Los Angeles Bankruptcy Lawyer Blog

A recent Chapter 13 bankruptcy case in Missouri shows the value of making sure you consult with an experienced Los Angeles bankruptcy attorney before moving forward with bankruptcy.

In the case of Johnson v. Fink, a married couple attempted to change their payment plan but was shot down by the court trustee and the judge.

There are two common forms of bankruptcy in the United States that consumers choose. First is Chapter 7 bankruptcy in Los Angeles, which most people identify with. This is where debts are discharged and sometimes assets are needed to be liquidated to pay off debtors. This is mainly designed for people without income.

The second form, which has gained popularity in recent years, is Chapter 13 bankruptcy in Los Angeles. Under this chapter, people who have income but who are still badly in debt can set up a payment plan, authorized by the court, that allows them to pay back some of their debt. Once the set time period ends, the remaining debt goes away. Under this plan, their assets are protected from creditors.

The Johnson family chose Chapter 13, according to court documents and set up a payment plan based on their income from Social Security, a pension and the husband's two jobs. They agreed to pay $1,890 per month for 60 months.

But when the husband lost his second job, they asked for a modification to their plan. But what they asked for was for the payment to drop to $100 per month. The trustee -- the person appointed by the court to monitor their situation -- objected and the judge agreed.

The couple argued that based on other cases, their Social Security earnings shouldn't be counted as income for their bankruptcy payment. But based on their "bad faith" efforts in trying to reduce their payment without fully exposing all of their earnings, it was rejected. They appealed, but an appellate court upheld the lower court's decision.

The good news about Chapter 13 bankruptcy cases is that they can be flexible. If you agree to a payment plan, but have a major change in income, there are ways to petition the court to change your payment plan. Those can be granted.

But if you fudge the numbers or otherwise break the court's rules, you can not only have your petition rejected, but you can face the possibility of bankruptcy fraud charges in Los Angeles. This can lead to serious prison time, if convicted. It can also derail the bankruptcy process.

This is why hiring an experienced Los Angeles bankruptcy lawyer is so critical. Without experience on your side, these mistakes can hurt your situation. This family, which has lost income, will now be stretched even thinner because of a poor move. Avoid these mistakes and use bankruptcy laws for all they benefits they can provide. They are designed to aid consumers, not hurt them.

Continue reading "Johnson v. Fink Shows Pitfalls of an Inexperienced Los Angeles Bankruptcy Lawyer" »

With Black Friday this week, the retail giants have been advertising big time to entice shoppers to get to the stores often and early to snatch up whatever they want for their holiday gift-giving. According to CNNMoney, retailers are expecting to put up big sales numbers this quarter as people clamor for the newest toys, electronics and deals starting the day after Thanksgiving.

Not surprisingly, Los Angeles bankruptcy lawyers have noticed an increase in credit card company advertisements as well. They're increasing their credit limits as well as their "perks" in order to encourage people to sign up for their cards.

They don't offer free perks to just anyone. You have to spend hundreds or thousands of dollars in order to qualify, and sometimes you must make payments in certain time limits in order to get the deal as well. Many of the deals are so unrealistic that they can't be met by the average consumer. These predatory lending practices lead to an increase in Chapter 7 bankruptcy filings in Los Angeles because consumers get into trouble quickly.

Yet this is the time of year when consumers tend to lose their focus and instead of shopping conservatively, they go all-out, even in a bad economy. And credit card companies are the winners because of the interest fees they will collect over time.

One way to get out from this trouble is to consider bankruptcy in Atlanta. By filing for bankruptcy, consumers can escape the problems caused by debt. These laws are designed to help consumers by eliminating debt and helping them move on with life without the ball and chain of debt problems.

The National Retail Federation estimates that 152 million people are expected to shop over Black Friday weekend, despite a backlash against stores opening early Thanksgiving Day. The survey, based on talking with 8,000 shoppers, usually estimates a lower number of shoppers. Last year, the organization estimated 138 million people, but 212 million showed up.

Target, Best Buy, Macy's and Kohl's are all opening at midnight on Thanksgiving, while Wal-Mart will kick off sales two hours earlier. Toys R Us is opening some stores at 9 p.m. on Thanksgiving. Some employees and consumers have looked down upon stores opening earlier, but more shoppers may show up as a result.

2010 numbers showed triple the number of midnight Black Friday shoppers as the year before, showing that it is worthwhile to open early. Some consumers believe that the new hours are better and help them avoid sleeping outside waiting for a store to open. Others, however, believe that shopping on Thanksgiving takes away from the meaning of the holiday of spending time with family.

Whether you plan to take advantage of the early shopping hours, stick to Black Friday or skip it altogether, shop wisely and shop within your means. If you are already saddled with debt, splurging while relying on credit cards is a disaster waiting to happen.

Continue reading "Black Friday Shopping Expected to Increase as Los Angeles Consumers Add to Their Debt" »

A recent article by SmartMoney looks at the fact that most advice columns suggest that people struggling with debt should budget better, negotiate their debts, make more money than they're making now and get professional help.

But what the columnists might not understand is that even trying to accomplish all these things can still lead to debt problems. What happens next?

Los Angeles bankruptcy lawyers would suggest a free consultation to see if bankruptcy is a good option for your situation. Many people believe that bankruptcy will hurt a person's credit, but what they fail to realize is that if they have stopped making payments on debts or are making minimum payments and incurring high interest rates and hidden fees, their credit has already take a substantial hit.

Filing for bankruptcy in Los Angeles will eliminate the debts that are making life so difficult. Rather than dealing with the scores of phone calls that you will receive from creditors, worrying about repo men coming to take your possessions or other legal problems, bankruptcy will stop that simply by filing.

According to the article, the rate of delinquency payments on consumer debt of 90 days or more is up more than 3 percent in the last year. Household consumer debt has doubled in the last ten years from $5 trillion in 2000 to $11.7 trillion in 2010.

Many people who once had great debt repayment records are having to pick and choose which debt to pay back and when. Most financial advisers suggest that people pay at least the minimum on all debts, which keeps creditors at bay. However, some people are choosing to pay off some debts and ignoring others. The article provides some tips to picking and choosing debts to pay off:

Give priority to the essentials:
Experts say that paying things that are most important, such as taxes, alimony and child support will keep you out of jail.

Determine the debts with the least favorable terms:
It's important to consider the interest rate and tax benefits to determine which debts you're going to pay off, if you're going to choose.

What will non-payment do to you?
For debts backed by collateral, consider what you may risk losing if you stop paying. You also must look at how non-payment will affect your credit score -- recency, severity and frequency are all things that affect your score.

So, which do you not pay on?
-Debts that affect your personal credit score.
-A home mortgage that is under water, meaning you owe more than it's worth.
-Unsecured debts, such as credit card debts or agencies that don't report to collection agencies.

While this may work for some people, picking and choosing debts to pay and not to pay is just going to keep people in the rut they've been in. Bankruptcy eliminates debts and allows people to be done with it. While it is a complex process, it can lead to a rewarding future without debt.

Continue reading "Why Choose to Make Debt Payments When Los Angeles Bankruptcy Provides Fresh Start?" »

The Wall Street Journal recently reported about a New York musician whose greatest investment was a caller ID box with a ring controller; he was saddled with debt.

The man successfully negotiated a 69 percent reduction in his $54,000 in credit card debt, but he was blasted with 40 to 50 automated calls a day. Millions of Americans are facing the same harassment as the economy continues to struggle, people lose their jobs and creditors come calling.

But one solution to ending the madness is bankruptcy in Los Angeles. By filing for bankruptcy, collections agencies are no longer able to call you. Once they are notified of the filing, they must cease harassment and attempts to collect money because your case is now in bankruptcy court.

The whole purpose of these pro-consumer laws is to help people who have gotten into debt without a way out. A big initial benefit is the consumer no longer has to deal with the automated calls, the threats of wage garnishment or repossession, the letters, the e-mails, the embarrassment of co-workers asking you why creditors are calling and other hassles.

But the bigger benefit is that a person's debts can be discharged, leaving them breathing easy as they move on with life without the drag of thousands in credit card debt. Consulting with an experienced Los Angeles bankruptcy lawyer should be your first step if you are struggling financially.

The advice and counsel an attorney can give can help you make smart decisions about your financial future. Bankruptcy may be the best option, although it's possible that counseling or debt negotiation may work. A lawyer with knowledge of the pros and cons of all these options can help you in your case.

According to the news report, there was a 1.8 percent annualized July decline in consumer credit, which was the 19th reduction in the last 21 months, going back to September 2008. The numbers show just how long it takes for debt to be paid back and how reluctant borrowers are to take out new loans with big banks.

Creditors, who are sending out credit card offers by the truckload, are still being very picky about whom they lend to, which will make the economy slow to recover. The 14 percent drop in the country's trade deficit shows that residents aren't buying imports with their former zeal.

In this case, the musician was able to deal with the harassment for three months after he stopped making payments on his credit cards and in the following two months received settlement offers of 50 cents on the dollar of what he owed. He was able to negotiate down to 31 cents on the dollar, on average.

But this man is an exception for two reasons. For one, many people don't have the skills or ability to successfully negotiate debt with a credit card company. These companies, like any other business, are out to make money. Negotiating debt can be tough.

The other reason is that the barrage of calls from debt collectors, their threats about legal action, credit scores and other warnings can lead people to give in and make a minimum payment, which just balloons the unpaid balance with higher interest rates and penalties.

Other debtors may fall into the traps set by the more than 2,000 debt-relief companies that have formed since the recession crippled consumer finances. These heavily advertised companies used to charge up to 15 to 20 percent of what was owed before laws outlawed that practice. In each case, speaking with an attorney about your options is the best course of action.

Continue reading "Los Angeles Bankruptcy Can Put An End To The Collections Headache" »

MSNBC.com is reporting that younger Americans -- those under 35 -- are fairing far worse than older Americans -- labeled as those 65 and older.

The article cites analysis by the Pew Research Center, which found that older adults have increased wealth, income and homeownership than their 35 and under counterparts.

This isn't completely surprising since younger Americans likely had less money and fewer years on the job before the Great Recession began wiping out savings accounts and disposable income. Older Americans likely had more stable jobs and more saved up so they had a chance to invest in the housing market in its decline.

But there are still many people who have been negatively affected by the economy, regardless of age. Many people are considering bankruptcy in Los Angeles as a way out of the mess that has been created by banks and corporate greed.

With bankruptcy protection, a consumer can get rid of years of built-up debt that has resulted in late fees, hidden fees, administrative fees, high interest rates, harassing creditors, robo-calls at all hours of the day and night and the threat of wage garnishment or legal action.

Los Angeles bankruptcy lawyers have seen the horror stories of sleepless nights, stress causing medical problems and other nightmares that debt and credit score hits have caused families. Filing for bankruptcy and being able to discharge debt and move on with life is a big benefit when times are tough.

According to the Pew Research Center, the disparity between young and old has been growing for decades. But the recession that started in 2007 made the gap even more extreme. Households headed by people 65 or older had a net worth of $170,000 in 2009. Households headed by those 35 and younger had a net worth of just $3,662, which is 68 percent lower than in 1984 after adjusting for inflation. Older adults are worth 42 percent more in that time span.

The collapsing housing market has hit younger households much harder and has left them in worse shape, the article suggests. The homeownership rate for younger adults has dropped since the recession, while older adults own more homes than they did 25 years ago.

And because those homes were purchased before 1986 and paid for throughout the gains in home equity in the 1990s, many homeowners (two thirds) have paid off their mortgages. Net worth of older Americans fell 14 percent between 2007 and 2009, but they still remain far wealthier than younger Americans.

They also benefit in the work force. Workers remain in their jobs longer, possibly because of losses in their retirement accounts. But also because they are keeping their jobs longer than younger Americans, many of whom have been laid off because of economic reasons.

Student debt is also an issue. Older Americans didn't enter the workforce with it and the rising costs of education and living expenses have saddled younger Americans with a larger burden of debt.

Much of this debt can be wiped clean through bankruptcy in Los Angeles. Rather than continuing to toil in debt and deal with the frustrations of having money problems, it may be prudent to consult with an experienced lawyer and make a fresh start. Without the debt, you may be able to make consistent house payments to build credit and start a more successful and fulfilling life.

Continue reading "Young Americans Hit Hardest By Economy Downturn, Should Look at Bankruptcy in Los Angeles" »

The number of foreclosures in Los Angeles are returning to the high levels that Los Angeles bankruptcy lawyers witnessed last year, meaning many people are again in trouble with their banks.

Last fall, many major lending institutions put a hold on or significantly cut back on filing foreclosures after allegations of robo-signing and fabricated documentation was found in foreclosure cases. Robo-signing is when banks hired outside companies to file foreclosures and rather than get bank officials to sign documents, they process so many that unqualified personnel signed and notarized documents.

There are also allegations that banks made up documents -- paperwork that should have been filed when the foreclosure was initiated, but was instead created after the fact -- so they would have a better chance of stealing the house back from borrowers, whose rights were trampled in the process.

Many homeowners are being forced to make very difficult decisions about their living situation. With unemployment rates high, people are having to choose where and how to spend their money. Many are using credit cards as a stopgap measure to get by and the bills are piling up.

One option that may be viable is a short sale in Los Angeles. Since a large portion of homeowners are under water, meaning their mortgage is for more than the house is worth, a short sale may help. In a short sale, the homeowner finds a buyer and negotiates with the bank to ensure they won't be liable for the difference between the sale price and what's left owed on the mortgage.

Many times, though, banks won't agree to that because they can sell the house for close to the sale price at auction and still have the option of coming after a borrower for the difference, called a deficiency judgment. This can be devastating to a family that gets out from under a house that has plummeted in value.

But bankruptcy in Los Angeles may be a far better option for many homeowners. In bankruptcy, homeowners can discharge years of debt that has built up in this bad economy, which can enable them to again make mortgage payments.

And filing for bankruptcy immediately stops the foreclosure process. That means that if your house, whether it's one payment down the road toward foreclosure or set for auction, can't be taken from you. Once debt issues are resolved through bankruptcy, it's possible you can continue to live in your house after it's over.

According to the Associated Press, there were 77,733 properties that received an initial default notice in October, a 10-percent hike from September. States such as Florida, Pennsylvania and Indiana recorded the biggest increases on a state-by-state level.

The article suggests that after a year of delay in filings, banks are again going after homeowners who have missed payments rather than attempting to negotiate and help people stay in their homes. About 6 percent of homeowners have missed two or more payments, an increase from the second quarter.

The article points out that 22.5 percent of all homeowners are under water in their mortgages, which equals about 10.9 million properties. On top of that, 2.4 million additional borrowers have less than 5 percent equity in their home. Without the glut of foreclosures off the market, prices won't increase and the industry will continue performing poorly.

Continue reading "L.A. Bankruptcy Can Help Stop the Rise of Foreclosures" »

A recent bankruptcy case in Illinois shows the importance of consulting with an attorney before heading into court alone. If you're thinking about filing for bankruptcy In our area, having a Los Angeles criminal defense lawyer on your side can make a world of difference.

In United States v. Persfull, the same day that debts were discharged in a bankruptcy case, the man's mother died and left him and his brother equal shares in her estate.

After finding out, the bankruptcy trustee re-opened the bankruptcy case. Eventually the U.S. Attorney's Office filed charges and secured a conviction for bankruptcy fraud. Bankruptcy fraud in Los Angeles is a serious crime and can be avoided if there is open communication between the lawyer and client.

Bankruptcy fraud is defined as a person who intends to or devises a scheme to file a fraudulent bankruptcy petition, files a false document in bankruptcy or makes false representations in relation to a bankruptcy petition before or during the filing.

If convicted, a person can face up to five years in prison, a fine or both.

As the Los Angeles Bankruptcy Lawyer Blog reported in May, former baseball All-Star Lenny Dykstra was indicted on bankruptcy fraud charges.

According to prosecutors, he allegedly stole items from his $18 million estate in Ventura County and sold them without telling the bankruptcy court. He allegedly took fixtures, artwork, furniture and sports memorabilia and put it in storage in order to make money on the side and not tell the court or creditors.

Dykstra is currently battling those charges and faces up to 80 years in prison on the 13 counts, if he is convicted.

In Persfull, two brothers were charged with bankruptcy fraud because after one filed for bankruptcy, the bankruptcy trustee told him he had to report any inheritance he could receive if their mother, who was ill, died.

The day his debts were discharged, she died and left him and his brother equal shares in her estate. One brother signed a disclaimer of interest, but never told the trustee about the inheritance. It was more than a year later that the trustee realized the men had inherited property from their mother.

After a series of transactions between the brothers, investigators began snooping around and bankruptcy fraud charges were later filed. They argued that it was brotherly love and not a scheme to defraud that ended with the brother who filed for bankruptcy ending up with some of his mother's assets.

While he had offered his share of the estate to his brother, the man who filed bankruptcy later received two loans from his brother -- one for $28,000 and another that allowed him to retire the mortgage on his primary residence. A mortgage on the house was used to buy a car and put money into a stock portfolio account.

After the bankruptcy case was re-opened, the trustee couldn't get in touch with the man and eventually filed a lien against his mother's house. A jury found that the brothers lied when they said their mother had left them nothing.

It is a dangerous path to try to defraud the government because many records are open to the public and available for court officials to see. It is critical that someone filing bankruptcy be open and honest with his or her lawyer to avoid these serious legal charges.

Continue reading "United States v. Persfull Shows Risks of Bankruptcy Fraud in Los Angeles" »

Many Americans these days are struggling financially. Some people have lost their jobs and can't recover, while others endure major medical bills or are trapped by high interest rates and fees on loans and credit cards.

Because of that, personal bankruptcy numbers remain high as consumers in these situations and others realize that filing for a Los Angeles bankruptcy is a good option for them.

But which option is best? There's Chapter 7 bankruptcy as well as Chapter 13 bankruptcy. While they both benefit the consumer by discharging debt, they have distinct rules that must be followed in order for the consumer to benefit.

Los Angeles bankruptcy lawyers field calls almost daily from people looking for help. It can't hurt to sit down and discuss your case and see what option is best. And it's possible that there may be other legal options that can help you, too.

A recent article out of St. Louis compared Chapter 7 bankruptcy and Chapter 13 bankruptcy and looked at the benefits of both.

Chapter 7 bankruptcy is perhaps the most popular form and the one that most people identify with. It is the chapter that allows people to discharge all of their debts and sometimes requires liquidating assets, but not always. There are instances where a people can keep their house, cars and other assets. For instance, a person may be able to keep an asset whose value is less than what is still owed on it. Or maybe there is a huge loan on a vehicle and the debtor decides not to repossess it.

In those cases, a person can walk away from Chapter 7 bankruptcy without his or her unsecured debt, like credit cards and medical bills, hanging over their heads anymore. This form of bankruptcy is designed for people who have little or no income, but who have overwhelming debt problems.

Chapter 13 bankruptcy is slightly different.

In Chapter 13, the consumer is usually employed or has a steady income, but has been overrun by debt problems. He or she makes too much money to qualify for Chapter 7 bankruptcy, Chapter 13 consumers are still able to discharge their debt.

But they will be able to keep their house, cars and large assets. Unlike Chapter 7, they won't be able to just eliminate debt, but instead create a payment plan with approval of the court.

The payments will be worked out so they are affordable for the consumer and once the payment period ends, the rest of the debt owed is discharged. While all debt isn't wiped clean, a majority of it is and large assets remain intact.

This is designed for wage-earning consumers who are making money, but not enough to pay off the debt they have accumulated. This can easily happen with major medical issues and predatory lending practices.

Which option is best for you can only be determined by discussing your particular situation with a qualified Los Angeles bankruptcy lawyer.

Continue reading "Chapter 7 Bankruptcy in Los Angeles vs. Chapter 13 Bankruptcy in Los Angeles" »