Posts Tagged ‘U.S. Bankruptcy Court’

Bankruptcy and the Means Test

Thursday, November 10th, 2011

The Bankruptcy Code was amended in 2005.  The amendment included the ‘Means Test’ for filing a Chapter 7 case.  The Means Test is a mathematical formula which determines whether a debtor’s bankruptcy petition should be assigned a “presumption of abuse” or not by the court. 

If a petition falls within the “presumption of abuse” range, the debtor has the burden to prove that the filing is not fraudulent.  If this burden is not met, the court may dismiss the Chapter 7 case.

The Means Test is applied to consumers whose majority of debt is consumer or personal debt (not business debt).  If a debtor’s income is below the state’s median income, the Means Test is not applied and there is no presumption of abuse.  Additionally, if the debtor is a disabled veteran and the debt was incurred primarily while on active duty (or related activities), the Means Test is not applied.

If the debtor is not a qualifying disabled veteran and his income exceeds the state’s median income for a household of their size, the means test is applied to determine if there is a presumption of abuse.  The Bankruptcy Code identifies numerous expenses to be deducted from the debtor’s income.  After those expenses are deducted, the amount is multiplied by 60.  If the result is under $10,000 or over $6000 and also amounting to 25% or more of your “non-priority, unsecured debt,” the court will presume that your filing is fraudulent.

As if the formula is not confusing enough, there are other factors to consider in the Means Test.  For instance, some expenses you are allowed to deduct from your income (education expenses, contributions to charity, etc.).  You must also determine whether debt is “priority/non-priority” and “secured/unsecured.”

Finally, if the court determines there is a presumption of abuse, that presumption can be rebutted by “special circumstances.”  Proving special circumstances typically requires the expertise of a bankruptcy attorney arguing there are reasonable reasons why the debtor’s income falls within a certain range and those reasons are not fraudulent.

If you have questions regarding Chapter 7, Chapter 11, or Chapter 13 bankruptcy, lien stripping, wage garnishment, cram down, foreclosure, asset protection, or related issues, please call Red Hill Law Group PC, to schedule a no-charge face-to-face or phone consultation with an experienced personal finance/bankruptcy attorney.

We can be reached at 877-343-3289, or please use our contact form and you will be contacted within the next business day.

Download our Free E-Book, “Seven Bankruptcy Mistakes That Will Keep You Chained to Your Debt” here:

http://bankruptcyattorneyirvinesite.com

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Posted in Bankruptcy, Chapter 11, Chapter 13, Chapter 7 | No Comments »

Four Advantages of Filing Chapter 13 Over Chapter 7

Tuesday, May 17th, 2011

“Chapter 13 bankruptcy offers several advantages over a Chapter 7 (liquidation) bankruptcy,” says Bert Briones, an Orange County, CA bankruptcy attorney for Red Hill Law Group, PC. 

Stop Foreclosure

Saving a home from foreclosure is the most significant advantage for individuals who file Chapter 13.  By filing Chapter 13, the debtor has the opportunity to stop foreclosure actions and delinquent mortgage payments can be brought current over time. 

Reschedule Additional Secure Debts

A Chapter 13 filing will also allow individuals to extend secure debts (other than a mortgage) over the duration of the Chapter 13 plan, which is no more than five years.  This gives the debtor the possibility of reducing payments as well.

Third Party Liability Protection

A Chapter 13 filing also has a provision that protects third parties and possibly cosigners who are liable with the debtor on “consumer debts“.

Eliminate Creditor Harassment

Finally, a Chapter 13 filing will protect you from creditors contacting you, although they may still try.  A Chapter 13 plan provides for your plan payment to go to a Chapter 13 Trustee who will then distribute your payments to the creditors.  This type of arrangement acts like a consolidation loan.

If you have questions regarding Chapter 7, Chapter 11, or Chapter 13 bankruptcy, lien stripping, wage garnishment, cram down, foreclosure, asset protection, or related issues, please call Red Hill Law Group PC, to schedule a no-charge face-to-face or phone consultation with an experienced personal finance/bankruptcy attorney.

We can be reached at 877-343-3289, or please use our contact form and you will be contacted within the next business day.

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Posted in Bankruptcy, Chapter 13, Chapter 7, Creditor Harassment | No Comments »

The 8 Most Common Bankruptcy Mistakes

Monday, May 2nd, 2011

“The actions you take leading up to bankruptcy can drastically affect your journey through the bankruptcy process,” says Bert Briones, Principal Attorney of Red Hill Law Group, PC, an Irvine, CA bankruptcy/personal finance attorney. “You definitely want to pay attention to these eight potential trouble spots.”

The Credit Card Run­up Mistake:

The best thing to do is to not use your credit cards once you have decided to file for bankruptcy. Consumer debts that you incur for luxury goods and services owed to a single creditor in excess of $500 within 90 days of filing are presumed to be non­dischargeable and may be found to be due and owing! Even cash advances of more than $750 within 70 days of filing are presumed to be non­dischargeable and may also be found to be due and owing.

The Repay a Family Member Mistake:

When it comes to repaying debts, you cannot treat a family member any better than you would an ordinary creditor. As a matter of fact, a bankruptcy trustee can reclaim any amount repaid to a family member within one year of filing.

The Transfer Property out of Your Name Mistake:

A bankruptcy trustee can go so far as to undo a transfer of property that previously belonged to you. This surprising event can occur if the transfer took place within four years of the filing with the intent to hinder, delay, or defraud a creditor.

The “Short Sell” Your Home Mistake:

When financial pressure begins to mount many people consider reducing their expenses. While this is a sound thinking on one level, it does not take into account the means testing under the bankruptcy code. I have seen many people contact our office after having sold their home under a short sale only to find out that their new rent obligation will not help them to either qualify under a liquidation or help them to reduce their payments to unsecured creditors under a reorganization.

The Liquidate Your Retirement Account Mistake:

Your retirement accounts are generally protected. You can eliminate your debt and keep whatever you have in an ERISA qualified account, free and clear. Too many individuals empty their retirement accounts in a desperate attempt to pay down their credit card debt.

The Line of Credit/Second Mortgage to Pay Off Debt Mistake:

Don’t take a loan against your real estate in an attempt to reduce the equity. You can often file bankruptcy and not lose this valuable asset. If you take out a second mortgage to pay credit card debt, you may be putting your home at risk.

The Failure to Appear at Court Proceedings Mistake:

If there is a collection case pending against you in state or federal court, don’t assume that you can avoid the court process simply because you have decided to file bankruptcy. Until your bankruptcy case is actually filed, a collection case can continue.

The Failure to Tell Your Attorney the Truth, the Whole Truth, and Nothing but the Truth Mistake:

Your attorney can only provide advice that is based upon information provided by you. Failure to notify your attorney about your assets can lead to the loss of those assets, denial of your bankruptcy case, fines, imprisonment, or all of the above.

Please call Red Hill Law Group, PC with any questions or to schedule a no-charge face-to-face or phone consultation with an experienced personal finance/bankruptcy attorney. We can be reached at 877-343-3289, or please use our contact form and you will be contacted within the next business day.

Use your Smartphone to connect with the Red Hill Law Group website instantly using our QR Code:

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Posted in Bankruptcy, Chapter 11, Chapter 13, Chapter 7, Creditor Harassment, Debt Settlement / Debt Negotiation | No Comments »

What is an “Automatic Stay”?

Thursday, April 21st, 2011

“The automatic stay goes into effect immediately upon the filing of a bankruptcy petition by a debtor,” says Bert Briones, Principal Attorney of Red Hill Law Group, PC, an Irvine, CA Bankruptcy/Personal Finance Law Firm.

The automatic stay prevents creditors from making collection efforts against a debtor, including phone calls, letters, repossession, foreclosure, lawsuits, garnishments, and levies.

The purpose of the automatic stay is to protect the debtor and the debtor’s property from the reach of creditors while at the same time giving the debtor an opportunity to work out a repayment plan. In other words, the automatic stay freezes the debtor’s assets, preventing individual creditors from picking away at them and ultimately destroying the debtor’s chance at a fresh start.

In a Chapter 7 case, the automatic stay protects not only the debtor’s property, but any equity he may have in that property. It also ensures that any non-exempt property is distributed fairly among the debtor’s unsecured creditors.

In a Chapter 13 Case, the automatic stay protects property of the debtor which may be critical to the success of his Chapter 13 plan. Moreover, in a Chapter 13 case, the automatic stay prevents creditors from making collection efforts against a non-filing co-debtor.

As to property, the automatic stay remains in effect until it is lifted or terminated by the court or until such time as the property is no longer a part of the bankruptcy estate. As to a debtor, the automatic stay remains in effect until the case is dismissed, the case is closed, or the debtor receives or is denied a discharge.

Official notice of the automatic stay is included in the Notice of Chapter 7/13 Case which is served on creditors by the Clerk of the Bankruptcy Court. If the case is filed on the eve of a foreclosure or repossession, the debtor’s bankruptcy attorney should notify the creditor of the bankruptcy. If a lawsuit is pending against the debtor, his attorney should file a Notice of Bankruptcy with the court in which the lawsuit is pending.

There are certain legal situations which are exempt from the reach of the automatic stay. These situations include:

• The commencement or continuation of criminal proceedings
• The collection of restitution or fees incidental to a criminal proceeding
• Contempt proceedings meant to preserve the integrity and authority of the court
• The collection of alimony, maintenance, and child support payments
• Proceedings to establish paternity or to modify alimony, maintenance, or child support
• Where a landlord has obtained a pre-petition judgment for possession of the property
• Certain instances where a previous bankruptcy case has been dismissed
• Where there is a presumption that the case was not filed in good faith

Please call Red Hill Law Group, PC with any questions or to schedule a free face-to-face or phone consultation with an experienced personal finance/bankruptcy attorney. We can be reached at 877-343-3289, or please use our contact form and you will be contacted within the next business day.

Use your Smartphone to connect with the Red Hill Law Group website instantly using our QR Code:

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Posted in Bankruptcy, Bankruptcy Alternatives, Chapter 13, Chapter 7, Creditor Harassment, Debt Settlement / Debt Negotiation | No Comments »

What is a Chapter 7 Bankruptcy?

Tuesday, March 8th, 2011

A Chapter 7 Bankruptcy is sometimes referred to as a “Liquidation Bankruptcy”.  Its primary purpose is to discharge certain debts to give you a “clean slate” in a relatively quick process.

“Given a fresh start, you will be able to live your life free of collector calls, overdue payments, and the stress of being sued,” says Bert Briones, the Principal Attorney of Red Hill Law Group, an Irvine, CA bankruptcy law firm.  “You will have no more personal liability for your discharged debts upon completion of your Chapter 7 bankruptcy case.”

A Chapter 7 bankruptcy is only available to individuals, not businesses.  In order to complete a file a Chapter 7 bankruptcy, the following must be provided:

  • A list of assets and debts
  • A list of monthly living expenses
  • Driver license
  • Social Security card
  • Tax returns from the previous year
  • Completion certification for credit counseling

Once a bankruptcy petition has been filed, an automatic “stay” will be issued by the court that will give you immediate relief from creditor actions.  As long as this stay is in effect, creditors usually may not initiate or continue lawsuits, telephone calls, or wage garnishments.

Once your trustee is satisfied with the information in your Chapter 7 bankruptcy filing is correct, you will rest easy by becoming eligible for a Chapter 7 discharge.  A typical Chapter 7 bankruptcy filing takes approximately six months from initial filing to discharge.

Please call our office at 877-343-3289 with any questions you may have, or use our contact form and you will contacted within the next business day.

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Posted in Bankruptcy, Bankruptcy Alternatives, Chapter 11, Chapter 13, Chapter 7, Client Help, Credit Reform Act, Credit Scores, Creditor Harassment, Debt Settlement / Debt Negotiation | No Comments »

Approved July Debt Settlement for DRLG Clients

Thursday, July 29th, 2010
Bank of America Tower in New York City.
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Major financial institutions are willing to settle. Here is a list of some recent debt settlements for our clients. If you are not already a client, feel free to call us if you would like to see if we can help your situation, 877-343-3289. Have a great day!

Original Balance %  Paid Amount Paid Creditor
$908.96 28% $250.00 Phillips Cohen
$29,946.90 25% $7,769.86 FIA Cards
$1,289.00 42% $550.00 GEMP
$1,746.15 37% $660.00 ARSI Amex
$18,858.51 22% $4,225.00 Citi/Moore Law Group
$23,700.00 28% $6,715.80 Chase National
$2,181.73 33% $720.00 Creditors Interchange
$14,753.06 33% $5,000.00 Bank of America
$1,999.00 40% $800.00 Bank of America
$1,769.52 35% $710.00 Bank of America
$2,576.22 32% $825.00 BofA
$36,712.00 21% $8,000.00 BofA
$21,624.00 24% $5,381.17 City Card
$3,251.00 36% $1,200.00 Advanta
$1,892.43 42% $800.00 Target
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Look out for Debt Settlement Fraud! Warning signs of Attorney Negotiation vs. Debt Settlement Company

Thursday, March 25th, 2010

Unfortunately, Debt Settlement fraud is continuing to see an increase by debt settlement companies offering programs with absurdly low payments over long terms(over 48 months) to satisfy the consumer need to reduce payments due to high interest rates and increased payments. Although debt settlement typically does lower payments, it doesn’t take your $1,000 payment and turn it into a $400 payment. The typical payment reduction is 20-40% less that what you are currently paying. One benefit of our firm, that same 20-40% reduction also includes the attorney fee in the reduced payment, all the while giving you the legal parameters you seek when hiring us.

There are some obvious warnings signs to look out for when going into an aggressive program such as debt settlement, also known as debt negotiation :

1) Ninety-five percent of debt settlement companies are not law firms and extreme caution must be exercised- They can offer you no legal protection or advice to help you try to avoid wage garnishments , levies against your bank accounts , and liens against your personal property.  Only a law firm can do this for you.  It is possible to get sued in debt negotiation, if you are sued and are not with a debt settlement firm , but you are with debt settlement company , the company will typically drop the creditor from the program and leave you with no protection or advice.  You will then have to hire a law firm to represent you, why not start with a law firm from the beginning?  You will find the cost of our law firm is usually the same cost, if not better, and you will get the protections we offer throughout the program.

2) Completing the debt negotiation in a reasonable time frame- They will say just about anything that pleases you to enroll you in their program.  One way to recognize a scam is when they allow you to set a monthly payment amount to whatever you want.Usually, it is very low and for a much longer period of time than a knowledgeable law firm will offer you.   A debt settlement program should have you debt free of enrolled debts in thirty-six months or less, and only under specific circumstances (higher debt), no longer than forty-six months.  You need to acquire funds as quickly as possible for your budget to be successful in debt negotiation. You can put yourself at significant risk by accepting a program that lasts too long.

3) Stopping the collection calls- If a representative from a debt settlement company tells you they can stop the collections calls, ask them how? Here’s why you should ask… Debt settlement companies, which are not law firms, have NO legal ability to send Cease and Desist letters to put an end to the collection calls.  These calls can be very annoying, scary, embarrassing, and aggravating.  Our law firm’s expertise with the collection laws enables us to know how to reduce dramatically, or eliminate those calls altogether.

4) The Law Firm Must be Reputable- When it comes to law firms, you have an extra layer of protection, which is the CA State Bar Association. Check the State Bar for the attorneys standing if you are going with a law firm.  The attorneys are held to a much higher standard by being a member of the Bar Association. With unanswered complaints to the Bar, an attorney can lose his/her license and business. The attorney cannot just get another law license and open up somewhere else. Therefore, it is in their best interest to do the best job for the client.  To look at our firm and our lawyers’ standing with the State Bar, go to http://www.calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=10114 under “attorney search” and input our attorney names Bert Briones and David Jess Miller. They are a prime example of a clear record you need when dealing with your debt.

In addition, if a debt settlement company is not a member of the BBB or has an unsatisfactory record with the BBB, is not in good standing with the CA State Bar, and/or is new and showing any of the warning signs above, it is best to continue your search for the proper firm to represent you.

While debt settlement can be a very smart and viable option for many, you need to be very cautious about the organization you are considering. By following the points and warning signs above, you will greatly reduce the risk of being enrolled into a program that will not benefit you.

Contact us if you are ready to take the next step out of debt. Our consultation is free, and by the end of the call you will know your options. Call today to ensure you options don’t become limited because you waited too long. Fill out our contact form to get started.

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BK Filings in Orange County Hit New Record in Jan 2010

Friday, February 12th, 2010
Aerial view of Orange County, California, the ...
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Bankruptcy filings by Orange County individuals and businesses hit a decade high for January, according to new data from the U.S. Bankruptcy Court Central District of California.

Source: U.S. Bankruptcy Court Source: U.S. Bankruptcy Court

The highest monthly number of filings ever in the Orange County court in Santa Ana was 4,214 in October 2005 just before federal bankruptcy laws changed making it more difficult to discharge all debts through the bankruptcy courts.

But January’s filings are a continuation of the troubles Orange County residents and small businesses have had since the housing bubble burst and the long and deep recession that pushed the local unemployment rate as high as 9.8%. In December it was 9.1%.

Orange County isn’t alone. Here are numbers for the entire Central District of California, which encompasses eight Southern California counties (click on image for a larger view):

bankruptcy-by-area Source: U.S. Bankruptcy Court

Job loss, high medical bills or the self employed who lose significant revenue in the downturn are the top reasons individuals file for bankruptcy, according to  bankruptcy attorney Benjamin Yrungaray in the Costa Mesa office of First Source Law.

Some experts aren’t surprised that large numbers of bankruptcies continue to be filed.

“Everyone I talk to expects first and second quarters of 2010 will have a lot more business filings,” bankruptcy attorney Jim Bastian of Shulman, Hodges & Bastian in Foothill Ranch said late in 2009. “Expect an uptick in commercial real estate (filings) and some retailers, who will come through the holiday season and realize after the first of the year their sales were not as good as they hoped.”

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