2013

How To Stop A Wage Garnishment

Ouch! You were just notified from your boss that they are going to garnish your wages. You find a A wage garnishment order was served from court. In California, creditors are allowed to garnish up to 25% of your disposable earnings.

25% of your income is a big chunk of money that you need to run your household. One effective way to stop a garnishment order is to file bankruptcy right away. A bankruptcy order will shut down the garnishment order instantly. You will be able to keep your money.

Filing an emergency bankruptcy case requires a little work. First, you need to pay your bankruptcy attorney and pay the filing fee with court. Right now, a chapter 7 bankruptcy fee is $306. Typically, I charge $1000 per case. If you run a business, and you want to keep it, I typically charge $1600. Thus, you will need approximately $1200 to file bankruptcy.

Second, you need to take the credit counseling class. The class can be taken on the internet. They charge as low as $10 for the class. Afterwards, a certificate is issued that needs to be filed.

Finally, you will need to verify and sign a bankruptcy petition that your attorney prepares. If the case needs to be filed right away, an abbreviated petition can submitted to the court with the promise that the full petition is filed within 14 days.

Photo credit: http://www.flickr.com/photos/beigephotos/

Monday, 23 September 2013

Two Big Obstacles To Chapter 7 Bankruptcy

Most folks I meet want to file a Chapter 7 Bankruptcy. Many do not know what it means, but they have had friends file a Chapter 7 Bankruptcy and keep everything they own. Therefore, they want to file bankruptcy the same way. Filing a Chapter 7 bankruptcy requires navigating through a couple of obstacles. The first is a means test. Second, is having qualified exemptions.

A Means Test You Say?

Most individual debtors filing for bankruptcy relief are required to complete a Statement of Current Monthly Income and calculations. Around the water cooler, we call this requirement “means testing”.

A debtor must enter income and expense information onto the appropriate form and then make calculations using the information entered. Some of the information needed to complete these forms, such as a debtor's current monthly income, comes from the debtor's own personal records. However, other information needed to complete the forms comes from the IRS.

After inputting this information we come up with a family's income. A family qualifies for a chapter 7 bankruptcy if they make less than the following: Single person: $48,415; couple: $63,030; three people $67,401; four people: $75,656.

If you make more than this amount, a chapter 13 bankruptcy might be the best fit, which is called the repayment bankruptcy option.

Exemptions You Say?

Chapter 7 is a liquidating bankruptcy. This means all non exempt property is sold by the trustee and disbursed to your creditors.

The good news is that most assets are protected. Homes, cars, tools of the trade, guns, household furnitre are protected to a certain degree. The point is to provide a fresh start. That means you will likely be able to exempt the Honda Accord, but have to surrender the Tesla. There are also exemptions for cars, retirement accounts, wedding rings, household goods, etc.

Photo Credit: http://www.flickr.com/photos/soldiersmediacenter/

Wednesday, 11 September 2013

Chapter 7 Bankruptcy: Will They Take My Apple iPhone 5s?

Yesterday Apple announced the premier of the update iPhone. It looks nice, but I am happy with the older version. The announcement got me thinking about what a lot of folks think about when they are contemplating filing a Chapter 7 bankruptcy petition in California:

"What can I keep?"

Way back in ancient world history, outstanding debt meant you could be sold as a slave. Today, American values hold that a person should be a to get a fresh start. As such, here are some important exemptions that the bankruptcy court lets you keep:

$4,800 in car value
$600 of any household item
$7,175 in business tools of the trade

So, to answer the question, yes, you can keep your iPhone 5s should you need to file a chapter 7 bankruptcy petition! In fact, it is my client's experience that they usually keep everything as all their property is exempt.

Ken Jorgensen, California Attorney

www.fresnobankruptcylawgroup.com

Photo Credit: GONZALO BAEZA

Monday, 26 August 2013

The Cheapest Chapter 7 Bankruptcy: $125

You think you can't afford to file a chapter 7 bankruptcy. You visited a chapter 7 bankruptcy attorney and discovered that it is going to cost over $1000 to file Chapter 7 bankruptcy. You start browsing on the internet and discover that a paralegal will prepare paperwork for you for $125.

You better think twice. There are good reasons why a California bankruptcy attorney will not charge $125. Unlike a paralegal, a chapter 7 bankruptcy attorney will conduct legal research and render a legal opinion to make sure that bankruptcy is the right fit. He or she will go to court and represent you when you are examined by a chapter 7 panel trustee. If any unpleasant issues arise, like an angry creditor, the issue will be handled by the attorney. If the attorney messes up, there will likely be malpractice insurance in place to help fix the mistake.

By hiring a paralegal, you will be on your own after the paperwork is completed. No legal research. You will go to court by yourself. Any issues that arise in the bankruptcy will be your problem. In the Central Valley of California, there are many competent attorneys assisting people in filing chapter 7 bankruptcy. The fees are competitive. Therefore, think twice before trying to save a few dollars.

Photo credit: http://www.flickr.com/photos/ecastro/

Thursday, 15 August 2013

What Happens To Marrital Debt When One Divorcing Spouse Files Bankruptcy?

Divorce can result from the stress of dealing with marital debt.  Bankruptcy and divorce often go hand-in-hand.

Often one spouse wants to file bankruptcy and the other spouse dissents.  Thus, the question is what happens with the debt when the husband files divorce by himself?

Answer: The husband is no longer liable on any of the unsecured debt. Not his separate or the marriage's joint debt.  Because California is community property state, his separate debt -- incurred while married -- will be owed by the non-filing wife. It is a rough rule. Now, she will have to be concerned about handling repayment of all the debt.

If the couple is in the process of divorce, the family court judge may have some leeway in taking that fact into consideration when awarding other community property and/or spousal support.

Photo Credit: http://www.flickr.com/photos/daquellamanera/

Wednesday, 7 August 2013

Creditor Files A Lien After A Chapter 7 Bankruptcy

Sometimes after a client files bankruptcy, a creditor who had an unsecured debt files a lien with a judgment obtained before the bankruptcy was filed.

The lien is likely invalid and can be removed. Most likely, the creditor did not have knowledge of the bankruptcy when the abstract judgment was recorded. By contacting the creditor or their lawyer directly they will voluntarily remove the lien.

If the creditor refuses, an adversary proceeding in the bankruptcy court can be filed to remove the lien and possibly seek monetary damages for a violation of the fair debt collection acts. Because of the time and cost, hopefully this will not be necessary.

But you should review all of the facts with an attorney and then take steps to get it removed as soon as possible.

Ken Jorgensen, California Attorney

www.fresnobankruptcylawgroup.com

Photo credit: http://www.flickr.com/photos/jaxxon/

Tuesday, 16 July 2013

Chapter 7 Meeting of Creditors -- What to Expect at Fresno's Bankruptcy Court

After filing a Chapter 7 bankruptcy in the Fresno area, you will be required to attend the "Meeting of Creditors" at the Robert E. Coyle Fresno Federal Court House. The meeting is also referred to as the "341 Meeting."

The Fresno Federal Court House is located at 2500 Tulare Street, Fresno, CA 93721. It's on the corner of "O" Street and Tulare. There are several courthouses in downtown Fresno. It's the one with the tall evergreen trees. I have had a lot of clients go to the wrong one. Here are a couple of pictures of the court house that you want to go into:

The "Meeting of Creditors" is the only real event of importance you are required to attend. (Most of the other meetings take place at my office.) You do need to be prepared for the hearing. Please bring your driver license, social security card, change for parking, and a pen to write with.

Parking is available on the side streets, but the parking spots have 2 hour metering. There are also some nearby parking garages. Free parking is available, but you will need to walk a few blocks after parking. If you are in the mood to walk, there is free parking two hour parking on the streets adjacent to the railroad tracks and Amtrak Station. (Approximately two blocks East of the court house.)

After parking, you will walk up to the courthouse door. The picture to the left is the entrance to the courthouse. As you walk into the courthouse, you will immediately go through security. After security you will be in an attractive hallway.
Below, is a picture of the hallway:

The Meeting of Creditors takes place in two rooms off the first floor hallway. The two rooms are halfway down the hallway. Here is a picture of the sign just outside the two rooms:

Once you arrive, go inside the trustee room and look for a questionnaire on a table. It should be in the back of the room. Take the questionnaire and answer the questions outside in the hallway. This is a good place for you and I to meet before the meeting:

Our 341 meeting is set in 1 hour groups. Along with you, there will be nine other folks that have their meeting of creditors at the same time. The good news is that the typical case lasts only 5 minutes long. 99% of the time no creditor shows up. It will likely be me, you and the trustee. The purpose of the meeting is to allow your bankruptcy chapter 7 panel trustee to ask you questions about the documents you filed and any follow up questions she may have on specific assets of yours. I will be there the entire time. Here are three questions that are asked at each meeting of creditors:

Did you list all of your assets and all of your debts on you petition?
Did you review, understand and sign your petition?
Have you sold any assets in the last three years?

While it is never fun to give sworn testimony in a court proceeding, the Meeting of Creditors is nothing to stress over. I know that this is easier said than done. After it is all over, as we are walking out of the courthouse, you will likely be thinking, "No Sweat!"

Wednesday, 10 July 2013

What to Expect at the First Meeting with a Chapter 7 Bankruptcy Attorney

Here is what to expect when you first meet a chapter 7 bankruptcy attorney:

I, like most Fresno attorneys, do not charge for the first consultation.  If you contacted an attorney that wants to charge right away, try someone else first. Remember, your chief goal is to determine whether you should file bankruptcy. It's also important to feel comfortable with the attorney.  Trust your instincts.  There are a lot of attorneys that file Chapter 7 bankruptcies in Central California.

The first meeting can last anywhere from 30 minutes to 90 minutes. The attorney's goal should be to explain the bankruptcy process and determine whether bankruptcy is the best solution.

This first meeting will broadly the bankruptcy process. You should have all your questions answered.  The attorney should have a broad understanding your personal finances. These topics include your assets, income, and expenses. At the end, you should feel more comfortable deciding whether you want to file bankruptcy. You should be quoted a price to file bankruptcy. I typically charge between $1200 and $1500 per bankruptcy. The Eastern District of California Bankruptcy Court charges $335. There are two online bankruptcy classes that cost as low as $35.

It is helpful to bring copies of the following documents:

1. Driver License

2. Social Security Card

3. Last two years of filed tax returns

4. Last six months income stubs. (Pay stubs, unemployment, disability, etc.)

5. Lawsuits, garnishments, foreclosures, abstract of judgments or tax liens.

6. Retirement statements (Your most recent 401k, PERS, STRS, and/or pension statements

7. Title certificates to all cars, trailers, Boats, etc.

8. Most recent invoice statements to vehicles and real property

9. Life insurance policies.

10. Credit report from www.annualcreditreport.com (the free report)

11. If you are required to pay child support or alimony, than provide Marriage Agreement and court order.

12. License of professionals, e.g. sales agent, truck driver, attorney.

Wednesday, 3 July 2013

California On Track To Pass New Debt Purchasing Laws

In the last couple of weeks, I wrote about how certain debt buyers, like Midland Funding LLC, buy debt from creditors in bulk and then prey on debtors for money even if they cannot prove their case at trial.

It looks like California is going to enact laws beginning January 1, 2014 to help protect consumers from these unsavory practices by bulk debt purchasers.

Titled the Fair Debt Buying Practices Act, California SB 233 passed in the Assembly and Senate on an unanimous vote in favor. The measure now goes to California Governor Jerry Brown for his signature. Its provisions would take place on January 1, 2014. I see no reason why Governor Brown will not sign the bill.

Here are some of the highlights of the bill:

Debt buyers must have in their possession proof that they are the sole owner of the debt, the account balance at charge off, date of default or last payment, name and address of both the creditor and debtor, and a complete chain of title on the account if bought and sold multiple times.
If the debt is legally too old to file a lawsuit, but still can be reported to the credit bureaus, the debt buyer must use the following language in its first written communication:

“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, [insert name of debt buyer] may [continue to] report it to the credit reporting agencies as unpaid for as long as the law permits this reporting.”

3. If the debt is older than both the statute of limitations and credit bureau reporting, the following must be included in the letter:

“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, and we will not report it to any credit reporting agency.”

This should be a helpful law. I estimate 85% of the people receiving a letter with one of these admonitions should be smart enough to tell the creditor to go away. What do you think?

Photo credit: http://www.flickr.com/photos/headingtonmedia/

Monday, 1 July 2013

Are SBA Loans Dischargeable in a Chapter 7 Bankruptcy?

Every now and then I am asked whether debt from an SBA Loan can be discharged in a Chapter 7 bankruptcy. The short answer is "yes".

I am asked this question because it is linked to a government program. However, there is nothing special about a SBA loan compared to any other private business loan when it comes to bankruptcy. It is treated like every other loan. Like all other loans, however, a SBA loan would not be dischargeable if the loan was obtained by fraudulent means.

For the most part, business owners typically do not need to worry about whether their SBA loan will be discharged in bankruptcy. However, there can be a foreclosure issue. Many SBA loans are secured by a deed of trust on real property. Because of the deed of trust, the lender will have the right to foreclose on the property. In conclusion, even though you personally are no longer responsible for the debt, your lender can still sell your property through a foreclosure sale in a Chapter 7 bankruptcy.

Thursday, 27 June 2013

More Families Qualify for Chapter 7 Bankruptcy!

Great news for families needing to file bankruptcy in Fresno! In order to qualify for a Chapter 7 bankruptcy, most families have to pass the "means test". In very simple terms, the "means test" takes a family's income which is then reduced by certain expense allocation. If a family's net income is less than the established guidelines, the family qualifies to file a chapter 7 bankruptcy. If the income is higher than the set guidelines, then it becomes much more difficult to successfully complete a chapter 7 case.

The recent good news is that the median income guidelines were raised. Thus, more families qualify for chapter 7 bankruptcy. If you are single, the new median family income is $48,415. It used to be $47,433. A family of 2 is allowed $63,030. It was $61,752. A family of three is $67,401. It was $66,034. A family of four is now allowed $75,656. It used to be $74,122. If you have a larger family, add $8,100 for each member in excess of 4. You can view the guideline table at the United States Department of Justice's website: http://www.justice.gov/ust/eo/bapcpa/meanstesting.htm

Using the means test properly is important to a successful outcome. About two years ago, I had a family that did not qualify under the means test. However, the wife was pregnant. I waited to file their case until after their baby was born. Their family size increased by 1. Thus, I was able to use a higher median income and they passed the means test.

The new "means test" data changes frequently. These numbers should be good until November 1, 2013.

photo: http://www.flickr.com/photos/evilerin/

Giant Creditor, Midland Funding LLC, Loses at Trial

Modern day rebels have defeated the Imperial Storm Troopers, a.k.a. Midland Funding LLC!

A debtor sued by Midland Funding, LLC won at trial and is has now sued Midland Funding LLC for unfair practices and malicious prosecution.

In Fresno County and the rest of California’s Central Valley, Midland Funding, LLC, has filed thousands of cases on behalf of credit card companies and other creditors. Most of the time Midland hopes that the defendant never responds to the lawsuit. However, if the defendant responds, they hope to settle the case before it ever goes trial.

In Samuels vs. Midland Funding, LLC, 2013 Westlaw 466386 (S.D. Ala.), defendant Samuels fought Midland Funding. He did not settle the case but forced them to trial and won!. He then sued Midland funding. This case looked at whether it was permissible for Samuels to sue Midland after it lost at trial. So far, the court is saying that Samuels has a valid lawsuit against Midland Funding.

Before looking at the details in this case, let’s take a step back. Midland Funding is notorious throughout the country for buying debt in bulk. Just like how you can go to Costco and buy a 100 rolls of toilet paper in bulk, Midland Funding purchases blocks of debt at a discount. It then tries to collect on the debt. Their goal is to collect more money from debtors than it cost them to buy the debt. They are very good at what they do. The problem bulk debt purchasers have is that they sometimes fail to obtain the documents, or understand the facts well enough to win at trial.

In the Samuels case, the debtor was smart. He figured out that Midland Funding could not prove its case and refused to settle with them. By refusing to settle, Samuels forced Midland to trial. They were completely unprepared for trial. They showed up with no witnesses or documents to show the debt was owed by Samuels. Like many “bulk purchasers” of debt – they were hoping to settle the case or that Samuels would ignore the lawsuit so that it would not have to prove their case in front of a jury, or judge. They must have been shocked Samuels took them all the way to trial because they showed up with no witnesses or evidence to prove the debtor owed the debt. Needless to say, the Samuels won the case.

But, the story does not end here for Midland Funding. Samuels went on the offensive. He filed a second lawsuit against Midland Funding for violation of the Federal Debt Collection Act and malicious prosecution. Midland Funding’s high powered attorneys tried to kick the case out before it was tried by a judge or jury. However, they lost the motion and tried to win on appeal. However, they lost again. The court held that it was concerned with bulk purchasers of debt that were unable to prove their cases. Now it looks like Midland Funding has to convince Samuels to settle his case against them by paying money to him. I hope Samuels takes this case to trial. It would serve Midland Funding right if it is proven they were never in a position to win their case at the trial level.

The lesson to take from this case is to not be afraid of these national debt companies. Defend yourself! Make sure the claim is valid and that the debt collector can prove its case at trial. If they cannot do this before trial, they likely will fail at trial as well. It is unfortunate that very few defendants in Midland Funding cases know this. Do not be one of them.

photo: http://www.flickr.com/photos/snotch/