Monthly Archives: July 2010

by Douglas Jacobs, California Bankruptcy Attorney · Posted in Family Debt Problems, Marriage and Debt

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As you all have read from my previous posts.  I do not advocate for DIY’ers to create their own California Chapter 7 bankruptcy Petition.

However, not everyone listens to attorneys, lol.

Here is a link to a sample California Chapter 7 bankruptcy Petition. Here is another link as well.

As I have said before, its often more cost-effective (for example – the risk of losing your home, car, tax refund etc….) to hire an attorney.  However, not everyone will do that.

Caveat Emptor!

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 Here’s an interesting issue that circulated on a bankruptcy attorney listserv. A debtor files bankruptcy because he cannot pay credit card and medical bills. After he files his petition, he returns to one of his doctors for treatment on an ongoing illness. The debtor had listed on his bankruptcy schedules a bill to same doctor for treatment rendered and billed prior to the bankruptcy. The doctor says he will not further treat the debtor’s illness until and unless the debtor pays the doctor’s past due bill.

The doctor’s position is common sense. Why should a doctor, or anyone else, continue providing services to a patient who has not paid bills for the prior services? The issue is whether the doctor’s insistence on payment of a bill listed on the debtor’s petition is an illegal violation of the bankruptcy stay.

One of the listserv attorneys found a case on this issue decided 25 years ago. A bankruptcy court held that a physician’s service contingent upon payment of a scheduled prior medical bill violated the automatic stay and entitled the debtor to an award of sanctions against the physician. The court said the physician was free to simply deny treatment to the bankruptcy patient, but he could not leverage his professional services to compel payment of a discharged medical debt. 38 B.R. 515

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I found this article posted at http://www.bankruptcyorlando.com/ and it reads:

I had two trustee meetings today with clients who acquired new cars not long prior to filing bankruptcy. Both debtors got help from more affluent family members to get their cars, but the two debtors and their respective families chose different ways to title the car and structure the transaction. Debtor Number One was driving a new car paid for by his father when he filed bankruptcy.. His father purchased the car in his own name for cash and then gave the car to his son, the debtor, to use. Debtor Number Two borrowed money from his brother in law to purchase a new car before bankruptcy. Debtor Two purchased the car with the brother in law’s money prior to filing and shortly after filing bankruptcy he recorded a lien on the title in favor of his brother in law.

Debtor One keeps the car. Debtor Two loses the car. Because the lien on Debtor 2′s car was recorded after the bankruptcy the trustee can avoid the lien and treat the car as owned free and clear by Debtor 2. Debtor One keeps his car because even though this debtor drives the car exclusively, pays for gas, repairs, and insurance, the car title was never in the debtor’s name and the debtor never had legal title.

The morale of this true story is that if a family member wants to help you out getting you a car before you file Chapter 7 bankruptcy have the family member title the car in their name. After you file the petition the same family member can gift the car title to you. Alternatively, if the family member does not want the liability of ownership he can loan you money for your car, but make sure the family member puts a lien on the car at the same time you buy the car (just like a bank would do).

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Well, that depends.If your first mortgage is $800,000 and the house is worth $400,000, you have a problem.If the house payment for the first mortgage (the one most likely to start a trustee’s sale in California) is $2,400 per month, and your income is zero, you have a problem.If you have a car that’s worth $25,000 and you want to file a bankruptcy in California, you have a problem.All of the above problems have solutions, depending on the rest of the facts that are presented.

But none of this stuff is easy, and not all of the solutions are happy, smiley solutions.

On the other hand, what I want to achieve in my cases is that the bankruptcy client (“debtor” or “bankrupt”, although that term is a bit archaic) gets rid of most of his dischargeable debt, keeps most of his exempt property, spends money that’s coming to him (tax refunds, for instance) on his family prior to filing, and gets to move on into his or her or their fresh start with darn near zero historic debt.

I like it best, in fact, when the debtor has a car that’s exempt, and is owned free and clear; but cars are the most bizarre, complicated issue among all those that get dealt with in bankruptcy cases in California.

So here’s the deal: sometimes you get to keep the house, if you can afford to make some of the payments. Sometimes you get to keep the car, if it’s exempt, or if it’s over-encumbered (although the Judges don’t like reaffirmations on those cars any more than I do), and sometimes you don’t.

It depends.

But most people with overwhelming debt who decide to file a bankruptcy in California (and the vast majority of those I file are Chapter 7 cases, because I think those are by far the best bang for the buck for the debtor client; much better than the awful five year Chapter 13 bankruptcy cases) wind up, on balance, happier and less anxious after they get that overwhelming debt scraped off by their bankruptcy discharge.

And if there’s zero equity in the house, or negative equity, there may be good economic reasons to rent for four years instead of paying $4,500 per month to stay in a very nice house. Which the bank, really, owns.

On the other, other hand, the ultimate decision points with my clients are theirs, not mine. If a client wants to stay in a house that’s massively underwater, with huge monthly payments, and can’t afford to do it without sucking money out of a 401(k), that’s a decision for the client.

I will, of course, tell the client that he’s been smoking wacky tabacky if he thinks he’s making a great business decision, but if I were a business genius, I wouldn’t be a simple back-country bankruptcy lawyer in California!

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At the law offices of Chirnese L. Liverpool, we offer affordable flat fee Chapter 7 bankruptcies.  You can retain us with as little as a $99 deposit down. 

We will begin to work on your petition for you and you will receive a draft of your petition upon completion of payment.  Unfortunately, we cannot file your case without  being paid in full on a Chapter 7 matter, because then we would be creditors and subject to discharge!   :0

However, we accept payments and you can even create your own payment structure.  The sooner you get it paid, the sooner you can become one step closer to being debt free!

To begin your bankruptcy process, contact the Law offices of Chirnese L. Liverpool today at (818) 714-2200

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Written by IRS
Relief Admin Lucy Bartlett on July 11, 2010

 A person can issue a letter to another person authorizing him to act in business or legal matters on his behalf and this is called a letter of attorney, or power of attorney in common law. The person who is issuing the power of attorney is known as principal and the person who acts on behalf of the principal is known as attorney-in-fact or agent.
The attorney-in-fact is authorized to sign documents in the name of the principal.

When a person is incapacitated because of some ailment and could not sign a cheque, that person can request another person to do so through oral instructions. Institutions such as banks, hospitals, IRS in the US insist on a power of attorney in writing to honour the instructions and they normally take up the original letter with them for their records.

The signature of the principal in a power of attorney should be notarized to get a legal status similar to the case of signatures in any
deed in normal circumstances which are notarized. This process is known as “equal dignity rule”.

The scope of the power of attorney can be defined in the letter itself. It can be a limited power of attorney to carry out specific acts
or it can be a broad or general power of attorney to carry out any and all acts on behalf of the principal. A court will interpret the scope of power of attorney, exactly as described in the letter. A time limit can be set to a power of attorney.

Upon the death of the principal, the power of attorney becomes invalid. It also becomes invalid when the principal becomes
incapacitated due to mental illness or physical injury unless a provision is made in the original power of attorney specifically
exempting such provisions.

This type of “durable power of attorney” or “living will” enables the agent to make decisions regarding the health care of the principal in case it is needed.

In a “springing power of attorney”, the power granted becomes valid only when specific acts described in the letter takes place – such as illness, which incapacitates the principal – in the future. Due to the privacy legislation in US, doctors will not provide medical history or related information regarding the capacity of the principal unless specific authorization is given in the power of attorney.

The principal of a power of attorney can revoke the powers granted by informing the attorney-in-fact that it is revoked.

The Law offices  of Chirnese L. Liverpool can help you draft a power of attorney and/or living will.  Give us a call at (818) 714-2200

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Well,  they are officially releasing news and pictures that the oil leak has been stopped in the gulf.  I wonder if they are going to have to file for bankruptcy now?

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A lot of individuals who are contemplating whether to file for chapter 7 bankruptcy are wondering do they even qualify to file a chapter 7 bankruptcy.  There are generally 2 main qualifications for filing bankruptcy.  The first step is to take your income and list all of your monthly debt not including credit card payments.  If at the end of the month, you have $100 or less left over (and this is not including credit card payments), than you have met the first step to qualification.  The second step is whether you fall under the median income for your household size.  If you make more than the median income for your household size than you must pass the means test.  Determining whether you are qualified to file chapter 7 bankruptcy should be done with a qualified professional, such as an attorney, or you can risk losing a lot by filing and not qualifying.  Each individual person’s situation is different and should be given an individual assessment by an attorney.  At the law offices of Chirnese L. Liverpool, located at 6277 Van Nuys Blvd Suite 126, Van Nuys, California, 91401….. we collect the necessary information to insure that you are qualified to file for a chapter 7 bankruptcy.  If you are in need of a California bankruptcy attorney give our office a  call at (818) 714-2200 or visit us on the web at www.liverpoollegal.com

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Many people faced with debts that they cannot afford seek assistance from friends and family to help it make it through their tough times.  They do this in an effort to avoid filing bankruptcy or to help them get thru a period of time until their income increases.  However, in today’s economy, those efforts do not always work and the individual (or couple) turns to bankruptcy as a way to alleviate all their unsecured debt and the mounting stress on their back.  They see bankruptcy as an option to give them a fresh start.

Unknown to many that file bankruptcy is that the trustee appointed to administer the case can, and will (in certain circumstances) take back money paid to creditors prior to the bankruptcy filing date.  This includes payments made to friends or family who assisted the debtor.  These payments are often classified as “preferential payments” depending on who received the payment and the payment date.

The trustee does not walways exercise this option.  It is the trustee’s discretion whether to take back any preferential payments made to creditors.   The trustee must consider who received the payments, how much they received, and whether other creditors were paid similarly.  The trustee is more likely to utilize his/her avoidance powers when the payment to a particular creditor was for a large amount and made within the time period set forth by the bankruptcy code for preference payments.

Generally, the Trustee will not challenge payments to secured creditors (such as house loans or car loans).  Similarly, minimum payments on credit cards are often left alone unless one creditor received a large amount at the expense of other creditors.

If a debtor is interested in paying back loans to friends or family, it is usually best to wait until after the bankruptcy case is over.  The money that the debtor would use to make such payments prior to the bankruptcy filing will often be protected (exempt) in the bankruptcy case so that the debtor is free to use the money as he or she wishes after the case concludes.  However, if the payment is made prior to the filing date, the money is no longer in the debtor’s possession and he cannot exempt the money in the bankruptcy.  The Trustee can then recover the money from the person who was paid and redistribute the amount collected evenly among all the creditors.

It is often best to consult with an attorney prior to filing bankruptcy to assess whether any payments recently made would be at risk.

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