All items from Northern California Bankruptcy Lawyer

The New York Times’ great feature on the dark world of consumer debt collection had a marvelous flow chart of the progress of collecting an old bill.
Only it was deceptively wrong.
After following the debt collector’s options and outcomes from first collection call to the various resolutions, the graphic showed two wildly different outcomes if the consumer got sued.
One outcome had the consumer telling the judge, “I’ve fallen on hard times and can’t afford to pay my debt“.  Result:  the consumer loses.  Hard times isn’t a legal defense to a collection suit.
The second outcome had the consumer telling the judge:  “Make them prove I owe the money“.  Result, says the article:  the consumer wins!
Why the different results for different scripts?  Because, the debt buyer has no proof of the debt.  And the burden of proof in a collection suit lies with the person who filed the suit.

Posted 2 days 8 hours ago

smoke and mirrors theilr cc
I can’t save anything because it takes every dollar I make just to get by.
Sound like a description of your budget?
For some folks, that is absolutely true.
But for another slice of working folks, there’s some black magic budgeting going on that hides what’s really afoot.
These voodoo budgets look rational, but only on the surface.  If there were two budget line items:  1) food, and 2) groceries,  you’d see the duplication.
But what often happens is more subtle.  Meet the twins of budget self deceptions.
Electronic entertainment
Got cable?  More than basic cable?  Do you also budget for entertainment, eating out, vacations?
What is premium cable if not entertainment?  You can probably say the same thing about data on smart phones.  These services make our days brighter.  But the cost has to be counted against the same budget category as other non essential pleasures.

Posted 1 week 1 day ago

This fake arrest warrant is wrong in so many ways.
Repeat after me: we don’t jail people for debt.
fake warrant
The post We Don’t Arrest People For Not Paying Debts appeared first on Northern California Bankruptcy Lawyer.

Posted 2 weeks 9 hours ago

The division of the debts of a failed marriage, however carefully crafted at divorce, can be utterly destroyed if one of the former spouses files a Chapter 13 bankruptcy.
A Chapter 13 discharge is double barreled.  It will eliminate the debts that the filing spouse owes to creditors.  It also wipes out any obligation to the debtor’s former spouse to shield that spouse from those debts.
It gets worse:  any obligation of one party to pay the other to equalize the division of assets can be wiped out in a Chapter 13.  (Support debts survive; they aren’t dischargeable anywhere, any time.)
All parties, the divorcing spouses and their family law attorneys, need to consider the impact on the division of assets and liabilities if either spouse drops the bankruptcy bombshell.
Debts divided and protection promised
Where both spouses are liable on a debt, the divorce agreement often assigns the debt to one spouse and imposes on that spouse an obligation to indemnify the other spouse.

Posted 2 weeks 1 day ago

When you’re flat broke and thinking about bankruptcy, cheaper sure looks better.
If a lawyer will do your Chapter 7 for $600, what’s the point of paying $1000? Or even $2000?
Like answers to many legal questions, it depends.
Bankruptcy relief depends on your facts
Whether to file bankruptcy, or whether to file now, rather than later, depends on how the facts of your financial situation interact with bankruptcy law.
Your bankruptcy lawyer is charged with gathering those facts and analyzing them so that you get the most debt relief the system can offer.
If your bankruptcy lawyer doesn’t dig deep enough, or think broadly enough, you may hit avoidable snags in your case.
With the caveat that there is no direct and sure-fire connection between cost and quality, let’s talk about what it costs to escape from broke.
How to figure what you should pay
The cheapest guy in town isn’t for you.  Chances are, he’s new to the field.  He’s dabbling.  He’s hoping to sell you something else along with a bankruptcy, or he’s outsourced the real work to someone with less training than he has.

Posted 4 weeks 3 days ago

217/365 August 5 - Found MoneyTax penalties seem like a further insult when you’re having trouble paying the tax itself.
Everything seems subject to an additional penalty:  failure to file timely;  failure to pre pay sufficiently;  failure to be accurate.
They mount up quickly, often equaling the unpaid tax.
Bankruptcy can not only eliminate your liability for certain taxes, it can wipe out the tax penalties as well.
Here’s how it works.
Three rules for discharging tax penalties
Penalties for dischargeable taxes are dischargeable
Tax penalties are tied to a particular tax year.  If the tax for that year is dischargeable in bankruptcy, the discharge wipes out the penalties too.
The formula for a dischargeable tax, roughly speaking, says you can get rid of an unsecured tax if  1) the return for that year was due more than three years before the bankruptcy was filed;  2) if the return wasn’t filed on time, it’s been on file for at least two years; and 3) the tax for that year was assessed at least 240 days before bankruptcy.
Discharge the tax, discharge the penalty.

Posted 5 weeks 9 hours ago

8717466531_3c0832952a_zGetting a check from the government isn’t necessarily a great thing.
Not when it’s the government returning YOUR money as a tax refund.  You’ve struggled without the money for a year while Uncle Sam used it without interest.
But it’s even worse when you’ve filed bankruptcy during the tax year, and come April, the bankruptcy trustee demands the turnover of a portion of the refund as having accrued before you filed bankruptcy.
Ouch!  You lose twice.
Cut your creditors out of your tax refund
Part of your pre bankruptcy planning should include a look at your current year withholding.
If you usually get a substantial refund, or if something in your tax life suggests you’ll get a big refund for the year you file bankruptcy. do something!
The trustee can demand a portion of the refund only if there IS a refund.
Decrease your withholding as soon as you decide to file bankruptcy such that your reduced withholding for the last part of the year brings you close to the amount you expect to owe.

Posted 6 weeks 8 hours ago

Uncle Sam public domainIt’s easy to assume that debts owed to the federal government can’t be discharged in bankruptcy.
Easy, but wrong.
Just because the creditor is Uncle Sam doesn’t mean the debt can’t be wiped out in bankruptcy.
In fact, debts to the government range from freely dischargeable to not-in-this-lifetime nondischargeable.
Honesty required for discharge
To be subject to discharge in bankruptcy, a debt cannot be incurred by fraud.  Any creditor who is induced to lend you money by false statements or actual deception can fight the discharge of a debt otherwise dischargeable.
The creditor has to challenge the discharge within a short time limit and has to prove that fraud was involved in the initial transaction that created the debt.  If the creditor does so, the debt will live on beyond the bankruptcy.

Posted 9 weeks 4 days ago

sheikh_tuhin_To-Do_List-public domain Got your bankruptcy discharge?  
The end of the bankruptcy case is the start of your new financial life.
Now, you’ve got work to do to maximize that fresh start.
Save your bankruptcy papers
The bankruptcy schedules listed everyone you owed money to when you filed.  Those creditors got notice of your case. The discharge wipes out your liability to most of those creditors.
Save the creditor lists and the discharge order because chances are that some of your creditors will sell your discharged debt to a debt buyer who will try later to collect from you.  That’s zombie debt.
Proof of notice to the original creditor and the discharge order should ward off zombies.
List the debts that weren’t discharged
You may have debts that the law doesn’t allow to be discharged:  family support, recent taxes, and student loans .  If you have these kinds of debts, they survive the bankruptcy discharge.  The creditors retain their rights to enforce them.

Posted 12 weeks 3 days ago

Unbalanced_scales wikimedia public domainSeniors in California enjoy stout protections against collection actions by their creditors.
Those protections often make it unnecessary for a debt laden senior to file bankruptcy.
But no one talks about one consequence of relying on exemption law to fend off creditors.
California exemption laws that  fully protect the assets of seniors provide no protection to the heirs.
The elder who elects to rely on state law exemptions during his lifetime may be leaving his estate , in effect, to his creditors.
Probate pays creditors
Probate is a proceeding to assure that the property of the decedent (the person who has passed away) goes to the correct parties after payment of the decedent’s debts.
In probate, creditors have a short period to file their claims.  Allowed claims are paid in full before the heirs receive anything.
Once the allowed claims are paid, the heirs have no liability to the decedent’s creditors.

Posted 13 weeks 2 days ago