All items from Bay Area Bankruptcy Lawyer Blog

As many of our clients filing personal bankruptcy get older, we often see clients who have taken reverse mortgages on their homes. Either because they needed income to live on or to deal with a spouse’s end-of-life care, I meet with a growing number of bankruptcy clients who have turned to these types of loans in order to get by. And no wonder, the banks have been pushing reverse mortgages aggressively for several years now. Daytime television is now inundated with commercials for reverse mortgages. I’m not going to get into the financial wisdom of these loans in this post, but I do want to focus on how reverse mortgages are treated in bankruptcy, particularly in Chapter 7 bankruptcy.

No one ever wants to be involved in an accident, but unfortunately, they happen all the time. As the medical bills and other expenses start to pile up because of an injury and/or inability to work, many seek relief by filing for bankruptcy to manage all of the debts that they have accumulated during this period. In fact, medical bills and debts arising from medical treatments not fully covered by insurance are among the chief reasons our San Jose bankruptcy attorneys see people needing to file Chapter 7 or 13.

Those filing personal bankruptcy in California in 2013 can now protect a little more of their assets in a Chapter 7 bankruptcy, and potentially pay a little less into a Chapter 13 plan. That’s because the California bankruptcy exemptions have been increased modestly as of January 1, 2013. I’m not complaining as this is the first increase in the amounts debtors can keep in a Chapter 7 bankruptcy in California since April 2010. And anyone needing to file bankruptcy in California should be grateful to Assembly Member Bob Wieckowski for introducing the bill, AB 929, that raised the bankruptcy exemptions. Unfortunately, the California Bankers Association and the National Association of Bankruptcy Trustees (go figure) opposed the passage of AB 929 and were able to prevent the bill’s originally proposed increase in the homestead exemption.

The National Association of Consumer Bankruptcy Attorneys (NACBA) recently published a consumer alert report entitled “The Debt Settlement Trap: The #1 Threat Facing Deeply Indebted Americans,” which detailed the stories of debt strapped consumers who have fallen prey to the numerous scams peddled by so-called debt settlement companies. You’ve probably heard their claims on TV and on the radio a million times. Debt settlement companies that promise to settle your debts for pennies on the dollar and to get you out of debt without filing bankruptcy. Their commercials usually feature a handful of earnest folks who claim the debt settlement company saved them from the supposed stigma of bankruptcy by negotiating with their credit card companies and bill collectors. Their commercials bombard the air waves with the message that bankruptcy is somehow morally wrong, and the debt settlement companies offer a more honorable alternative than filing personal bankruptcy.