Long Beach Bankruptcy Attorney Blog

One of the most common questions regarding consumer bankruptcy is what happens to a debtors property when they file a Chapter 7.

First, the concept of a Chapter 7 is that the debtor gives up his/her assets in exchange for a discharge on most debts. It would be fundamentally unfair to allow someone to keep all the good stuff and throw out all the bad. However, there are exceptions to this rule.

Certain property is deemed "exempt" from judicial sale. If you own a home and have equity of approximatley $50,000, you can squeek by. That number increases to $75,000 for a married couple. Your walls laden with Picassos, on the other hand, won't be so lucky. Engagement rings, family heirlooms, bicycles, couches, furnishings in your home, and most other small personal items will be exempt, but not if they are worth an extraordinary amount. For example, you can keep jewelry, heirlooms and art up to $6750.

Perhaps more important for some clients is the "pension factor". If you have a pension that you've worked really hard on for years and years, you may be able to keep it intact Both Traditional and Roth IRA's can be exempt up to $1,095,000 per person!

Continue reading "Can you keep your Long Beach Property if you file Bankruptcy?" »

Assuming that you looked through Part I of this series, you are probably here for a couple of reasons. You like to read about bankruptcy in your spare time? Or, perhaps you have been booted from the opportunity to file chapter 7 because you make too much money and/or have assets that you'd like to keep around.

Remember that a Chapter 7 Bankruptcy liquidates all the assets of the debtor and the proceeds get paid to the creditors. Some assets are exempt from sale, such as a small amount of equity in your personal residence, personal items, cars, furnishings, and a variety of other items so long as they are not 'too valuable'.

If you live in Long Beach, let's assume that you have too much equity in your home and other assets to meet the exemptions under a chapter 7. The theory behind a chapter 13, generally, is that you keep your assets, stop creditor harrassment, and repay what you can over a defined term. The duration of the plan depends on your income, but is usually three OR five years. The plan doesn't presume that you MUST pay all your creditors everything you owe. The Bankruptcy trustee assigned by the court will devise a plan that could be described as "the best you can do" over the near future.

During a Chapter 13 Bankruptcy, most of your discretionary (aka spendable) income will be used to repay creditors. Why would anyone do that? Because at the end of the plan, most of your remaining debts are discharged! Some types of debt remain but that's another blog.

Continue reading "Long Beach Bankruptcy FAQ's: Chapter 7 or 13? (Part II)" »

The most common question about bankruptcy among my friends, colleagues, neighbors, and clients in Long Beach is "what's with the chapters? Where do I fit in?"

Ok, quite simply (if that's possible), let's go over the major differences. A chapter 7 bankruptcy, often referred to as 'straight' bankruptcy or liquidation is the simplest form of filing and is appropriate if the debtor (the one with the issues) doesn't have significant assets with value.

As an example, if you owe $50,000 in credit card debt and $50,000 in medical bills and can't make the payments, BUT own a home worth $2 mil and you only owe $1 mil, you get pushed out of Chapter 7 and possibly into Chapter 13. I hope that makes sense. Did you know you are sitting on a million dollars?

If you have those same debts and have equity in your home around $75,000, you might be in luck. Certain assets are treated with special care, such as your home, car, personal items, heirlooms, jewelry, and perhaps most importantly, your retirement accounts and pensions. The purpose of the chapter 7 bankruptcy is to give you a fresh start if you can't meet your debt obligations in any reasonable way in the near future.

So, let's say that you are the normal guy above: ugly credit card debt, stacked up bills of every other variety, and a home that you are making payments on but really don't own much of due to the horrible real estate market in Long Beach, Southern California, or pretty much anywhere else. You are a strong candidate to file Chapter 7 Bankruptcy and have your debts discharged permanently. Yes. That's right, permanently.

One last question: how much money do you make? This is a new rule. If you make over $100K, we'll need to look more closely at your overall financial picture to see if you still qualify. The new code, as of 2005, puts an earnings filter on big earners. Its not the end of the road, however. If you make too much money for a Chapter 7, filing a Long Beach Chapter 13 Bankruptcy might save the day. More on that in Part II.

Long Beach is not the only city to be suffering through this economy. Bankruptcy filings increased 35% from February to March in the US. Over 158,000 new petitions were reported in the month of March nationwide, and California is one of the biggest contributors with our massive population and real estate dependent economy.

Double-digit growth in Chapter 7 and Chapter 13 filings over last year met the expectations of the experts and they are not shy about their prediction of future increases. Our real estate issues compares to the industrial devolution in the Midwest. The effect of the auto industry's 'collapse' has hammered dependent states Michigan and Illinois as filings rise there as well.

Long Beach will be watching our local industry very carefully as we hope to avoid the potentially devastating double fate of the real estate bust combined with our precious industrial powers, ie Boeing. With new orders for the C-17's and a port that is, uh, surviving, we should make it.

In an effort to stop an impending auction of the popular domain sex.com, the Central District of California allowed an involuntary bankruptcy petition to be filed on March 17, 2010. Escom, LLC, the owner of sex.com paid a rumored $14 million for the site in 2006 and has had difficulties making good on their deals with creditors.

Three of Escom's principal creditors, Washington Technology Associates, iEntertainment Inc, and AccountingMatters.com, joined together to file the involuntary bankruptcy petition. In effect, the filing enjoined the lender from seizing assets of the website, namely their fancy URL. The auction would have dramatically reduced the value of the company's assets, thereby threatening the remaining creditors postition.

Sex.com was originally founded by Gary Kremen in 1994. He is well known for his popular dating megasite, Match.com. After extensive research on both sites, there is little left to say.

A Federal bankruptcy judge has approved the bankruptcy plan for chapter 11 for the the parent company to the Long Beach Press-Telegram and other papers. Affiliated Media Inc. applied for bankruptcy protection on January 22, 2010 and is likely to be on track for bankruptcy protection as early as March 18 according to the company's spokesman Seth Faison. That's pretty fast.

Affiliated Media is the holding company for MediaNews Group, Inc., a huge conglomerate of newspapers making up the second largest such group in the U.S. with 54 daily papers and over 100 non-daily publications.

The management of MediaNews will remain unchanged (really?), but the ownership structure is expected to change dramatically. The debt-ridden entity will see most of its debts turned into ownership by its many lenders, the largest being Bank of America. Have you heard of them? They are now in the newspaper business too.

It isn't an entirely new concept that newspapers are struggling. It seems a bit obvious that printing massive quantities of physical papers would eventually become, dare I say, obsolete, especially when compared with the cost of electronic media. You can envision the future when you are holding your daily newspaper in electronic form on your device, whether it be your telephone, ipad, laptop, etc. In case you are wondering when the future begins, it started about five years ago.