Bankruptcy Information:WHAT TO EXPECT

Discuss with your attorney your goals in filing the case.

2. Cooperate with your attorney in preparing all required bankruptcy papers and
documents, thoroughly reviewing drafts of documents, and advising your attorney
2 of corrections needed.
3. Provide your attorney with all documentation he or she requests, including but not
limited to accurate copies of the following documents:
a. Certificate of Credit Counseling, together with the debt repayment plan, if
any, prepared by the nonprofit budget and credit counseling agency that
provided individual counseling services to you prior to bankruptcy.
b. Proof of income you received from all sources in the 6-month period before
your case was filed. Some examples include paycheck stubs, Social
Security statements, worker’s compensation payments, income from rental
property, pensions, disability payments, self-employment income, child and
spousal support, and other payments. If you are self-employed or own a
business, you should provide report(s) disclosing monthly income and
expenses for the 6-month period before the case was filed.
c. Federal and state income tax returns, or transcripts of returns, for the most
recently ended tax year, as well as any other returns requested by your
attorney.
d. Proof of your identity and Social Security number. Some examples are
your driver’s license, passport, or other document containing your
photograph.
e. A record of your interest, if any, in an educational individual retirement
account or a qualified State tuition program.
f. The name, address and telephone number of any person or state agency to
whom you owe back child or spousal support or make current child or
spousal support payments. Include all supporting documents for the
payments. Some examples of supporting documents are a court order, a
declaration of voluntary support payments, a separation agreement, a
divorce decree, and a property settlement agreement.
g. Any insurance policies requested by your attorney.
h. Documents relating to any inheritance to which you are entitled.
i. Documents relating to any legal action in which you are a party.
II. AFTER THE CASE IS FILED, YOU AGREE TO TIMELY AND
PROMPTLY COMPLY WITH ALL APPLICABLE CHAPTER 7 RULES
AND PROCEDURES, INCLUDING BUT NOT LIMITED TO:
3 1.
Attend the § 341(a) meeting of creditors at the time(s) ordered.
2. Keep the Chapter 7 trustee and your attorney informed of your current address and
telephone number and employment status.
3. Inform your attorney of any wage garnishments, seizure of assets or liens that
occur or continue after the filing of your bankruptcy case.
4. Provide copies of all federal tax returns or transcripts to your attorney when
requested, and pay over to your attorney or the trustee, as directed, the nonexempt
portion of any tax refunds.
5. Contact your attorney promptly if you are sued on a scheduled debt or if you file a
lawsuit or intend to settle any dispute relating to events that occurred prior to the
filing of your bankruptcy case.
6. Provide on a timely basis all information or documentation requested by your
attorney, including all information needed to respond to any motion or objection
seeking relief in your bankruptcy case.
7. Provide your attorney with any tax returns, account statements, pay stubs, or other
documentation necessary to comply with any audit requests.
8. Respond promptly to all communications from your attorney.
III.
BEFORE THE CASE IS FILED, YOUR ATTORNEY AGREES TO
PROVIDE ALL SERVICES NECESSARY FOR REPRESENTATION,
INCLUDING BUT NOT LIMITED TO:
Attorney will personally*:
1. Meet with you to review your assets, liabilities, income, and expenses.
2. Counsel you regarding the advisability of filing either a chapter 13 or a chapter 7
case, discuss bankruptcy procedures, and answer your questions.
3. Review the completed petition, statements, schedules, and all amendments with
you.
4. Explain to you the attorney’s fees that are being charged in the case, how and
when those attorney’s fees are determined and paid, and whether additional fees
will be charged for representation in adversary proceedings that might be filed in
the case, or in the event the case is converted to another Chapter.
5. Provide a fully signed copy of this document to you.
4 With the assistance of staff under his or her supervision, your attorney will:
6. Verify the number and status of any prior bankruptcy case(s) filed by you or any
related entity.
7. Timely prepare and file your petition, statements, schedules, required documents
and certificates, and all necessary amendments to these filings.
* The term “personally” means that the described service will be performed only by an
attorney who is a member in good standing of the Bar and admitted to practice before the
bankruptcy court. The service shall not be performed by a non-attorney even if that
individual is employed by the attorney and is under the direct supervision and control of
that attorney.
IV.

1. Advise you of the requirement to attend the § 341(a) meeting of creditors and
inform you of the date, time, and place of the meeting. In the case of a joint filing,
inform you and your spouse that both of you must appear at the meeting.
2. Inform you that you must be punctual for the § 341(a) meeting of creditors or the
meeting may be continued to a later date.
3. Attend the § 341(a) meetings and any court hearings, either personally or through
another attorney from his or her firm or through an appearance attorney who has
been adequately briefed on the case.
4. Advise you if an appearance attorney will stand in for him or her at the § 341(a)
meeting or any court hearing, and explain to you in advance, if possible, the role
and identity of the appearance attorney. In any event, it is your attorney’s
responsibility to adequately prepare the appearance attorney for the meeting or
hearing by providing all documents and information in sufficient time to allow for
proper representation of you.
5. Notify you on a timely basis if any pleading seeking relief against you is filed.
This notification shall specify a deadline by which you should contact your
attorney to discuss a response to the pleading and may state that if you do not
contact the attorney timely, such attorney may choose not to file a response. Such
notification should explain the potential consequences of not filing a response to
the pleading.
6. If your attorney is contacted by you on a timely basis, as provided in paragraph 5,
5 such attorney will timely respond in an appropriate manner to any pleading
seeking relief against you.
7. Prepare, file, and serve on a timely basis any necessary amended statements and
schedules and any change of address, based on information provided by you.
8. Monitor all information filed in your case for accuracy and completeness.
9. File objections to claims when appropriate.
10. Prepare and file a proof of claim for a creditor when appropriate.
11. Advise you of the effect of proposed reaffirmation agreements and, where
appropriate, negotiate alternate terms with secured creditors.
12. Attend any hearing scheduled by the court on a reaffirmation agreement,
regardless whether such attorney has signed off on the agreement.
13. Unless otherwise agreed before the bankruptcy case is filed, your attorney will
represent you in adversary proceedings, including but not limited to objections to
discharge and/or dischargeability. Unless otherwise agreed before the case is
filed, your attorney will also continue to represent you if the case is converted to
another Chapter of the Bankruptcy Code. The attorney is not, however, obligated
to represent you in an appeal to another Court.
14.
If your attorney has not been retained to represent you in adversary proceedings,
and an adversary proceeding is then filed against you, the attorney will, within 7
days after receiving notice of the adversary proceeding, explain to you the
estimated cost of providing representation in the adversary proceeding, the risks
and consequences of an adverse judgment, and the risks and consequences of
proceeding without counsel. In addition, the attorney shall advise you of the date
by which a response to the adversary proceeding is due in order to avoid a
judgment being entered against you based on your failure to respond. And, the
attorney shall advise whether you may be eligible to participate in a program in
your part of the district to provide eligible debtors with attorneys at no or reduced
charge, and who to contact about participation in such a program.
15. Prepare, file, and serve any other motion that may be necessary to appropriately
represent you in the bankruptcy case, including but not limited to motions to
impose or extend the automatic stay.
16. Respond promptly to your questions and communications for the duration of the
case, and provide all other legal services that are necessary for the proper
administration of the bankruptcy case.
6
17. Advise you of the requirement to complete an instructional course in personal
financial management, and the consequences of not doing so.
18. Represent you at a discharge hearing, if required.
19. Represent you in connection with any audit request.
V. ALLOWANCE AND PAYMENT OF ATTORNEYS’ FEES
You and your attorney agree that the fee for all legal services to be provided in the
bankruptcy case will be $__________. You agree to pay this fee. This fee does/does not
(circle the appropriate verb) include representation in adversary proceedings and
does/does not include representation if the case is converted to another Chapter. (If
neither is designated, representation is included).
If you dispute the legal services provided or the fees charged by your attorney, you may
file an objection with the Court. Should your attorney’s continued representation create a
hardship, such attorney may seek a court order allowing him or her to withdraw from the
case. Under Local Rule 2091-1, such attorney will not be allowed to withdraw until
another attorney enters the case, unless good cause is shown for the withdrawal.
Client’s Signature. By signing this agreement, you certify that you have read the
agreement and understand and agree to carry out the terms of the agreement to the best of
your ability, and that you have received a signed copy of the agreement.
Attorney’s Signature. By signing this agreement, your attorney certifies that, before the
case was filed, he or she personally met with you and counseled and explained to you all
matters as required by this agreement.

SPECIAL APPEARANCES-WHEN YOU NEED THEM MOST (SOUTHERN CALIFORNIA)

Attorney with over 30 years experience-licensed before all the Courts of the States of California and Nevada. I will appear in the following Courts: Federal, Bankruptcy, Workers' Compensation, and all State Courts for motions, case management conferences, unlawful detainers or any other appearance required work. I have extensive experience, including but not limited to: all aspects of business litigation, construction disputes, collection work, labor law, licensing, administrative hearings, unlawful detainers and general business litigation. I also have actively conducted trials, mediations and arbitrations. You can call me anytime

_________________________________ ______________

WHAT TO EXPECT

Discuss with your attorney your goals in filing the case.

SPECIAL APPEARANCES-WHEN YOU NEED THEM MOST (SOUTHERN CALIFORNIA)

AFFORDABLE ROUTINE LEGAL HELP (Pasadena)

Experience in employment, civil litigation. Post bar. Reasonable prices and quick turn around.

==Answers
==Demurrers
==Motions
==Drafting and responding to discovery
==Legal research
==Complaints
==Organization of discovery
==Proofreading

_________________________________ ______________

How to File Bankruptcy for Free in California (2020 Guide)

Written by Attorney Andrea Wimmer. Updated July 30, 2020

19-24 minutes

In a Nutshell

Getting debt relief through bankruptcy doesn’t have to be expensive. If you can’t afford to hire a bankruptcy lawyer, you can file bankruptcy without one. This guide will take you through the 10-steps of filing Chapter 7 bankruptcy in California without a lawyer.

Living in California comes with a lot of benefits, but it also often comes with a high cost of living, which makes slipping into debt really easy. After all, if most of your income is spent on just housing and transportation expenses, not much is left for any other expenses.

Filing bankruptcy in California can help you wipe your slate clean and get a fresh start. Bankruptcy law provides for an automatic stay of debt collection actions. This means wage garnishments and repossessions have to stop as soon as your case is filed.

Whether you are an Oscar-winner like Kim Basinger, who filed in 1993, or just a regular Californian trying to make a living in the Golden State, it's important to remember that you can seek bankruptcy protection by filing either Chapter 7 or Chapter 13 bankruptcy.

How to File Bankruptcy in California for Free

Collect Your California Bankruptcy Documents

You’ll submit most of the information for your California bankruptcy case by submitting the official bankruptcy forms to the court. Collecting certain documents that contain the information you’ll need beforehand will make that part a lot easier for you. Plus, there are a few things - like your last income tax return - that have to be submitted to your trustee during the bankruptcy process.

To correctly calculate your monthly income, you’ll need to collect your paycheck stubs from the last 6 months. If you’re self-employed or a gig worker, document your monthly income in a way that makes sense for your situation.

You’ll also need to provide a list of all your creditors to the bankruptcy court. You can get a free credit report to help with this but you should also review any collection notices you’re getting in the mail. That way you can make sure you’re not missing anyone.

Take Credit Counseling

You’ll have to complete credit counseling in the 6 months before filing your bankruptcy case. Federal law requires it, no matter what type of bankruptcy someone files. Make sure to sign up for this course with one of the providers approved for California bankruptcy cases.

You don’t have to go anywhere to complete this requirement; most providers offer it online or over the phone. There is a small cost associated with taking the course, but several non-profit companies are approved to offer the course in California. So, if the first phone number you call ends up quoting you $50 - the maximum allowed under federal law - shop around. There’s bound to be more affordable options available.

Complete the Bankruptcy Forms

The bankruptcy forms are the same for everyone that files in the same district as you. Some of thenational forms are pretty self-explanatory and easy to complete by yourself. Others, like the one asking you to list your exempt property, can be a little more technical.

If you hire a bankruptcy attorney, they’ll ask you all the questions that they need answered to prepare the California bankruptcy forms. If you’re using Upsolve’s free app, it’ll walk you through all of the questions on the forms, then generate them for you.

Since you are the one signing the bankruptcy forms before they are filed with the court, it's important for you to carefully review everything. You can learn more about the California bankruptcy process by visiting the court’s self-help center in San Diego or the self-help desk at the Sacramento courthouse.

Get Your Filing Fee

If your income is less than 150% of the federal poverty guidelines, you can file an application to have the filing fee waived. If you don’t meet the requirements for a fee waiver, but are unable to pay the full $338 all at once - maybe due to an ongoing garnishment -, you can apply to pay the court filing fee in installments instead.

If you are able to pay the court filing fee in full, you should bring it with you when you go to the courthouse to file all of your bankruptcy documents. You can’t use a credit card, debit card, or personal check to make this payment. California bankruptcy courts generally accept US Postal Service money orders and cashier's checks from an acceptable financial institution (this probably means major bank). Cash usually works too, but many bankruptcy courts are not accepting cash at the moment due to the coronavirus pandemic.

Print Your Bankruptcy Forms

Once you have (1) taken credit counseling, (2) collected your documents and completed your California bankruptcy forms, and (3) made a game plan on how to handle the filing fee, you’re ready to officially begin the process of filing Chapter 7 bankruptcy in California.

If you completed all documents on your computer, print everything out twice so you have a copy for your own files. If you’re filing without any help, remember there are a lot of different forms that make up the full filing package, so having a checklist will come in handy.

Go to Court to File Your Forms

California has 4 federal districts, which means there are four bankruptcy districts. You can find out which district your case needs to be filed in using this tool provided by the Eastern District of California. You can file your case by dropping the California bankruptcy forms off in person, or by mailing them to the bankruptcy court. Folks that file without an attorney (“pro se”) in California's Central District, can file their bankruptcy case online using the court’s Electronic Self-Representation (eSR) Bankruptcy Petition Preparation System.

If you’re going in person, Keep in mind that the court is a federal building, so you’ll be required to pass through security on your way in and that you can’t file your case on a federal holiday.

Mail Documents to Your Trustee

Once your California bankruptcy is filed with the court, most of the heavy lifting is done. The court will assign a bankruptcy trustee to handle your Chapter 7 bankruptcy case. The bankruptcy trustee sells nonexempt property and pays it to creditors in order of priority, depending on the types of debt someone has. Most Chapter 7 filers don’t have any nonexempt property.

They may send you a letter asking you to send them bank statements, paycheck stubs and similar documents in addition to your federal income tax return. It’s important that you pay close attention to any such requests you may receive from your trustee.

Take Bankruptcy Course 2

The Bankruptcy Code requires everyone to take this course after filing bankruptcy even if there is nothing someone could have done differently to avoid it. It’s important to take this course from one of the approved providers, and while you don't have to get it done before your 341 meeting, you certainly can.

Once you have completed bankruptcy course 2, your certificate of completion will need to be filed with the bankruptcy court. Make sure you ask your course provider whether they will file the certificate in your Chapter 7 bankruptcy case for you, or if you are required to do it yourself.

If you don’t complete this course, you will not receive your discharge; however, the case administration continues. Since the discharge is the main benefit of filing Chapter 7 bankruptcy in California, it is important not to forget this step.

Attend Your 341 Meeting

In most cases,the 341 meeting, or "meeting of creditors," is the only time a bankruptcy filer goes to court. You won’t meet with a judge or other court official on this day. Instead, the bankruptcy trustee that is handling your case will meet with you to ask you some standard questions about your case.

While it's not required, there are some easy tips and tricks on how to prepare for your 341 meeting. Other than showing up, the most important part is that you bring a valid picture ID and proof of social security number. The bankruptcy trustee will only accept certain forms of identification, so if you don’t know where your actual social security card is, make sure you have an acceptable alternate.

Dealing with Your Car

If you own your car free and clear (or it’s worth more than you owe), make sure to claim the appropriate bankruptcy exemption under California law to protect this value. If you have a car loan, bankruptcy law gives you 3 options for dealing with it. You can surrender it to the bank and discharge the loan, you can purchase the car for its current value and discharge the rest of the loan, or you can keep everything the same by entering a reaffirmation agreement with the bank.

California Bankruptcy Means Test

When Congress amended the Bankruptcy Code in 2005, it created the “means test” to make sure folks can’t abuse the United States bankruptcy system. The bankruptcy means test starts by comparing your household income to the median household income of a household of the same size in the Golden State.

If you’re not a regular wage earner, and instead get paid on commissions or per job assignment, remember that this test is based on the 6 months before your bankruptcy filing date, not including the month you file in.

Data on Median income levels for California

California Median Income Standards for Means Test for Cases Filed On or After May 1, 2020
Household Size	Monthly Income	Annual Income
1	$5,030.00	$60,360.00
2	$6,605.92	$79,271.00
3	$7,352.92	$88,235.00
4	$8,442.92	$101,315.00
5	$9,192.92	$110,315.00
6	$9,942.92	$119,315.00
7	$10,692.92	$128,315.00
8	$11,442.92	$137,315.00
9	$12,192.92	$146,315.00
10	$12,942.92	$155,315.00

Data on Poverty levels for California

California Fee Waiver Eligibility for Cases Filed On or After May 1, 2020 Eligible for fee waiver when under 150% the poverty level.
Household Size	State Poverty Level	Fee Waiver Limit (150% PL)
1	$1,063.33	$1,595.00
2	$1,436.67	$2,155.00
3	$1,810.00	$2,715.00
4	$2,183.33	$3,275.00
5	$2,556.67	$3,835.00
6	$2,930.00	$4,395.00
7	$3,303.33	$4,955.00
8	$3,676.67	$5,515.00
9	$4,050.00	$6,075.00
10	$4,423.33	$6,635.00

California Bankruptcy Forms

California bankruptcy forms can be broken down into two categories: (1) the national forms that are the same in bankruptcy filings in all states, and (2) local forms that vary for every district in California. Once you find out which district your bankruptcy case needs to be filed in (see below for details), make sure you head to that district’s website to find out their specific requirements.

Central District of California Requirements

One of the required documents in this district is a declaration regarding the income you received in the 60 day period before filing your California bankruptcy case. All required forms and their instructions are made available for free on the Central District of California court's website.

The Central District of California is home to the largest bankruptcy court in the United States and has court locations in Los Angeles, Riverside, Santa Ana, Santa Barbara and in the San Fernando Valley. It stretches from the Central Coast area across the entire state to the state border. Folks filing for Chapter 7 bankruptcy in California who live in the counties of Los Angeles, Orange, Riverside, San Bernardino, Santa Barbara, Ventura, and San Luis Obispo will have their case heard in the Central District.

Eastern District of California Requirements

All the documents needed to file Chapter 7 bankruptcy in this district can be downloaded as a single packet from the Eastern District of California court's website. The Eastern Bankruptcy District’s website also provides pro se filers a free tool to create their creditor matrix.

The Eastern District of California is broken into three divisions, Sacramento, Modesto, and Fresno, and covers 34 counties reaching from the Oregon border in the north, down to Bakersfield in the south, and from the coastal mountains in the west, to the Nevada border in the east.

Northern District of California Requirements

The Northern District has a variety of district-specific forms. There are also specific local forms depending on which of the four divisions is handling your California bankruptcy case. One of the documents that is identical across the entire district is the statement regarding pay advices that you are required to send to your bankruptcy trustee. Note: The statement regarding pay advices is not filed with the court!

The Northern District was established in 1850, only two weeks after California became a state and today encompasses fifteen counties, namely Alameda, Contra Costa, Del Norte, Humboldt, Lake, Marin, Mendocino, Monterey, Napa, San Benito, San Francisco, San Mateo, Santa Clara, Santa Cruz, and Sonoma counties.

Southern District of California Requirements

Bankruptcy filers can get instruction packets for free on the court's website and Local Form 1901 lists all the Chapter 7 bankruptcy filing requirements for individuals.

This district covers the southernmost counties in California: San Diego County and Imperial County and houses a single bankruptcy court building in San Diego. The Southern District also holds 341 meetings in El Centro.

California Bankruptcy Exemptions

Exemption laws determine what property you have that your bankruptcy trustee can’t touch. California residents can choose between two sets of exemptions to protect their assets. One set of California bankruptcy exemptions bankruptcy cases. If you don’t own a home with equity, you’re able to protect up to $25,340.00 in property that’s not protected outside the bankruptcy process.

California Bankruptcy Lawyer Cost

Depending on your situation, having a lawyer help you with your bankruptcy filing may be a good investment. Even though the low end cost of a bankruptcy lawyer can be as high as $1,200 (and the upper end of therange is around $1,850), getting legal advice can save you money in the long run, especially if your property doesn’t seem to fit into the California bankruptcy exemptions.

California Legal Aid Organizations

Legal Aid in California can help if you can’t afford a bankruptcy lawyer but don’t want to go through the bankruptcy process on your own. There are a variety of organizations, non-profits, and other resources available to anyone looking to file Chapter 7 bankruptcy in California.

Upsolve
Nationwide Service (NYC Office)

California Court Locations

Warner Center

Warner Center
818-587-2900
21041 Burbank Boulevard Woodland Hills, CA 91367

California Judges

California Bankruptcy Judges
District	Judge Name
Central District of California	Hon. Alan M. Ahart
Central District of California	Hon. Theodor C. Albert
Central District of California	Hon. Martin R. Barash
Central District of California	Hon. Neil W. Bason
Central District of California	Hon. Catherine E. Bauer
Central District of California	Hon. Sheri Bluebond
Central District of California	Hon. Julia W. Brand
Central District of California	Hon. Peter H. Carroll
Central District of California	Hon. Scott C. Clarkson
Central District of California	Hon. Thomas B. Donovan
Central District of California	Hon. Mark D. Houle
Central District of California	Hon. Wayne Johnson
Central District of California	Hon. Victoria S. Kaufman
Central District of California	Hon. Sandra R. Klein
Central District of California	Hon. Robert N. Kwan
Central District of California	Hon. Geraldine Mund
Central District of California	Hon. Robin L. Riblet
Central District of California	Hon. Ernest M. Robles
Central District of California	Hon. Barry Russell
Central District of California	Hon. Deborah J. Saltzman
Central District of California	Hon. Erithe A. Smith
Central District of California	Hon. Maureen A. Tighe
Central District of California	Hon. Mark S. Wallace
Central District of California	Hon. Scott H. Yun
Central District of California	Hon. Gregg W. Zive
Central District of California	Hon. Vincent P. Zurzolo
Eastern District of California	Hon. Ronald H. Sargis
Eastern District of California	Hon. Christopher Klein
Eastern District of California	Hon. Michael S. McManus
Eastern District of California	Hon. Robert S. Bardwil
Eastern District of California	Hon. Fredrick E. Clement
Eastern District of California	Hon. Christopher D. Jaime
Eastern District of California	Hon. René Lastreto II
Eastern District of California	Hon. Philip H. Brandt
Northern District of California	Hon. Roger L. Efremsky
Northern District of California	Hon. Hannah L. Blumenstiel
Northern District of California	Hon. M. Elaine Hammond
Northern District of California	Hon. Stephen Johnson
Northern District of California	Hon. William Lafferty
Northern District of California	Hon. Dennis Montali
Northern District of California	Hon. Charles Novack
Southern District of California	Hon. Louise D. Adler
Southern District of California	Hon. Christopher B. Latham
Southern District of California	Hon. Margaret M. Mann
Southern District of California	Hon. Laura S. Taylor

California Trustees

California Trustees
Trustee	Contact Info
Karl T. Anderson	(760) 778-4889
Wesley H. Avery	wavery@rpmlaw.com (626) 395-7576
Lynda T. Bui	(949) 340-3400
Thomas H. Casey	(949)766-8787
Arturo M. Cisneros	(951) 328-3124
Charles W. Daff	charleswdaff@gmail.com (657) 218-4800
Carolyn Anne Dye	90010-1998
Howard Marc Ehrenberg	(213)626-2311
Jeremy W. Faith	(818) 705-2777
Todd A. Frealy	(951) 784-4122
Jeffrey I. Golden	(714)966-1000
Amy L. Goldman	(213)250-1800
Rosendo Gonzalez	(213)452-0071
David M. Goodrich	(714) 966-1000
David Keith Gottlieb	(818) 539-7720
Howard B. Grobstein	(951) 234-0951
Weneta M. A. Kosmala	(714)708-8190
Brad D. Krasnoff	(310) 277-0077
Heide C. Kurtz	(310)832-3604
Sam S. Leslie	(213) 368-5000
Richard A. Marshack	(949)333-7777
Peter J. Mastan	(213) 335-7738
Sandra K. McBeth	(805) 464-2959
John J. Menchaca	(213)683-3317
Elissa D. Miller	(213) 626-2311
Jerry Namba	(805)922-2575
Karen S. Naylor	(949) 748-7936
John P. Pringle	(323)724-3117
Jason M. Rund	(310) 640-1200
David Seror	(818) 827-9200
Larry D. Simons	larry@lsimonslaw.com (951) 686-6300
Steven M. Speier	SSPEIER@GLASSRATNER.COM (949) 336-1895
Diane C. Weil	(818) 946-1270
Robert S. Whitmore	(951)276-9292
Edward M. Wolkowitz	(310)229-3367
Timothy J. Yoo	(310) 229-3361
Nancy J. Zamora	(213) 488-9411
Sheri L. Carello	slcarello@gmail.com (916)444-8149
Michael P. Dacquisto	mdacquisto2@gmail.com (530)244-6267
Irma C. Edmonds	icetrustee@gmail.com (559) 221-2233
Gary R. Farrar	gfarrar@ecf.eqpiqsysmtems.com (209)551-1962
Peter L. Fear	trustee@trusteefear.com (559) 464-5295
Alan S. Fukushima	asf@usbtrustee.com (916) 449-3949
J. Michael Hopper	jmhopper@jmhtrustee.com (530)757-2033
Kimberly J. Husted	kh7trustee@gmail.com (916) 635-1939
Michael D. McGranahan	michaelmcg@pacbell.ne (209)524-1782
Eric J. Nims	enimstrustee@gmail.com (209) 887-3585
Randell Parker	(805)854-1503
Geoffrey M. Richards	GRTrustee@pacbell.net (916) 288-8365
James E. Salven	jim@salven-cpa.com (559)230-1095
Susan K. Smith	sksmith3@earthlink.ne (916) 833-2936
Henry M. Spacone	hspacone@yahoo.com (916)485-5530
Jeffrey M. Vetter	jeffreyvetter@hotmail.com (661)809-6806
Douglas M. Whatley	2dougwhatley@gmail.com (916) 358-9345
Kari Bowyer	trusteebowyer@gmail.com (408) 641-1327
Lois I. Brady	loisbrady@sbcglobal.net (510) 452-6498
Linda S. Green	linda@greentrustee.net (707) 575-6112
Frode "Fred" S. Hjelmeset	fhtrustee@gmail.com (650) 386-5634
Timothy W. Hoffman	twh1761@yahoo.com (707) 874-2066
Janina M. Hoskins	Jmelder7@aol.com (707) 569-9508
Doris A. Kaelin	dktrustee@gmail.com (831) 600-8093
Michael G. Kasolas	trustee@kasolas.net (415) 504-1926
Sarah L. Little	sarah@littletrustee.com (510) 485-0740
Paul J. Mansdorf	(510)526-5993
E. Lynn Schoenmann	tteeschoenmann@earthlink.net (415) 569-4390
Marlene G. Weinstein	mgwtrustee@mgwtrustee.com (925) 482-8982
Leonard J. Ackerman	lenackerman@7trustee.net (619) 906-5593
Christopher R. Barclay	admin@crb7trustee.com (619) 255-1529
Gerald Holt Davis	ghd@trusteedavis.com (619) 400-9997
Leslie T. Gladstone	leslieg@san.rr.com (858)454-9887
James L. Kennedy	jim@jlkennedy.com (858)451-8859
Ronald E. Stadtmueller	ronstadtmueller@aol.com (858) 564-9310

Written By:

Chapter 7: How it Works

Created by FindLaw's team of legal writers and editors | Last updated July 26, 2018

Following is an overview of the early course of a typical Chapter 7 bankruptcy case.

The Chapter 7 Petition and Filing Requirements

A chapter 7 case begins with the debtor filing a petition with the bankruptcy court (the court serving the area where the individual lives, or where the business debtor is organized or has its principal place of business or principal assets). In addition to the petition, in a chapter 7 bankruptcy case the debtor must also file with the court:

Schedules of assets and liabilities;
A schedule of current income and expenditures;
A statement of financial affairs; and
A schedule of executory contracts and unexpired leases.

Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case began).

Individual debtors with primarily consumer debts have additional document filing requirements. They must file:
A certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling;
Evidence of payment from employers, if any, received 60 days before filing;
A statement of monthly net income and any anticipated increase in income or expenses after filing; and
A record of any interest the debtor has in federal or state qualified education or tuition accounts.

A married couple may file a joint petition or individual petitions. Even if filing jointly, a married couple is subject to all the document filing requirements of individual debtors.

Fees and Payment Options

As of December 1, 2016, the courts must charge a case filing fee, a miscellaneous administrative fee, and a trustee surcharge. Normally, the fees must be paid to the clerk of the court upon filing. With the court's permission, however, individual debtors may pay in installments. The number of installments is limited to four, and the debtor must make the final installment no later than 120 days after filing the petition. For cause shown, the court may extend the time of any installment, provided that the last installment is paid not later than 180 days after filing the petition. Id. The debtor may also pay an administrative fee and the trustee surcharge in installments. If a joint petition is filed, only one filing fee, one administrative fee, and one trustee surcharge are charged. Debtors should be aware that failure to pay these fees may result in dismissal of the case.

If the debtor's income is less than 150% of the poverty level (as defined in the Bankruptcy Code), and the debtor is unable to pay the chapter 7 fees even in installments, the court may waive the requirement that the fees be paid.

Required Information

In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must provide the following information:

A list of all creditors and the amount and nature of their claims;
The source, amount, and frequency of the debtor's income;
A list of all of the debtor's property; and
A detailed list of the debtor's monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse is required so that the court, the trustee and creditors can evaluate the household's financial position.

The "Automatic Stay"

Filing a petition under chapter 7 "automatically stays" (stops) most collection actions against the debtor or the debtor's property. But filing the petition does not stay certain types of actions listed under the Bankruptcy Code, and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.

Meeting of Creditors

Usually between 20 and 40 days after the petition is filed, the case trustee will hold a meeting of creditors. During this meeting, the trustee puts the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding the debtor's financial affairs and property. If a married couple has filed a joint petition, they both must attend the creditors' meeting and answer questions. Within 10 days of the creditors' meeting, the U.S. trustee will report to the court whether the case should be presumed to be an abuse under the "means test" (which determines eligibility for filing bankruptcy under chapter 7)

It is important for the debtor to cooperate with the trustee and to provide any financial records or documents that the trustee requests. The Bankruptcy Code requires the trustee to ask the debtor questions at the meeting of creditors to ensure that the debtor is aware of the potential consequences of seeking a discharge in bankruptcy such as the effect on credit history, the ability to file a petition under a different chapter, the effect of receiving a discharge, and the effect of reaffirming a debt. Some trustees provide written information on these topics at or before the meeting to ensure that the debtor is aware of this information.

In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the meeting of creditors.

Conversion from Chapter 7

In order to accord the debtor complete relief, the Bankruptcy Code allows the debtor to convert a chapter 7 case to case under chapter 11, 12 or 13 as long as the debtor is eligible to be a debtor under the new chapter. However, a condition of the debtor's voluntary conversion is that the case has not previously been converted to chapter 7 from another chapter. Thus, the debtor will not be permitted to convert the case repeatedly from one chapter to another.

More information on later stages of a Chapter 7 case:

Who Can File for Chapter 7 Bankruptcy?

Created by FindLaw's team of legal writers and editors | Last updated January 23, 2018

Prior to October 17, 2005, it was largely up to a bankruptcy judge to decide whether a debtor met Chapter 7 requirements. Judges, therefore, could use substantial discretion when assessing the debtor's financial situation. As a result, under the old law, most filers chose to have debt discharged even if they were financially capable of repaying the debt in a Chapter 13 repayment plan. Consequently, the intent of current bankruptcy law is to weed out filers who can afford to repay some debt.

Under the new law, a debtor must qualify for Chapter 7 by meeting certain criteria. If the debtor fails to meet Chapter 7 requirements, a bankruptcy court can convert the case to a Chapter 13 bankruptcy. With the exception of disabled veterans that file to eliminate debt that was incurred while on active military duty or filers with debt that primarily came from operating a business, all other filers must meet Chapter 7 requirements.

The following are circumstances in which a debtor is not eligible for Chapter 7.

1. The Debtor's Income is Too High

Eligibility for Chapter 7 requires a determination of whether a filer's income is too high. The "means test" determines whether a debtor qualifies for Chapter 7. The first part of the test requires the debtor to compare their current monthly income -- the average income in the six months preceding the application for bankruptcy -- with their state's median income.

Eligible monthly income includes the following:

wages, salary, tips, bonuses, overtime, and commissions
gross income from a business, profession, or a farm
interest, dividends, and royalties
rents and real property income
regular child support or spousal support
unemployment compensation
pension and retirement income
workers' compensation
annuity payments
state disability insurance

A filer does not have to include income tax refunds and payments from Social Security retirement benefits.

If the filer's current monthly income is equal to or below the state's median, then the debtor can file for Chapter 7. If, on the other hand, the filer's income exceeds their state's median family income, the filer must pass the second part of the means test to qualify for Chapter 7.

2. The Filer Can Repay Some Debt

If a filer's income is more than their state's median income, it is necessary to look at how much disposable income the filer has left after paying "allowed" monthly expenses, such as rent and food, to determine whether the filer has enough money to pay some of their unsecured creditors through a Chapter 13 repayment plan. If the filer has a certain amount of income left over to pay some unsecured creditors, then the court will dismiss the Chapter 7 filing.

3. Debt was Previously Discharged in Bankruptcy

If a filer discharged debt under a Chapter 7 bankruptcy within the past eight years or under a Chapter 13 bankruptcy within the past six years, then the debtor is ineligible for Chapter 7. The time limitation runs from the date when the debtor filed for the previous bankruptcy.

4. A Previous Bankruptcy Case was Dismissed within the Previous 180 Days

A filer is ineligible if the dismissal of a previous Chapter 7 or Chapter 13 bankruptcy case occurred within the past 180 days for any of the following reasons:

The filer violated a court order
The previous bankruptcy case was considered fraudulent or constituted abuse on the court
The filer requested a dismissal after a creditor asked the court to lift the automatic stay

5. The Debtor Failed to Meet the Credit Counseling Requirement

Within 180 days prior to filing for Chapter 7, a debtor must participate in credit counseling with a nonprofit agency approved by the U.S. Trustee's office. The purpose of credit counseling is to help the debtor determine whether other options besides bankruptcy are available. All debtors must participate in credit counseling unless an exception applies. Exceptions include physical disability, mental incapacity, or the debtor's service on active duty in a military combat zone. When counseling has concluded, the debtor will receive a certificate of completion to submit to the bankruptcy court when filing.

The Debtor Defrauded Creditors

A bankruptcy court may discharge a bankruptcy case if it appears that the filer has attempted to defraud creditors. The following types of actions by a debtor within a few years of filing for bankruptcy may indicate fraud in the court's eyes:

The debtor transfers property to friends and family members
The debtor mutilates or destroys property
The debtor purchases luxury items
The debtor lies about income and debt on a credit application

A filer signs bankruptcy papers under "penalty of perjury," so providing false information may not only lead to the dismissal of a debtor's case, but may also lead to charges of perjury or fraud on the court.

Related Resources

Before You File for Chapter 7, Speak with a Bankruptcy Lawyer

Stuck in debt? Not sure how or when you will be able to pull yourself out? If this all seems a little overwhelming, it doesn't have to be. But without a complete and nuanced understanding of the law, you may not get the most desirable results. Get some peace of mind today and contact a local bankruptcy attorney.

What is Chapter 7 & 13?

A Chapter 13 bankruptcy is a reorganization of your debt, structured as a payment plan. There are many different reasons why a Chapter 13 bankruptcy might be your best bet. It’s important that we sit and analyze your options before suggesting a Chapter 13 bankruptcy. We need to look at the whole situation: the type of debt, income and your goals in bankruptcy, in order to determine whether a Chapter 13 would be the right solution for you.

Chapter 13 cases last from 3-5 years, depending on the type of debt and income. Based on your budget, we will propose a payment plan to the court. It’s very important that we go over your budget carefully and propose something that you can live with for the period of time that you are in bankruptcy. Fortunately, our vast experience in the Chapter 13 area allows us to be familiar with the budgeting process and, that way, we come up with something that will be both acceptable to you and the court.

Once we present a plan that we believe to be both feasible and one that shows your best efforts, we present this plan to the court and Chapter 13 Trustee. It is the Trustee’s role to ensure that you are trying your best to pay off your debt and that your creditors are being treated fairly. It’s our relationships with the court, based on years of experience, that creates smooth sailing through this process.

You may ask why you would want to file a Chapter 13? Your friend may have finished his or her bankruptcy in only a few months, and we’re telling you that you could be in bankruptcy for three to five years! Why would you want to do that? There are many reasons, the following are just a few:
Kinds of debt - There are many different kinds of debt that may not be dischargeable in a Chapter 7, debt that still leaves you feeling overwhelmed but that you just don’t have the money to pay out of pocket. Examples of this are back mortgage payments or recent income taxes. A Chapter 13 gives you some breathing room and lets us come up with a plan to get caught up on all that debt. During this process you have some peace of mind. We represent you and become your advocate, ensuring that you can get all of your debt paid off in a 3-5 year period without harassment.

Lien Stripping- It cannot be stressed enough that a lien strip is only available as part of a Chapter 13 bankruptcy. You have to enter into a payment plan in order to strip off your second mortgage.

Income- Sometimes you make simply too much money to file a Chapter 7. Chapter 7 cases have various income tests that you would have to pass in order to qualify. Chapter 13 cases aren’t like that. From an income standpoint, there is no qualifying for a Chapter 13. We just have to create a budget where you propose to pay back your debt in a way that is fair to your creditors. Sometimes that means paying back a bigger portion of their debt, sometimes it means you barely pay off any of your debt. Fortunately, Chapter 13 budgets exist in the real world, where we can count your insurance, your taxes, your child care etc. in order to form a realistic budget to create a plan where everyone is fairly treated.

Assets- Many of our clients come to us and they are scared that if they filed bankruptcy, they could lose their home, their car, their savings etc. We carefully analyze whether your assets can be fully protected in a Chapter 7, assuming you qualify. Sometimes we are not certain everything you have can be fully protected. A Chapter 13 is a much safer route when you have many assets at stake. Chapter 13 Trustees don’t sell anything! Nothing is at risk for sale. For that reason alone, a Chapter 13 is a preferred option for clients who have too much to risk in a Chapter 7.

Chapter 13 FAQ

Q: Is Chapter 13 right for me?

A: There are a number of factors that go into deciding whether Chapter 13 is right for you.
First, Chapter 13 becomes a clear option if you do not qualify for Chapter 7 bankruptcy.
Chapter 13 also makes sense if you are a homeowner who is looking to keep your home but need to make up arrearages or want to extinguish your 2^nd mortgage, or both.

The Chapter 13 process is long, however, lasting between 3 and 5 years. It also you requires you to pay your monthly disposable income to your creditors. We are able to carve out plenty of living expenses from this payment, however sometimes new expenses arise, and we would need to get court approval to change those payments.

Chapter 13, however, can also be very rewarding because it is the surest way to save your home if you are falling behind on payments and possibly facing foreclosure.
Please give our office a call for a free consultation on whether Chapter 13 is right for you.
Q: Chapter 13 process

A: As mentioned above, after we get your case filed, we will help you through a 3 to 5 year process that involves monthly payments to your creditors.

Q: What if something happens to me financially during my case?

A: This is why it’s crucial you come to us and feel comfortable communicating with us. We understand that in three years things happen. You could lose your job, you could transfer, or hey, you could win the lottery! There are always solutions and options during your Chapter 13 case. We have the knowledge to guide you through anything that comes up (unless you win the lottery, you’ve probably given that one some thought on your own!).

Q: Where does my money go in the payment plan?

A: The payment that you make each month goes to the Chapter 13 Trustee. The Chapter 13 Trustee then distributes it to your creditors. This payment usually only adds up to a small percentage of what you owe, and at the end, any outstanding debt is discharged, so you save a significant amount of money by going through the process.

Q: Can I keep my car?

A: Yes, as long as you continue to pay for it. Many people include their car in their Chapter 13 case, which allows you to make your car payment to the Chapter 13 Trustee, who in turn deals with your car lender. Others pay their car outside the plan. It’s up to you but we will probably have some guidance about how to handle that decision during your free consultation.
Q: Q: Do you service my location?

A: We service all of California, with offices in San Francisco, Long Beach, Fresno, and Los Angeles.
If it is not convenient to visit one of our offices, we can handle your entire case by phone and email! Please give our office a call for a free consultation.

Q: I’ve already filed a Chapter 7 before. Can I do it again?
A: Yes, but you cannot file a Chapter 7 case until at least eight years after the filing of your prior Chapter 7 case. If you are still in the eight-year window, you may have other good options, such as Chapter 13 or Debt Settlement.
Q: Can I keep my house?
A: California has very generous laws when it comes to allowing debtors to protect their assets. Unless you have a significant amount of equity in your home, you can generally keep your home as long as you make your mortgage payments. When you meet with an attorney at Jolley Smith, we will discuss the specific exemptions that apply to your situation. In addition, we are happy to discuss alternatives to keeping your home, including short sales, foreclosures and deeds in lieu of foreclosure.
Q: Can I keep my car?
A: Generally, if you want to keep your car, you can do so. If your car is paid off, protecting the equity is typically not a problem. However, there are limits on what you can protect in a Chapter 7, so if your car has a lot of equity, you will need to discuss with an attorney whether there is any exposure. If you still owe money against your car, you will have to continue to make payments if you want to keep your car. Often, it is advisable to reaffirm the car loan to ensure that the car cannot be repossessed if payments are current. A reaffirmation agreement re-obligates you to the original contract. Therefore, before signing a reaffirmation agreement, you should make sure that you can comfortably afford the payments. One benefit to reaffirming a car loan is that the lender will typically continue to report payments to the credit bureaus, therefore making it easier to reestablish credit.
Q: How much does a Chapter 7 cost?
A: Jolley Smith charges a reasonable and competitive fee that can vary depending on the complexity of the case. We offer a free in-office or telephone consultation. During our consultation, we will explore your options and discuss the fees associated with each option. For those who cannot afford to pay our fee up front, we offer affordable payment plans.
Q: Will Chapter 7 hurt my credit score?
A: A bankruptcy stays on your credit report for 10 years, but you are generally able to re-build you credit much sooner than that. In fact, many of our clients receive credit card offers within months. Also, based on today’s lending standards, it is possible to qualify for a mortgage within two years of the bankruptcy discharge. It is impossible to predict exactly how a bankruptcy may impact your credit score, but it is important to note that a bankruptcy is often what is needed to allow you to rebuild your credit.
Q: I feel really badly about doing this? Can’t I just wait to see if things get better?
A: Absolutely! However, it’s really important to be realistic and create a plan. We can definitely help you come up with a plan to help eliminate your debt. Financial problems can’t be solved by hoping so call us and we’ll review all possibilities.
Q: Will creditors stop harassing me?
A: Yes! You may begin referring all creditor calls to our office as soon as you get us on board. In addition, the filing of a Chapter 7 case imposes an automatic stay that stops all creditor actions against a debtor. This means that while the stay is in effect, creditors must cease any lawsuits, wage garnishments, foreclosures, etc.
Q: Who will know?
A: Bankruptcy filings are public records. The Credit Bureaus will record your bankruptcy, which will remain on your credit record for ten years. Nonetheless, as a practical matter, your friends, family and employers will not know you filed unless you tell them.

What is Chapter 13?

Chapter 13 FAQ

The Home Affordable Modification Program (“HAMP”) is the most widely used and known loan modification program. HAMP allows homeowners who have experienced financial hardship or other temporary hardship – income loss, medical expenses, divorce, etc. – and are struggling with or behind on their mortgage payments to modify their mortgage via such measures as lowering the interest rate to as low as 2 percent and extending the length of the mortgage up to 40 years so that the mortgage payment doesn’t exceed 31 percent of the homeowner’s gross income. Among other requirements, homeowners must make all their mortgage payments on time over a minimum three-month HAMP trial period to be eligible for a permanent HAMP modification.

But successfully completing a trial modification does not necessarily mean a permanent modification will be extended under HAMP. Homeowners need to pass strict HAMP eligibility guidelines that include, among other things:

The home must be an owner occupied, single family 1-4 unit property (including condominium, cooperative, and manufactured home affixed to a foundation and treated as real property under state law);

The home must be a primary residence (verified with tax return, credit report, and other documentation such as a utility bill);

The home may not be investor-owned;

The home may not be vacant or condemned; and

First lien loans must have an unpaid principal balance (prior to capitalization of arrearages) equal to or less than:

o	1 Unit: $729,750
o	2 Units: $934,200
o	3 Units: $1,129,250
o	4 Units: $1,403,400

Recently, HAMP has altered its guidelines such that borrowers in bankruptcy are not automatically eliminated from consideration for a modification. As a result, Vokshori Law Group has been able to successfully represent its loan modification clients in bankruptcy and its bankruptcy clients in negotiating a loan modification.

There are other programs that our loan modification Attorneys have experience with and have been able to successfully pursue on behalf of clients. For example, FHA loans will be considered under the FHA-Home Affordable Modification Program (FHA-HAMP), which has its own borrower eligibility criteria.

Our law firm will advocate for you.

Loan Modification Frequently Asked Questions

A Loan Modification is a permanent change in one or more of the terms of a Borrower's loan, allows the loan to be reinstated, and results in a payment the Borrower can afford.
Question 1: In utilizing the Loan Modification Option to bring an asset current, can the Lender include all fees and corporate advances?

Answer: Mortgagee Letter 2008-21 states in part: Legal fees and related foreclosure costs for work actually completed and applicable to the current default episode may be capitalized into the modified Principal Balance.

Question 2: May a Lender perform an interior inspection of the property if they have concerns about property condition?

Answer: Yes, per Mortgagee Letter 2000-05, page 20, the Lender may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the Borrower's continued ability to support the modified mortgage payment.

Question 3: Can a Lender include late charges in the Loan Modification?

Answer: Mortgagee Letter 2008-21 states that the goal in providing the Borrower a Loan Modification is to bring the delinquent mortgage current and give the Borrower a new start; therefore, the Lender should waive all accrued late fees.

Question 4: When utilizing a Loan Modification Option, can a Lender capitalize an escrow advance for Homeowner's Association fees?

Answer: HUD Handbook 4330.1 REV-5 (Paragraph 2-1, Section B, Escrow Obligations) states: Lenders must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage.

Question 5: Is there a new basis interest rate which Lenders may assess when completing a Loan Modification?

Answer: Yes, Mortgagee Letter 2009-35 states that the Lender shall reduce the Loan Modification note rate to the Current Market Rate. Please refer to Mortgagee Letter 2009-35 for more details.

Question 6: Are Lenders required to re-amortize the total amount due over 360 month period?

Answer: Yes, per Mortgagee Letter 2009-35, the Lender must re-amortize the total unpaid amount due over a 360 month period from the due date of the first installment required under the Modified Mortgage.

Question 7: What date is utilized when determining the correct interest rate for a Loan Modification?

Answer: The date the Lender approves the Loan Modification (all verification completed and servicing notes documented, reported to SFDMS) is the date that Lenders are to use in determining the interest rate.

Question 8: Will HUD subordinate a Partial Claim should a Borrower subsequently default and qualify for a Loan Modification?

Answer: If a Borrower subsequently defaults and qualifies for a Loan Modification, HUD will subordinate the Partial Claim.

Question 9: Are Lenders required to perform an escrow analysis when completing a Loan Modification?

Answer: Yes, Lenders are to perform a retroactive escrow analysis at the time the Loan Modification to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.

Question 10: Can a Lender qualify an asset for the Loan Modification Option when the Borrower is unemployed, the spouse is employed, but the spouse name is not on the mortgage?

Answer: Based upon this scenario, the Lender should conduct a financial review of the household income and expenses to determine if surplus income is sufficient to meet the new Modified Mortgage Payment, but insufficient to pay back the arrearage. Once this process has been completed the Lender should then consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not on the original mortgage.

Asset Protection With PRIVATE Associations- Safer Than Trusts!

Do you own assets like a house, car, boat, airplane, a business or other valuable things?

Did you know that if these assets are in YOUR name and under your social security number, they can be taken away from you? Billions of dollars of assets have been lost due to poor asset protection planning. The fact remains that unless you have safeguards in place, you could lose your assets at any time.

Private Associations are about the safest and easiest vehicles to operate for asset protection.

The most common and yet one of the most dangerous methods of protection is the use of trusts. The dangers of trust include:

Tricky to operate
Risk of legal problems including imprisonment
Trustee can confiscate assets through fraud or theft
Trust can be pierced because of trustee liabilities
... and more.

The best way so far to protect assets is through a Private Humanitarian FoundationAssociation.

The benefits of using a Private Association for assets protection include:

Complete Privacy
Total Control of the Association and the assets that it holds
Can be operated anywhere in the world
Excluded from many forms of taxation
Association has no tax filing requirements
Can open banks accounts all over the world
There is no ending date for a PRIVATE Association
Assets can be passed down to heirs while avoiding probate
Private Associations are NOT government regulated
Associations can reimburse you for your daily living expenses
and much more.....

The old saying goes, "Own nothing but control everything", with Private Associations, you can do just that and with peace of mind. With Associations, YOU are in control.

Private Associations are simple, easy and quick to set up and even easier to operate. No need to keep financial or other records, although doing so is recommended.

Home > How to Discharge Your Student Loans in Bankruptcy

Discharging student loans in bankruptcy is difficult, very difficult, but not impossible. Some borrowers have succeeded in getting their student loans discharged in bankruptcy. There are several steps that borrowers should take if they wish to obtain a bankruptcy discharge for their student loans.

Bankruptcy Discharge of Student Loans Is Very Rare

You can’t simply wave a magic wand, announce to the world “I declare bankruptcy” and watch your student loans disappear. It isn’t that easy.

In a 1981 bankruptcy court case, Judge Burton R. Lifland said that discharging student loans required “a certainty of hopelessness, not simply a present inability to fulfill the financial commitment.”

It is much easier to wipe away credit card debt, personal loans, auto loans and mortgages than student loans. The U.S. Bankruptcy Code puts student loans in the same category as child support obligations, taxes and criminal fines.

Statistics concerning the rarity of bankruptcy discharge for student loans are based on information provided by the Educational Credit Management Corporation (ECMC). ECMC is the guarantee agency that services defaulted federal student loans when the borrower files for a bankruptcy discharge.

Only 29 of 72,000 student loan borrowers with active bankruptcy filings in 2008 succeeded in getting a full or partial discharge of their student loans, according to ECMC.

That’s 0.04%, or odds of about 1 in 2,500. You’re more likely to die of a heart attack or of cancer than to get your student loans discharged in bankruptcy. Still, the odds of discharging student loans in bankruptcy are better than your odds of winning the Powerball lottery jackpot.

Nevertheless, these low odds are due, in part, to very few borrowers including their student loans in their bankruptcy filing. Also, it is unclear if the ECMC statistics are limited to just federal student loans. Federal student loans are much more difficult to discharge in bankruptcy than private student loans because federal student loans offer income-driven repayment plans.

Bankruptcy Discharge of Student Loans Requires Undue Hardship

Qualified education loans, which include all federal education loans and many private student loans, cannot be discharged in bankruptcy unless this would “impose an undue hardship on the debtor and the debtor’s dependents” [11 USC 523(a)(8)]. Loans made under a program that is funded in whole or in part by a nonprofit institution are similarly excepted from discharge.

Congress did not define what it meant by the term undue hardship. Since most bankruptcy court cases involve financial hardship, it seems that Congress wanted a harsher standard for student loans, one that presents an unreasonable or excessive burden. But, Congress left it to the bankruptcy courts to define the term.

Originally, Congress allowed student loans to be discharged if they have been in repayment for at least five years. Undue hardship was provided as an alternative for discharging student loans that had been in repayment for a shorter period of time. The option for a bankruptcy discharge after five years was increased to seven years in 1990 and eliminated entirely in 1998, leaving just the undue hardship option.

Most courts have adopted one of two standards for defining undue hardship, either the Brunner Test (all circuits but 1st and 8th) or the Totality of Circumstances Test (8th circuit).

The Brunner Test involves three prongs:

You must currently be unable to repay the student loans and maintain a minimal standard of living for yourself and your dependents.
The circumstances that prevent you from repaying the student loans must be likely to continue for most of the repayment term of the loans.
You must have made a good faith effort to repay the student loans, including using options for financial relief, such as deferments, forbearances and income-driven repayment.

The Totality of Circumstances Test omits the third prong of the Brunner Test and is more flexible.

In addition, the borrower must file the undue hardship petition in an adversarial proceeding, where the lender can challenge the claim of undue hardship.

Get an Attorney

A borrower is more likely to obtain a bankruptcy discharge of their student loans if they are represented by an experienced attorney.

However, most bankruptcy attorneys are unwilling to pursue an undue hardship claim because these cases involve an adversarial proceeding, which are expensive and involve a lot more work. It can cost $10,000 or more to pursue an adversarial proceeding and borrowers who file for bankruptcy usually don’t have the money to pay the lawyer’s fees. Lenders are also likely to appeal the decision, so a favorable decision is unlikely to be final.

Even if you don’t have an attorney and are representing yourself pro se, always show up in court. If you don’t show up when required, the lender can win the case by default.

Demand Proof that the Debt Is Owing

In any court case involving student loans, demand proof that the debt is owed. In particular, ask for a copy of the signed promissory note, especially if the loan has been sold.

The lender may not have the original loan promissory note or a copy. If so, they will have difficulty proving that the borrower owes the money or that they hold title to the debt.

Spreadsheets showing a history of loan payments are business records and are not proof that the debt is owed.

Generally, courts show a lot of deference to lenders. Many will allow the lender to provide a copy of the promissory note that was in use at the time and proof that the borrower received or benefited from the loan proceeds in lieu of the borrower’s actual signed promissory note.

But, if there is any evidence that suggests that you did not borrow the loan, present it and challenge the veracity of the lender’s proof. For example, compare the signature on the promissory note with your actual signature and present the court with copies of your signature on other documents. If you were incarcerated at the time the loan was supposedly borrowed, present the court with documentation of this, since incarcerated individuals are ineligible for federal student loans.

Question Whether the Loans Are Qualified Education Loans

If a loan is not a qualified education loan, it may be dischargeable in bankruptcy without requiring an undue hardship petition and adversarial proceeding. You should challenge whether the loan satisfies the requirements to be considered a qualified education loan.

Qualified education loans must have been borrowed solely to pay for qualified higher education expenses of an eligible student who was enrolled on at least a half-time basis and seeking a degree, certificate or other recognized education credential at an eligible institution of higher education.

A refinance of a qualified education loan is also considered a qualified education loan.

There are several types of loans that are not qualified education loans:

Mixed-use loans, such as credit cards, personal loans, auto loans, home equity loans, HELOCs and cash-out refinance of a mortgage, are not qualified education loans because they were not borrowed solely to pay for qualified higher education expenses.
Direct-to-consumer loans are not qualified higher education loans because they are designed to overcome restrictions on the amount borrowed and thus may exceed the college’s cost of attendance. Such loans are not school certified and therefore the college financial aid office cannot enforce a cost of attendance cap on the annual loan amount.
Bar study loans are not qualified education loans because they are not used to pay for qualified higher education expenses. The borrower is also not an eligible student, since the student has already graduated.
Residency and relocation loans are not qualified education loans for the same reasons as bar study loans.
Continuing education loans and career training loans are not qualified education loans because the student is not enrolled on at least a half-time basis and is not seeking a degree or certificate.
K-12 loans are not qualified education loans because they are not used to pay for qualified higher education expenses.

As these loans demonstrate, there are several characteristics of a loan, the student, the borrower or the educational institution that may prevent it from being considered a qualified education loan.

Criteria based on the characteristics of the loan or lender include:

The loan may not be owed to a person who is related to the borrower, defined as a brother or sister (whether by whole or half-blood), spouse, ancestor or lineal descendant.
The loan may not be a loan from qualified employer retirement plans, such as a 401(k) or 403(b).
The loan must have been borrowed within a reasonable period of time (90 days) before or after the qualified higher education expenses are paid or incurred. Loans used to pay primarily for prior-year balances are not necessarily qualified education loans. Note that this timing requirement applies only to the original qualified education loan, not any subsequent refinance of the qualified education loan.
The loan must have been borrowed to pay for the cost of attendance as defined in the Higher Education Act of 1965 as of August 4, 1997. This includes tuition and required fees, room and board, books, supplies and equipment, transportation, miscellaneous personal expenses, dependent care costs, study abroad costs, disability-related expenses and loan fees. It does not include room and board for students enrolled less than half time, the cost of obtaining professional licensure or certification, and the rental or purchase of a personal computer.
If the lender received $600 or more in interest during the year and did not issue IRS Form 1098-E, the loan might not be considered a qualified education loan. Lenders of private student loans must also collect IRS Form W-9S from the borrower before issuing a 1098-E.

Criteria based on the characteristics of the student include:

The loan must have been borrowed to pay for the education of a student who is enrolled on at least a half-time basis.
The loan must have been borrowed to pay for the education of a student who is seeking a degree, certificate or other recognized educational credential.
The loan must not have been borrowed to pay for the education of a dual enrollment student. A dual enrollment student is a student who is simultaneously enrolled in an elementary or secondary school in addition to a college or university.

Criteria based on the characteristics of the borrower include:

The loan must have been borrowed by a U.S. taxpayer.
The student must have been the borrower, the borrower’s spouse or a dependent of the borrower. For example, private parent loans are not considered qualified education loans if the borrower did not claim the student as a dependent. If the loan was borrowed by a grandparent, aunt or uncle of the student and the student was not claimed as a dependent, the loan is not a qualified education loan.

Criteria based on the characteristics of the educational institution include:

The loan must have been borrowed to pay for the education of a student who is enrolled at an eligible educational institution. Eligible educational institutions are defined as Title IV colleges and universities. If the educational institution was not accredited or not eligible for U.S. federal student aid, the loan is not a qualified education loan.

Note that these criteria apply to the design of the loan, not necessarily to how the borrower chose to use the loan proceeds.

Demonstrate Undue Hardship

Demonstrating undue hardship often depends on the income and expenses of the borrower, as well as the borrower’s prospects for increasing income.

Several successful bankruptcy discharge cases have involved a severe disability that prevented the borrower from maintaining a minimal standard of living while repaying the loan, even with an income-driven repayment plan. Examples include:

Disabled dependent. The borrower has a disabled dependent, such as a special needs child or elderly parent, with high ongoing cost of care. The borrower may be unable to work full-time while taking care of the disabled dependent. Although all federal student loans and some private student loans provide a disability discharge if the borrower is totally and permanently disabled, none provide a disability discharge if the borrower’s dependent is disabled.
No disability discharge. Some private student loans do not provide a disability discharge. If the borrower is totally and permanently disabled, yet ineligible for a disability discharge, their medical and disability-related expenses may prevent them from maintaining a minimal standard of living while repaying the student loan debt.
Low net income after subtracting disability expenses. Some disabled borrowers may be ineligible for a total and permanent disability discharge due to income above the poverty line for a family of two, yet still have insufficient income to repay their student loan debt. This can be because of high medical and disability-related expenses or because their family size is greater than two.

The borrower’s income may limit the borrower’s ability to repay the debt:

Divorce or separation. The borrower’s income may be reduced by alimony and child support obligations.
No prospects for increasing income. The borrower may be unable to get a better job because of age, infirmity, illness or disability. The borrower may already be earning the peak income for their occupation.
Very low income. The borrower earns less than 100% or 150% of the poverty line for their family size. (Bankruptcy fee waivers apply to people with income below 150% of the poverty line for the family size.) The poverty line is often defined as the income level below which the family has no discretion in how it spends money to pay for necessary living expenses. Accordingly, low-income borrowers may satisfy the first prong of the Brunner Test.
High cost of living. The borrower works in a city with a high cost of living, such as Boston, Manhattan or San Francisco.
Predatory colleges. The borrower may have a useless degree that does not qualify the borrower for employment or to sit for a licensing exam. The borrower may have dropped out of college with debt but no degree.

The borrower’s debt may limit the borrower’s ability to repay the debt:

Excessive debt. The borrower’s debt may be high enough to prevent the borrower from being able to repay the debt even if the borrower maximizes income and minimizes expenses.
Lack of income-driven repayment. Private student loans do not offer income-driven repayment. Federal Parent PLUS loans are not eligible for income-driven repayment unless they are included in a federal direct consolidation loan, in which case the consolidation loan is eligible for income-contingent repayment.

Although deferments and forbearances are not permanent solutions for long-term financial difficulty, using these options may satisfy the third prong of the Brunner Test.

There may be other extenuating circumstances that affect the borrower’s finances.

Depending on the severity of the circumstances, the lender may seek to settle the bankruptcy case rather than set a legal precedent.

Alternatives to Bankruptcy for Student Loans

Before pursuing a bankruptcy discharge, consider alternative methods of dealing with financial distress:

If your financial difficulty is short-term, consider using a deferment or forbearance.
If your financial difficulty is long-term, consider switching to a different repayment plan, such as extended repayment or income-driven repayment. Extended repayment reduces the monthly payment by stretching out the repayment term. Income-driven repayment reduces the monthly loan payment by basing it on a percentage of your discretionary income, as opposed to the amount you owe.
Look for loan forgiveness programs if you work in a public service occupation, like teaching, public health and the military. Look for employers who offer student loan repayment assistance programs.
Consider refinancing the student loans into a loan with a lower interest rate.
Contact the lender’s ombudsman to ask for a compassionate review.

SOCIAL SECURITY

SPECIAL APPEARANCES-WHEN YOU NEED THEM MOST (SOUTHERN CALIFORNIA)

SPECIAL APPEARANCES-WHEN YOU NEED THEM MOST (SOUTHERN CALIFORNIA)

AFFORDABLE ROUTINE LEGAL HELP (Pasadena)

Comments

Popular Posts

LAWYERS FOR BANKRUPTCY, WORKERS COMPENSATION, FAMILY LAW AND SOCIAL SECURITY/559-320-7028

How to File Bankruptcy for Free in California (2020 Guide)

How to File Bankruptcy in California for Free

Collect Your California Bankruptcy Documents

Take Credit Counseling

Complete the Bankruptcy Forms

Get Your Filing Fee

Print Your Bankruptcy Forms

Go to Court to File Your Forms

Mail Documents to Your Trustee

Take Bankruptcy Course 2

Attend Your 341 Meeting

Dealing with Your Car

California Bankruptcy Means Test

Data on Median income levels for California

California Median Income Standards for Means Test for Cases Filed On or After May 1, 2020

Data on Poverty levels for California

California Fee Waiver Eligibility for Cases Filed On or After May 1, 2020

California Bankruptcy Forms

Central District of California Requirements

Eastern District of California Requirements

Northern District of California Requirements

Southern District of California Requirements

California Bankruptcy Exemptions

California Bankruptcy Lawyer Cost

California Legal Aid Organizations

California Court Locations

California Judges

California Bankruptcy Judges

California Trustees

California Trustees

Chapter 7: How it Works

FindLaw Newsletters Stay up-to-date with how the law affects your life

Who Can File for Chapter 7 Bankruptcy?

What is Chapter 7 & 13?

Chapter 13 FAQ

What is Chapter 13?

Chapter 13 FAQ

Asset Protection With PRIVATE Associations- Safer Than Trusts!

Do you own assets like a house, car, boat, airplane, a business or other valuable things?

Private Associations are about the safest and easiest vehicles to operate for asset protection.

The best way so far to protect assets is through a Private Humanitarian FoundationAssociation.

The old saying goes, "Own nothing but control everything", with Private Associations, you can do just that and with peace of mind. With Associations, YOU are in control.

How to Discharge Your Student Loans in Bankruptcy

Bankruptcy Discharge of Student Loans Is Very Rare

Bankruptcy Discharge of Student Loans Requires Undue Hardship

Get an Attorney

Demand Proof that the Debt Is Owing

Question Whether the Loans Are Qualified Education Loans

Demonstrate Undue Hardship

Alternatives to Bankruptcy for Student Loans

No comments:

FindLaw Newsletters
Stay up-to-date with how the law affects your life