Bankruptcy: More News
Trusts and Estate Practice
Bankruptcy Practice
Bankruptcy Practice
| LAW OFFICE OF ALICE H WARE |
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This page is provided as a resource to laws and Bankruptcy forms
require such legal advice, please contact our office.
require such legal advice, please contact our office.
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| LAW OFFICE OF ALICE H WARE |
A COMMON belief about bankruptcy is that it will leave you with nothing, living
out of a cardboard box, says Cathleen Moran, a bankruptcy lawyer in Mountain View,
California. That is not necessarily true, even in Chapter 7 cases. In theory, Chapter 7
involves liquidating most of a debtor's assets to pay creditors including a home where
there is equity. But in reality, homeowners who end up filing often don't have enough
equity in their home to benefit creditors either because they've taken out a second
mortgage, the home's value has fallen or both. In such cases, the trustee handling the
bankruptcy could decide not to liquidate the home, leaving it available to the debtor to
keep it as long as they continue to make their mortgage payments. In other circumstances
the “homestead exemption,” would allow the debtor to keep their primary residence if the
equity in the home is below a certain threshold. This exemption varies widely from state
to state. In California the age and the marital status of the debtor are important: A
California Debtor has between $75,000 and $175,000 in homestead exemption depending
on the age and marital status of the debtor/debtors.
Filing Chapter 7 Bankruptcy does not permanently stop foreclosure – but it can delay it
for a few months. This would allow those behind on their mortgage to seek a loan
modification, try to catch up on their payments or arrange for the surrender of the home.
Although a Chapter 7 debtor cannot strip off a second mortgage, they may have a number
of other alternatives to consider which are worthy of discussion. In today’s economic
turmoil accurate and dependable information empowers the person to make wise decisions
about their current economic choices. The Law Office of Alice H. Ware, makes informing
you of your legal options our top priority. Call today for your free consultation…916-
781-3355
out of a cardboard box, says Cathleen Moran, a bankruptcy lawyer in Mountain View,
California. That is not necessarily true, even in Chapter 7 cases. In theory, Chapter 7
involves liquidating most of a debtor's assets to pay creditors including a home where
there is equity. But in reality, homeowners who end up filing often don't have enough
equity in their home to benefit creditors either because they've taken out a second
mortgage, the home's value has fallen or both. In such cases, the trustee handling the
bankruptcy could decide not to liquidate the home, leaving it available to the debtor to
keep it as long as they continue to make their mortgage payments. In other circumstances
the “homestead exemption,” would allow the debtor to keep their primary residence if the
equity in the home is below a certain threshold. This exemption varies widely from state
to state. In California the age and the marital status of the debtor are important: A
California Debtor has between $75,000 and $175,000 in homestead exemption depending
on the age and marital status of the debtor/debtors.
Filing Chapter 7 Bankruptcy does not permanently stop foreclosure – but it can delay it
for a few months. This would allow those behind on their mortgage to seek a loan
modification, try to catch up on their payments or arrange for the surrender of the home.
Although a Chapter 7 debtor cannot strip off a second mortgage, they may have a number
of other alternatives to consider which are worthy of discussion. In today’s economic
turmoil accurate and dependable information empowers the person to make wise decisions
about their current economic choices. The Law Office of Alice H. Ware, makes informing
you of your legal options our top priority. Call today for your free consultation…916-
781-3355
BANKRUPTCY MYTHS AND TRUTHS
Bankruptcy has been around for many years. During those years, everyone has heard
stories, heard "facts" from their friends and relatives, and even developed "emotional
responses" to the very word "Bankruptcy." As with any long-standing, well-known
subject, many "Myths" have developed and taken as the truth.
TRUTHS:
• Bankruptcy laws have changed dramatically over recent years.
• Your uncle isn't the best person to give you advice on such an important decision.
• You shouldn't believe the numerous myths that may stop you from taking that first
step.
• You need to consult a professional if you want to know how these new complex
laws apply to you.
Let's examine some of the most common Bankruptcy Myths:
If you or someone you know wants to know the facts about bankruptcy, please give
us a call for a free consultation: 916-781-3355. Thank you again for allowing us to
serve you!
Bankruptcy has been around for many years. During those years, everyone has heard
stories, heard "facts" from their friends and relatives, and even developed "emotional
responses" to the very word "Bankruptcy." As with any long-standing, well-known
subject, many "Myths" have developed and taken as the truth.
TRUTHS:
• Bankruptcy laws have changed dramatically over recent years.
• Your uncle isn't the best person to give you advice on such an important decision.
• You shouldn't believe the numerous myths that may stop you from taking that first
step.
• You need to consult a professional if you want to know how these new complex
laws apply to you.
Let's examine some of the most common Bankruptcy Myths:
- "Everyone will know I've filed for bankruptcy." Unless you're a prominent
person or a major corporation and the filing is picked up by the media, the chances
are very good that the only people who will know about a filing are your creditors.
(And the people you choose to tell.) While it's true that bankruptcy is a public
legal proceeding, the number of people filing is so massive that very few
publications have the space, the manpower or the inclination to run all of them.
(You probably have a number of friends and relatives who have filed bankruptcy
and you don't have a clue about it!)
- "You will lose everything." This is the misconception that keeps people who
really should file bankruptcy from doing so. No, the government won't sell
everything and leave you living out of a box! California has exemptions that
protect:
- o Household goods and furnishings
o IRAs and retirement plans
o Cash value in life insurance and personal injury claims
o Equity in your home (from $50,000 to $150,000 depending upon
your circumstances)
o If you don't own a home, these is a wildcard exemption that can be
applied wherever you want
- "If you're married, both spouses have to file for bankruptcy." Not
necessarily. If one spouse has significant debt in their name only, that spouse may
file bankruptcy without the other spouse: the other spouse's credit is not
impacted. However, if you have joint debt, it makes sense and saves money for
both to file.
- "It's really Hard to File for bankruptcy." No, it's not...but experts advise
consulting an experienced bankruptcy attorney and not try to do it on your own.
With the complexities of Bankruptcy Law and the ever-changing interpretations,
even attorneys who practice in other areas of the law can fail to protect your
interests.
- "Only Deadbeats File for Bankruptcy." Not true! The vast, overwhelming
majority of the people who file bankruptcy are good, honest, hard-working people
who file as a last resort. Many of my clients have always paid their bills and have
never considered not paying them until they "hit the wall" and their creditors will
not help them in anyway. Many have spent months or years struggling to pay the
bills left over from some life-changing experience (such as serious illness, the loss
of a job, separation or divorce, a failed business venture or some family
emergency. A 2005 study by Professor Elizabeth Warren of Harvard Law School
found that over half of all bankruptcies are related to illness, and 75% of those
people who end up filing because of medical bills have health insurance. Many
recent respected studies have shown that the average American family is only
three weeks away from personal bankruptcy.
- "You can only file for bankruptcy once." You can file for bankruptcy more
than once, but the 2005 Bankruptcy Law lengthened the required wait between
filings. You can only file for Chapter 7 bankruptcy once every eight years. You
have to wait two years to repeat a Chapter 13 filing and four years between a
Chapter 7 and Chapter 13 case. Filing for multiple bankruptcies is not a good
idea: hopefully, the mandatory credit counseling and the lessons learned will
prevent this from happening.
If you or someone you know wants to know the facts about bankruptcy, please give
us a call for a free consultation: 916-781-3355. Thank you again for allowing us to
serve you!
| 916-781-3355 |