Chapter 7 Bankruptcy Category Archives — Riverside County Bankruptcy Lawyer Blog Published by Riverside County Bankruptcy and Debt Lawyer

Things not to do before filing Chapter 7

April 2, 2024 | by Christopher Hewitt

Filing for Chapter 7 bankruptcy is a significant financial decision that can have long-lasting effects on your credit and economic future. Before filing for Chapter 7 bankruptcy, there are several things you should avoid doing to ensure the process goes as smoothly as possible and to maximize the benefits of bankruptcy protection. Here are some things you should not do before filing for Chapter 7 bankruptcy:

Don’t incur new debt: Adding more debt shortly before filing for bankruptcy can raise suspicions of fraudulent behavior. Avoid using credit cards or taking out loans once you decide to file for bankruptcy.

Don’t transfer assets: Transferring assets or property to friends or family members before filing for bankruptcy can be seen as an attempt to hide assets from creditors. Such transfers may be considered fraudulent and can complicate your bankruptcy case.

Six Ways to Avoid Getting your Bankruptcy Case Dismissed

March 20, 2024 | by Christopher Hewitt

Filing for personal bankruptcy can be stressful for most people. Many families face irrational embarrassment and shame for going through a process created to protect working families. Nobody finds bankruptcy a pleasant topic or process. However, the end goal is to get your debt under control by discharging unsecured debt either through a Chapter 7 liquidation bankruptcy or a Chapter 13 repayment plan. Although all debtors have the same goal of discharge at the end of their case, avoiding the pitfalls that can allow your case to become dismissed is essential to ensure you get the results you want from your bankruptcy.

Serve all the creditors in a timely fashion

As soon as a debtor files for bankruptcy, the debtor or their attorney must notify all of their creditors of the bankruptcy. Timely and accurate notifications to the creditors are a legal requirement upon filing your bankruptcy petition. Each creditor needs the opportunity to dispute the bankruptcy petition if they find any discrepancies or fraudulent information within the bankruptcy petition. A debtor who fails to notify all the creditors of their bankruptcy risks the possibility of having their case dismissed.

Getting a Heloc Loan in California

November 27, 2023 | by Christopher Hewitt

Over the past three years, a series of impactful events have significantly influenced the housing market. In response to the economic challenges posed by the COVID-19 pandemic, the Federal Reserve injected unprecedented amounts of money into circulation. This infusion of funds gave more individuals cash in hand to make down payments on homes.

Why Did California Home Prices Rise So Fast?

Simultaneously, the widespread adoption of WFH (work from home or remote work) reshaped living preferences, prompting a shift from urban to suburban and rural areas. People realized that if they didn’t need to consider commuting, they saw their relationship with work differently and could make lifestyle choices accordingly. Those who made a home purchase in 2020 or 2021 likely secured favorable fixed-interest rates, while those with adjustable rates may find themselves facing financial challenges. With interest rates at historic lows during the 2020-2021 period, the National Association of Realtors (NAR) highlighted in a report that the qualifying income for a median-priced home in America was approximately $50,000. Fast forward to 2023, and this figure has surged to around $107,000. This means that prospective homebuyers, who would have met the criteria for a home loan just a few years ago, now need significantly higher incomes to afford a similar property. This makes the number of possible home buyers shrink immensely over just a few years, not because they don’t want to buy a home but because they are no longer able to qualify for the mortgages. There are even stories floating around online that people who no longer qualify for the mortgage they already have, are being forced to refinance under the new interest rates simply because they no longer qualify based on the current conditions. That means theoretically people who had a 3.5% fixed mortgage could be forced into a 7.5% mortgage simply because they don’t make enough money after inflation. America has a habit of charging people more money when they can’t afford their current situation.

How to Give a Car Back

November 17, 2023 | by Christopher Hewitt

How it started

When Covid-19 hit America it was a black swan event that nobody could have predicted the series of financial turmoil it would cause for many Americans. Several major factors contributed to the reasons why Americans decided to buy new cars. Huge stimuluses were provided giving millions of Americans cash in hand as they pivoted from working in offices to working at home. With overflowing bank accounts and the fact that nobody could travel, eat out or do anything, many people decided to go out and finance new cars. Supply chains were also virtually shut down making car production and delivery difficult resulting in people fighting over what inventory was available. Many people are now asking how to give a car back and we are going to explore the options available to you.

What dealerships did

How to File for Bankruptcy and Keep Your Car

November 11, 2023 | by Christopher Hewitt

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How to File for Bankruptcy and Keep Your Car

If you’re contemplating bankruptcy and worried about keeping your car or truck, the solution isn’t straightforward, but there are strategies available to help you keep it. If you bought a brand-new or even a used vehicle over the last few years and you paid a premium for it, the vehicle may be underwater. There were many buyers during covid and people were offering over value on many hard-to-find vehicles when both manufacturers and dealers were unable to keep up with demand. This in turn pushed many Americans to agree to buy the car or truck that they wanted sometimes for thousands of dollars over the median price. Now that demand has slowed a bit there are many car owners who have vehicles in which they owe far more than the vehicle is worth.

Can I file for bankruptcy?

Student Loan Debt Options

November 4, 2023 | by Christopher Hewitt

California Student Loan Debt Options

For people in debt right now, things just got a lot worse. Notices have gone out to student debtors across the US that the moratorium has expired and can’t be extended thanks to the debt ceiling agreement. Payments have resumed since October 2023 and there are many unlucky people that simply can’t pay another bill right now. If you are considering your California student loan debt options, there is a lot to untangle. This article will focus on how you can (or can try) to discharge your student loans through bankruptcy, however there are some other good options I have listed below the article that you may want to consider if bankruptcy is not a consideration or of interest to you.

How do you start the process?

Using California’s 703 vs. 704 Exemptions

October 18, 2023 | by Christopher Hewitt

If you are a resident of the state of California you can take advantage of the state’s generous exemption laws to protect your property and other assets but it is important to understand the limitations of these laws and how they apply to your specific situation. When filing a Chapter 7 bankruptcy it is important to note that the majority of Chapter 7 bankruptcies are no-asset cases where the trustee does not make any attempt to sell your personal property. With that said, if you own a home or have other expensive assets you want to protect you will want to understand all of the rights you have under California law and apply them when possible. California has created bankruptcy laws in order to protect people and their property allowing them to become debt free and get their finances back on track. Exemptions enable you to retain specific assets following bankruptcy. It’s essential to choose the set of exemptions that aligns with your particular requirements. You cannot blend exemptions from both sets; rather, you must exclusively utilize exemptions from one set or the other. For married filers, both spouses must utilize the same set of exemptions without the option to double their exemptions.

Homestead Exemption:

Most states in the United States offer homestead exemptions to safeguard one’s primary residence in the event of bankruptcy. Unlike some other states, California does not permit the utilization of Federal exemption laws in a California bankruptcy proceeding. Instead, California offers two distinct exemption schemes as specified in Section 703 and Section 704 of the California Code of Civil Procedure. When deciding whether you should be Using California’s 703 vs. 704 Exemptions you need to understand the difference between and what best applies to your situation. While it is possible to negotiate with your mortgage lender to bring your delinquent mortgage up to date in Chapter 7, it’s crucial to recognize that the lender is not obligated to cooperate, and a significant number choose not to. To safeguard your home from potential loss in Chapter 7, it is advisable to ensure that your mortgage payments are up-to-date, that you can shield all equity through a homestead exemption, and that you are capable of maintaining your mortgage payments even after the bankruptcy process.

With house prices rising in California you want an experienced bankruptcy attorney to understand how to protect your asset

September 18, 2013 | by Christopher Hewitt

California has had some decent growth in property values lately with the lowering of interest rates, investors buying homes, and some people trying to get into a hot market before interest rates go up. This has been somewhat a good thing for housing prices. If you are considering filing bankruptcy for other debt related issues you may want to jump in before the market continues to rise. I have had two clients in the last month who have come to me from Cathedral city and haven’t paid there mortgage in over a year. One wanted to file a chapter 7 as he was divorced, the ex-wife was living in the house and he just had too much debt to manage. Amazingly he didn’t realize that his house was an asset. Last year the house was probably worth 150 and his not was about 160. Since he had no intention of saving his house and couldn’t pay the arrears with a now split family I decided to recommend a realtor to him before we filed. He was able to put 20k in his pocket within a month and we have delayed the filing of the bk for him. Once the money is out of escrow and in his account I can file using the 703 exemptions and protect the money with the wild card. So without the bankruptcy and a good lawyer spotting the value in the house he could of either lost the house and let the bank capitalize on that or we could have just filed the bankruptcy quickly and the trustee might have sold the house and paid the 20k to unsecured creditors. Having someone on your side with your interests and not a person who is just trying to file a million cases allows these kinds of insights to manifest into truly starting over with a fresh start.

My other client is in the same boat but wants to try to save the house as the mortgage is reasonable and renting would be just as expensive. We will pay back her arrears through a chapter 13 and if when she decides we can sell the house with court approval during the process. This might allow her to capitalize even more if the housing prices start to go up.

The other thing an experienced bankruptcy lawyer will look out for and make motions should he need to is that when you file a case your house might be worth what you owe and you use the 703 exemptions with the wild card to protect cash, cars, toys etc. You feel that is the better route since the property doesn’t really have equity. The thing is the trustee could keep the case open and even though you get a discharge he doesn’t file the no asset report and the case is not closed. If in 6 months the property has gained 5 % and its got 20k in equity the trustee could make a motion to sell and meanwhile you and bankruptcy attorney were asleep at the wheel thinking you got the discharge case closed. If a no asset report is not filed at the time of a discharge I will make a motion to the court to abandon assets. You don’t want the trustee buying the benefit of time and potentially selling one of your assets. In this market its something you have to be aware of.

Filing chapter 7 bankruptcy before house prices rise further

August 11, 2013 | by Christopher Hewitt

If you are struggling with Debt and on the fence about filing bankruptcy and you own a home, now might be the time to really consider the window. In California an individual gets an exemption of 75k or 100k for a married couple. Once you get above that equity your home becomes an asset that is too much to protect in chapter 7. Therefore the trustee would liquidate the home and give you the check for 75 or 100k and pay your creditors the remaining proceeds. That means unsecured creditors collect in a chapter 7 which is unusual but as prices go up the more that scenario becomes a reality. The cost of sale is taken into consideration as well. Usually a fair number for cost of sale analysis is 8-10% with 8% being more common. The reason for this is brokers, escrow and other costs that go into the sale of a house. I’ll do an example with numbers to make it more clear. If you are married you get an exemption of $100k dollars. So lets say you owe the bank 200k as a note against your house. Lets say the house is worth 325. As I mentioned the the exemption is 100k and the cost of sale would be 24k at 8% Under this analysis the trustee would not be enticed to sell your house. The trustees job is to sell assets that are non-exempt to pay unsecured creditors aka credit cards medical bills etc. If they pay realtors and costs 24k that does nothing for them and then they owe the bank 200k on the note and the debtors would get a check for there exemption at 100k since they are entitled to that as a priority before unsecured creditors get paid. I would assume 340k would be the price that would entice them but it doesn’t stop them from strong arming you to pay 15k to not sell it. Therefore since housing prices are going up at least temporarily, if you have equity in a home now might be a good time to get a bankruptcy analysis. I am a riverside country bankruptcy attorney specializing in bankruptcy. I live in Palm Springs and work in Palm Desert but serve all Riverside country and surrounding areas. Feel free to call to speak with an attorney about your debt and home matters as they apply to bankruptcy.

Student Loans Bankruptcy discharge Options

May 13, 2013 | by Christopher Hewitt

Tallk to an experienced chapter 13 bankruptcy attorney who practices regularly in Riverside County.