Law Offices - Kenneth D. Sisco, Attorney - Personal Information
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Last Updated: June 18, 2010 E-Mail -- protect@action-assetprotection-services.com
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Bankruptcy
For Many In Today's Economy,
Bankruptcy, May Be The First Step In Protecting And Rebuilding Wealth
Serving Los Angeles,
Orange, San Bernardino and Riverside Counties
It may seem ironic to find information concerning Bankruptcy on an Asset Protection site; but unfortunately, in today's financial climate, for a sizable portion of the community, bankruptcy is the only viable means for saving what assets remain, from further erosion. Over the past few years, did you make all the right decisions? Did you sell all your real estate at the top of the market? If so, did you invest the proceeds in assets that could survive the catastrophe of the housing and financial debacles? Were you able to resist the overwhelming temptations to go into debt, to either increase your wealth, or to save what wealth you had; or, first one, then the other? If you answered yes to all, or even some of these questions, you will have little use for this article. However, if you belong to the very sizable, and growing group, that for myriad reasons, suffered reversals, very often, through no fault of your own, you may find relief under our bankruptcy laws. Indeed, Bankruptcy may provide the platform from which you can relaunch your dream for a bright financial future. (By the
way, if you are still with me, and you answered "Yes," to the
questions above, you may find it useful to look at the other articles on this
site, to protect and multiply, the fruits of your omniscience.) There are essentially two types of bankruptcy appropriate for individuals; Chapter 7 and Chapter 13. Chapter 11 is also common, but is usually reserved for businesses. In some cases, however, it may also be appropriate for individuals who find themselves in complex circumstances, and do not qualify for the other chapters. This article is not intended to be a comprehensive treatise on bankruptcy law. Indeed, every person's circumstances are different, and it would not be possible to answer every person's, every question, with any degree of accuracy. Instead, this article is intended to simply be, an overview to present possible resolutions to what otherwise might be insurmountable problems. Generally, any Bankruptcy filing will, at least temporarily, stop creditor attacks, through foreclosures, telephone calls and other disruptions in your life. Which Chapter offers the most and best protection, is what is at issue here, and deserves close attention. Let me say right here, at the beginning, that in no other area of the law, is it more true that "You get what you pay for." Often, merely deciding between Chapter 7 and Chapter 13, is a complicated decision. Too often, you don't know, what you don't know. Not only do you need representation, but you need competent representation. If your situation is very simple and uncomplicated, then by all means represent yourself. Or, if you simply want to avoid typing up the forms, then hire a paralegal or a cut rate attorney. Otherwise, pay the extra money and get competent help. It could possibly be the best investment you have ever made. Chapter
7 Generally, a Chapter 7 is a liquidation. One simply gives up his and/or her assets, to pay what creditors can be paid, and the rest of the debts are discharged and eliminated. The person(s) are given a fresh start to begin again, debt free. Few things are that simple, however. For example, some, or all, of your assets may be exempt, and you may be able to keep them. Moreover, you may have assets, on which you owe more than their value, in which case you can certainly keep them, as long as you are willing and able to continue to make the payments. A second example is that those earning above the median income for their state, may not be allowed to file a Chapter 7, and will be required to file a Chapter 13, instead, to allow for the payment of some, or all, of their unsecured debts. As explained somewhat below, this may even be a good thing, but you most likely need help, to weave your way through these obstacles. Chapter
13 Simply stated, and generally speaking, a Chapter 13 bankruptcy is a reorganization. In many cases you will be able to save your home, and still write off one hundred percent of your unsecured debts. Indeed, sometimes, but usually not, you end up paying 100% of your debts, both secured and unsecured. The good news, however, is that unsecured debts may be repaid at zero percent interest. More good news, is that you will be given time to work your way out of your difficulties. For example, if you are several months behind on your house payment, instead of having to come up with a lump sum to bring yourself current; or instead of tacking the arrearages onto the end of the loan, and paying interest on those arrearages over the term of the loan, the bankruptcy plan will give you 3 to 5 years to catch up on the loan, at no interest! Another possible huge benefit with a Chapter 13 plan, arises when there is one or more junior liens against your home, and your home is worth less than the lien secured by the First Deed of Trust. In that case, it is possible to utilize a technique called "lien stripping." By application to the Court, you can obtain an order that, when and if, you complete your plan and obtain a Chapter 13 Discharge, the junior lien will actually be stripped from the property, and will be of no further effect. In contrast, with a Chapter 7, it is possible to keep your home, continue to make payments on the first, and have the debt secured by a Second Deed of Trust discharged. However, the lien will stay there, and in order to sell or refinance your home, some time in the future, you will need to deal with the problem of that lien. That is NOT the case with a Chapter 13 lien strip. If the lien is stripped, and you obtain a discharge, not only will the debt be discharged, but the lien will be stripped away, and of no further consequence. Even if property values soar, the "once" lien holder will no longer have a lien, and will in no way be able to collect, on that lien. A Chapter 13 may also allow you to "cram down" certain secured debts. For example, if you owe $25,000 on an automobile that is only worth $15,000, you may get the Court to reduce your debt to $15,000, and adjust your payments accordingly. These are only a few of the issues that should be considered when thinking of seeking the protection of the bankruptcy laws. Bankruptcy is never a good thing, although it does not carry the stigma it once did. As bad as it is, however, in today's climate, it can certainly turn a catastrophe into a bearable, survivable situation. As alluded to above, it is impossible to anticipate all the issues and questions that would be relevant to any particular situation. However, we can help with the following issues, and it will certainly be worth your while to inquire as to how your particular problems may be alleviated. If you have a question regarding any of the following, please call us. Forclosure - Pending or threatened Loan Modifications Lien Stripping Truth In Lending Violations and RESPA Collection Calls Lawsuits, Judgments, Liens and Levies IRS and/or FTB issues (Contrary to popular belief, some tax liens can be discharged.) Repossessions Medical Bills Garnishments Charge Offs Evictions Copyright ©2009 |
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