Don’t Kiss Your Hard Earned Cash Good-bye

File Bankruptcy Instead.

Did you know that paying off $60,000 in credit cards at 20% interest in minimum payments will take decades and you’ll pay nearly $200,000 back in payments of nearly $2000 per month?

Did you know that if you paid back the whole $60,000 at 0% interest through a Chapter 13 Bankruptcy, you’d pay back about $70,000 at $1,167 per month and be out of debt in 5 years.

With Chapter 13, you might not even have to pay back the whole kit and kaboodle, because it’s based on what you can afford to pay. Of course it also depending on the property you own as well and every case is different.

With Chapter 7, if you qualify, you could have your debt nubbed down to 0% principal and 0% interest. Of course it also depends on the property you own as well and every case is different.

I’m located in Murrieta close to Temecula, Lake Elsinore, Menifee, Winchester, Moreno Valley, Riverside, Corona, and Wildomar.

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What to do When You’ve Forgotten a Creditor

FORGOTTEN CREDITORS

Chapter 7

If you forgot a creditor, do you still owe it when your case is over?  In most Chapter 7 cases, no you don’t.

Of course the analysis is different for the different chapters of bankruptcy.  In Chapter 7 bankruptcy if you inadvertently leave a creditor off your petition, whether you have to pay them back or not depends on two things:  1. Did you rip this creditor off or cheat them out of their money or intentionally injure their person or property? OR 2. Did the Trustee assigned to your case set a deadline for creditors to submit claims for money.

Pretty much, if a creditor is left off your chapter 7 bankruptcy and if you didn’t cheat them out of their money in some way or intentionally harm them, then in most cases your debt will be discharged even though it was left out of the petition.

This is true only when your bankruptcy trustee did NOT set a deadline for creditors to make claims for money. The debt is automatically discharged. You don’t even have to reopen your case and add them to it, you just send them a copy of your discharge and remind them that you owed them before you filed your bankruptcy.  See Beezley v. California Land Title Co, (In re Beezley), 994 F.2d 1433, 1434 (9th Cir. 1993) (per curiam).

A bankruptcy trustee will only set that deadline if you have money or property that he can take away from you, sell, and pay the proceeds to your creditors.  For the vast majority of you, this will never happen.

To make the issue just a little clearer than mud, here’s a copy of the statute, 11 USC Section 523(a)(3):

[A debt is not discharged in bankruptcy if it is]

(3) neither listed nor scheduled . . .  with the name . . . of the creditor to whom such debt is owed, in time to permit—
(A) . . . timely filing of a proof of claim, unless such creditor had notice or actual knowledge of the case in time for such timely filing; OR
(B) [if you did commit fraud, embezzlement or intentional injuries or damage] . . . . , timely filing of a proof of claim AND timely request for a determination of dischargeability of such debt . . . unless such creditor had notice or actual knowledge of the case in time for such timely filing and request; 

11 USC Section 523(a)(3)(A)

ON THE LIGHTER SIDE: A bankruptcy trustee only sets a deadline for creditors to submit proofs of claim when he finds that you property that he can take away from you, sell, and pay your creditors.  This deadline is called a claims bar date.  So, for instance, you have a house with $50,000 in equity and you also have a cabin in the woods worth $10,000.  More typical is your home has $50,000 in equity and when that happens you can only protect about $3000 in cars.  If your car is worth $10,000 then your trustee is going to sell it and pay you a $3000 check.  You won’t be able to keep both the house and the car.

Your bankruptcy trustee will sell your car or cabin and split the proceeds among your creditors and that is true even if it would only pay your creditors 1% of what you owe them. Of course, if your cabin really is only worth $10,000 then he might not find a buyer.  What if he doesn’t?  Your trustee will still have already set the claims bar date anyway because he sets that long before he finds out that no one wants to buy your cabin afterall.

Your bankruptcy trustee might not set the claims bar date until months after your case has already discharged.  Once the trustee notifies the court that there may be assets, a claims bar date is set.  That date is usually 90 days after the bankruptcy trustee notifies the court.  At that point, you should definitely make sure that every creditor listed in your case is listed with the correct address.  Double check all of your records to make sure none were left out.  If you listed a creditor at the wrong address, then they won’t know about the bankruptcy and won’t get a share. So, Google all their corporate addresses.  Go to AnnualCreditReport.com or FreeCreditReport.com and to help make sure no one is missing.

If your creditor was not notified or if you used the wrong address, or if you found the right address but notified them too late to submit a proof of claim, then that creditor will not be discharged and you will owe them in full.  That is the start of a bad day.

Unless you can prove that the creditor had notice or actual knowledge.  So, for example, you had a business partnership and you listed both of your partners as creditors.  If however one of them moved but then he finds out that you filed from the other partner who didn’t move . . . then you just have to be able to prove that he knew in spite of the move.

It could be as simple as getting the one to testify and say that he told the other. Good luck with that one, they’ll probably collude to testify that he didn’t and then split what you owe the guy who moved.  Or if the move-away partner telephoned and left a snarky or nasty message about it.  You’ve got him.  If you scanned the notice of commencement of case and emailed it to him, then you’d be able to prove that you’d done that.

Best of course, if you realize that a creditor has been left out, and if you know that the bankruptcy trustee is setting the claims bar date, double check everything and amend your bankruptcy as necessary.  That’s going to cost some money, but it’s better than paying them back.

11 USC Section 523(a)(3)(B)

THE DARK SIDE: Basically the gist of this is: If you cheated a creditor either by fraud, theft, embezzlement, or intentional injury to person or property, then leaving them off your bankruptcy is not going to protect you from them.  You cannot beat these kinds of creditors by adding them late by amendment with only a week or two to go to the end of your case.  If a creditor would have a claim for this kind of debt, they must ask a judge to exclude them from your discharge.  But they must make that request in writing and file it with the court during the 60 days after your first hearing date.

Your first hearing date is called your first meeting of creditors.  The request that a creditor must file against you is a special type of lawsuit called an Adversary Proceeding.  If they were notified properly AND don’t file this lawsuit, then they have already lost.  It’s like a mini-Statute of Limitations, but it only works if they in fact knew about it.  If the creditor knew that you filed, and does not sue, then they lose by Default.

But subsection (B) of the statute has that little word, “and” in the text, what does that do?  “filing of a proof of claim and timely request for a determination of dischargeability”.  Does that mean that if you cheated a creditor out of money that the bankruptcy trustee must still file a notice to set a deadline to file proofs of claim in order for their claim to survive the bankruptcy discharge order?

Basically it works this way: Above on the lighter side, where there was NO fraud, NO embezzlement,  and NO intentional harm, the debt was discharged with nothing more happening.  In the dark side, where you DID cheat the creditor or you DID intentionally harm the creditor, the debt is NOT discharged.  However, the creditor has the same requirement to file an adversary proceeding to prove it.

When do they have to file that lawsuit though?  Since they didn’t get notice, then whenever they file it, it will be timely.  So, my recommendation is to reopen the case, add the creditor, and ask the court to determine a last date for that creditor to file their lawsuit against you.

Most creditors even when they have pretty good cases will still never bother to sue you in the bankruptcy court.  Especially when we’re talking about institutional creditors like the big banks.  A small creditor like The Piano Credit Company will sue you for fraud even when anyone can see that you never did it.  Your best friend who lent you some money or your former business partner, those are the ones that sue you.

Chapter 13

In chapter 13 bankruptcy, every case is an asset case and every case has a deadline set automatically for creditors to submit proofs of claim.

So, it is very important to make sure that your addresses are all correct, and that you have listed every one you might owe money or property.  You can download each of your three credit reports for free at AnnualCreditReport.com, and for a small fee you can download them at FreeCreditReport.com.  Keep in mind however that not all of your creditors will have reported to the credit reporting agencies and sometimes they are temporarily off of the reports.

If you are in bad financial circumstances, do not throw anything away.  Keep every invoice or billing statement that you ever get.  Keep every collection letter and every letter from an attorney.  If ever have to come and see me, you may wish you still had them someday.  Do not throw them away.

Debt Consolidation

Non-Profit Debt Consolidation

There are tons of non-profit debt consolidators in the Murrieta and Temecula areas.   In general what they do is, set you up with a debt consolidation plan.  One place put it this way, “You will be able to combine most, if not all of your unsecured debt and make one single monthly payment.” Your accounts don’t vanish, you haven’t done a consolidation loan, but instead the debt consolidators pay your various accounts monthly as you pay the debt consolidation company.   They claim that you will become more organized and eventually learn to understand your finances better through participation in the program.  Finally they stated that debt consolidation “may reduce” your payments. 

You may have heard that “those who can’t, teach.” Well, if someone wants to teach you about your debts, ask yourself how much they can do about it? (As an aside, most of the teachers I know are quite able and deserve more than they’re getting right now, but these debt consolidators are often not even college grads.)

Hmmm, “May Reduce”?  Wait a minute, isn’t that why you are thinking about contacting these people in the first place, because you don’t have the income currently to meet all the financial obligations that you have right now?  I doubt that’s the deal your looking for. I expect you’re looking for a will-reduce-your-payments type of plan.  Certainly there are a few of you who can afford all of your debts and are just looking for a way to get organized and if that’s the case, maybe a debt consolidation company is right for you.  But if you’re like most people who are looking into this you’re probably looking to make a bit more progress than that.

What most of these companies will tell you that they do is that they contact your credit card companies and medical bills and what not, and they negotiate a payment for you.  Either they are going to try to reduce the principal, interest, extend the term of the contract or a combination of them. 

But what they do not tell you is that, if they’ve been doing this for a while, they already know which of your credit cards are going to play ball with them and which will not.  How could they not know?  Think about it.  However, they will never tell you that you have a  card or account that won’t want to participate. 

So, they set you up with a debt consolidation payment plan and never tell you that one of your accounts didn’t like the terms and decided not to participate.  Instead, after getting a reduced payment or even no payment at all, 6 months or 10 months later, that card sues you.  You call up and exclaim, Wells The Fargo!  Why am I being sued? And the debt consolidators tell you, “oh goodness, it appears that they’ve decided not to participate.”  At that point you’re going to have to file bankruptcy before you have your wages garnished or a bank levy hits your checking and savings accounts. 

And why does that sweet little old non-profit debt consolidation company do that to you?  For the money!  Yes, fans that’s right, for the money.  Just because they’re not for profit does not mean that the officers of the company don’t take a huge salary.  It just means that they cannot declare a dividend to share holders.  So, what difference does it make?  Answer: You’re paying bankruptcy prices to non-lawyers for a non-legal service without the great results you’d get if you simply filed a bankruptcy instead.

So wait a minute, you’re only paying them $20/mo and about $300 down to set it up, right? (low end some charge you thousands)  That’s a lot of months that they’ve set up your payment plan for.  How much did they tell you?  48 months?  36 months?  36 x 20 = $720 and if they have 500 of you making payments through this type of plan that’s $10,000/mo plus $150,000 in set up fees. And as one debt consolidator put it, “I keep the float.” Meaning every month he’s got tens of thousands in his accounts collecting interest from his bank and he absorbs that interest for himself.  And for all that they “may reduce” your payments which means that one of the credit cards may not participate and will sue you.  Maybe not but good luck getting a guarantee out of them.

Chapter 13 Bankruptcy

Do you know what one is?  It’s a debt consolidation plan with the Federal Bankruptcy Code behind it backing you up and forcing your creditors to listen up and back down.  Creditors must take the plan.  I love it, we reduce interest rates on creditors to 0% and often reduce principals down to 5% or 10% of the total balances. 

Try as you might, you could pay off all your debts if only you didn’t have those pesky 20% to 29% interest rates.  With interest rates like that it will take decades to pay off your debt if you paid only the minimum payments.  They will just never let you pay down the principal. And it will be literally decades.

What if you owed say $60,000 in credit cards, medical bills, a repossessed car, and a student loan?  That would cost you $1000/mo . . . if you didn’t have to pay all that interest.  But with all the interest, late fees and penalties, you’re looking at monthly payments of $1500 to $2000/mo.  Maybe more.  Without the interest, penalties and late fees aren’t things tough enough already in Murrieta or Temecula?

A Chapter 13 bankruptcy gives you leverage that the debt consolidators only wish for.  You can force the credit cards, student loans and medical bills to take 0%.  If that’s all you can afford, then 0% interest.  If you can afford only $500/mo, guess what, then they get only about 50% of the principal. 

And none of them can sue you either, and if they want to opt out and not participate, they can, but what they’ll get is 1) they can’t sue you and 2) they get paid nothing at all.  Call me for more information on how to you might qualify for this type of bankruptcy debt consolidation.

Oh, and let’s keep it real, yes I do it for the money, but I’m also an attorney with years of experience offering a real solution to a very real problem. Not a way to “learn about” or “understand” your debts.  Let’s do something about it.  Call now 951-200-3613.

How to get Credit Reports?

EXPENSIVE CREDIT REPORTS

If you walk in with 3 credit reports that are a mile long each, I’m going to get your credit reports from my service, download them directly into my software and charge you for it. For a married couple for 3 a source report it is $53 and single $33 at this writing.

But don’t worry about that because my attorney’s fees are downright affordable compared to everyone else.

Free Credit Report

A great way to know how many creditors you have is to go to AnnualCreditReport.com to get your free annual credit reports. Make sure that you check mark all three credit reports on the page that asks which ones you want. Last I saw if you tried to check one at a time, it wouldn’t let you go back again unless you cleared your cookies first.

Also FreeCreditReport.com is a good place to go. They charge for a credit rating monitoring service but then allow you to get a free credit report with all three merged reports, once you have that, go back immediately and cancel the service before they charge you. You may have noticed that their link doesn’t work, they recently wrote to me and asked me to delink this post, I guess they didn’t like it that I was telling people to cancel their worthless service. 

Having your credit report is a great tool for assisting your bankruptcy attorney to process your bankruptcy petition whether in chapter 7 bankruptcy or chapter 13 bankruptcy. However, it doesn’t end there, you may have received collection letters, or letters from attorneys, or even a summons and complaint. Make sure that you bring those to your attorney because he or she doesn’t know about them unless you tell him. And if you verbally tell him and don’t provide it in writing, you may be wasting your breath.

Documentation Beats Conversation Every Time.

Not sure if you’ve been sued? But have you been delinquent on your debt payments for a while? Have you moved or had your house foreclosed?

You’d better Check the Courts and County Recorder’s Offices:

Check the County Recorder’s Offices to see if a creditor has recorded a judgment lien against you:

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$100 Starts

Bankruptcy $100 Starts

You may have read this before. But what does it really start? You think you’re getting a cheap bankruptcy or an affordable bankruptcy, but what are you getting really?

Your chapter 7 case will not be filed until you have paid the attorney’s fees, plus the filing fee, plus the credit counseling in full and completed the credit counseling. Period. This is true whether you come to me or anyone else.

Some of the $100 Starts guys (definitely not all) might file your case for you for $100 but only if you pay the $281 filing fee for a chapter 13 bankruptcy which is a bankruptcy with a payment plan for 3 to 5 years. Do you want a bankruptcy with a payment plan for 3 to 5 years just so you can afford to pay your attorney to file the case?

$50 Starts

$100 or $50 starts you making your payment plan against your attorney’s fees to your attorney, and that’s all. In my case it starts me taking your creditor phone calls when they start coming in which is usually the following day. Many attorneys won’t even do that. They say they’ll take the calls but then don’t do it until you’ve paid in at least half of your attorney’s fees. Or they’ll straight up tell you that they won’t take any calls until you’ve paid in half of the attorney’s fees.

For $100 will they send letters or make phone calls to your creditors for you? Of course not, neither will I . . . well, maybe one if it’s urgent. But it sounds like that’s what you’re getting doesn’t it? Immediately a bunch of phone calls and letters going out from the attorney’s office to beat down the bad guys. But all you get for it is a payment plan.

What I will do is this; once you have made the down payment to me, I’ll take your creditor phone calls for you. You must start taking your own calls again and when the collection agents call, tell them that you’re going to file for bankruptcy and that your attorney’s name is David Nelson and ask them to call me and verify it at 951 200 3613. Of course, don’t do this until we have met, signed retainers and you have paid me at least a down payment. 98% of your creditors will never call you back directly once you do that. They call me and verify it then leave you alone. Every now and again, one of them gets overzealous and then I write that one a letter. Once they receive the letter they leave you alone.

Affordable Bankruptcy

But even if all you did was start your payment plan, how much of a dent have you made if the attorney charges you $2000 for your affordable bankruptcy? Nada mucho. My prices generally start from $700 for widows, orphans and cancer patients or disabled folks plus the filing fee, up to My usual range which is $1000 to $1500 in attorney’s fees plus the filing fee for most cases and of course if you have several houses or a ton of cars or a lot of income, it can go up steeply from there.

But even so, I’ve had clients with a half a dozen houses and even those cases were only $2100 in attorney’s fees. So, still a strong affordable price compared to most. Normally, I don’t charge for extra creditors or extra collection agencies. Most people don’t have more than about 50 anyway. So, it’s not that much extra work from 20 or 25 to get to 50 data entries in a keyboard.

Of course, If you have a garbage bag full of unsorted collection agents, it’s going to cost you a bit more if you want me to pick through it, sort the duplicates and type up more than that range. Just bring me one statement from each account. IF you bring me your credit report make sure it has the addresses of the creditors on it so that I don’t have to search the web for them. IF it doesn’t, make sure you seach the web for those addresses and put them on the credit report or make sure you bring extra money to pay me to do it.

A great way to know how many creditors you have is to go to AnnualCreditReport.com to get your free annual credit reports. Make sure that you check mark all three credit reports on the page that asks which ones you want. Last I saw if you tried to check one at a time, it wouldn’t let you go back again. Also FreeCreditReport.com is a good place to go. They charge for a credit rating monitoring service but then allow you to get a free credit report with all three merged reports, once you have that, go back immediately and cancel the service before they charge you.

So what makes more sense to you? $100 starts you on a payment plan to pay off $1500 or $2000 in attorney’s fees or $100 starts you on a payment plan to pay off $700 (if you’re disabled or a widow or sick) to $1200 .

Bankruptcy Attorney David Nelson on Google+

799bk.com

$799 Bankruptcy

Sometimes you can find it.

Most of the time however, like what I’ve encountered here in Southern Riverside area of California, usually, it’s a bait and switch. They claim that you’ll get a cheap bankruptcy and when you get there, or when you call, it turns out that it gets you the most minimal bankruptcy ever, and probably you won’t even meet an attorney. When I occasionally charge only $700 plus the filing fee, it’s because the client is a widow or a cancer patient and when I do charge so little, guess what? You won’t meet a paralegal, I still go to the hearing with you, and unless I’m sick or on vacation, I’ll be the attorney at your hearing, and you’ll meet me when you get to the office, and I will be the one who types your bankruptcy.

Before we get started, Disclaimer: Nothing in this article may be mistaken as legal advice. Attorney David Nelson, is licensed only in California, and this article is intended only for readers in California. This article is for entertainment, educational, extra-curricular, and medical purposes only. If you decide to rely on this, heaven help you.

I’ve called similar cheap ads before, and other bankruptcy attorneys I know have called similar ads. Here’s what we’ve found:

Most of the cheap bankruptcy guys don’t go to the hearing with you unless you pay them more. Even then they probably don’t go themselves but hire a pinch hitter attorney to go for them and that guy won’t have read your file, and doesn’t know you or your case. At least in Riverside the pinch hitters are good attorneys who take good notes, but they can’t fight for you on the spot because they have so little knowledge of the case, the file or you. In fact, often you’ll find that the first phone call you’ve made was to a paralegal and he has an attorney who “supervises” him. If that’s the case, run the other direction. In that situation, if you want to meet with an attorney, you can, but only if you pay them more. If your income approaches the median income for your jurisdiction, it will cost you more. If they have to do the whole means test calculation for you at the consultation, it will cost you a lot more. If you have a house, it will cost you more. If you owe any taxes even property taxes, it will cost you more. If you have more than 10 or 15 creditors/accounts/collection agents/attorneys who must be listed in your bankruptcy petition, it will cost you more. If there is a judgment against you, and your bank accounts have been levied, it will cost you more. If your wages are about to be garnished or are being garnished, it will cost you more. If you have a car or a refrigerator that must or might need to be reaffirmed, it will cost you more. If the attorney or his paralegal fart while you’re in the office, that’s a value added perk and it will cost you more.

Most of us who have called this or similar ads have found that by the time the average bankruptcy client’s consultation is over, it will cost the retail price of $2000 or more to go bankrupt, plus the filing fee. Incidentally, the filing fee currently for a chapter 7 bankruptcy is $306 at this writing.

Even worse, many unscrupulous or lazy attorneys (and I haven’t heard or seen that the $799.com guys do this) will try to

upsell a chapter 13 bankruptcy

to you with a payment plan where the attorney makes at least $3500 to $4500 per case. Lovely isn’t it?

Bankruptcy attorneys who don’t do the careful analysis will advise a chapter 13 because your income is “too high.”

You require a careful analysis of your income and expenses in order to know if you really qualify for a chapter 7 or not. There are a lot of frequently overlooked factors or factors that require a lot of documentation. Some attorneys just don’t know what they are, especially if they were doing divorces a year ago and decided to get into the bankruptcy boom. I’ve been doing bankruptcy since 1994. Some attorneys are just too lazy to amass the required documentation in order to prove your case for you. Of course, some just want more money per case.

Will everyone do this? Of course not, will the cheap bankruptcy guys do this to you? I haven’t head that they do and I believe that most won’t based on what I’ve heard and the calls I’ve made, just that by the time you get done, they’re charging you retail for your discounted bankruptcy. Possibly some of them have changed their ways since I and my colleagues telephoned to ask about prices, I don’t know. In fact, I’m writing in the hope that it will spawn a reformation in the practice of the bait and switch statewide.

The firms that will more likely try to get you into a chapter 13 are the big ones. Several names on the door that sort of thing. Trust me, if you go in for a bankruptcy consultation to a Victorian building on the outside of downtown and the lawyer(s) have several support staff and a few new Mercedes in the lot, guess who’s paying for all that? Are they better at bankruptcy than me? Nope. Better looking, yes, and they’ll charge you more for that too. They are better at marketing, their websites cost them mega-bucks per year in upkeep and they pay huge rents and payrolls and their personal expenses are more than many of you make in a month or a quarter.

Don’t get me wrong, if you make a good bit more money than the average bear, then you have a higher than average probability of having to do a chapter 13. That’s what it’s for, if your income is significantly above the median, you might not be able to avoid a 13, but I’ve also seen cases where the income was a good bit over the median which qualified for a chapter 7. Did they qualify because I’m some bankruptcy wizard or a debt vampire who suck the vacuum of your finances away? No. Those clients qualified because once the analysis was done and the documentation gathered to prove the analysis, they did in fact qualify for a chapter 7.

Congress hasn’t left any wiggle room in the Means Test.

Means Test

Either you have passed your means test and you qualify for a chapter 7 or you didn’t. What the right attorney brings to the table is the analysis, not a way to fudge the numbers and make you qualify but the proper analysis based on the right reasons that show that you do qualify when you in fact already do.

Because every case is different, you must get the right consultation. Yes, even at chez moi it will cost you more than the average 7 but it will still be less than a firm with several names on the door. Possibly less than the guys with the cheap bankruptcy advertising.

Discharging Taxes

When discharging taxes, the right attorney can make all the difference. Especially if you call early. See this article. If you owe a lot of taxes, and I’m not talking about property taxes, but the board of equalization taxes, federal income taxes, self employment taxes and the like. And if you do, expect to pay more if you want your attorney to tell you that you have a high probability of discharging them in a bankruptcy.