Los Angeles Bankruptcy Law Monitor : Los Angeles Bankruptcy Lawyer & Attorney : Christine Wilton Law Firm : Southern California Chapter 13 & Chapter 7 Bankruptcy, Foreclosure

I'm continually expanding my bankruptcy law studies and now reading, Bankruptcy and Debtor/Creditor, Fifth Edition by Brian A. Blum. In this book, Blum discusses the two most important forms of injunction in a bankruptcy case as arising as a matter of law, which means automatically, at certain stages of the proceedings.  A basic definition of an injunction is a court order to do something or refrain from doing something. So, in my bankruptcy alphabet, I is for Injunction.

The first is the Automatic Stay under 11 U.S.C. 362, which serves as an automatic injunction to stay any and all collections against the debtor the moment the case is filed. The automatic stay enjoins all actions to collect debt due by the debtor, stops wage garnishments and foreclosures.  The second is the injunction on actions to collect a discharged debt, which goes into effect under Section 524(a)(2) as an incident of the discharge.

These two injunctions serve to place a wedge between debtor and creditor and upon successful completion of the bankruptcy case, the debtor receives a court Discharge Order, which serves to permanently enjoin actions to collect on the discharged debt.  Don't let debt collectors try to convince you that they are helping to rehabilitate your credit by offering you credit on the condition that you except a balance due on a debt you have previously discharged in bankruptcy!  Call your local bankruptcy attorney with post bankruptcy questions.  We're here to help.

Other Attorneys Blogging  the Bankruptcy Alphabet Believe I is for:

Income – New York Bankruptcy Attorney, Jay Fleischman
Income – Marin County Bankruptcy Attorney, Cate Eranthe
Income Tax Refunds – Allen Park, Michigan Bankruptcy Attorney, Christopher McAvoy
Independent Contractor – Big Island Bankruptcy Attorney, Stuart T. Ing
In Forma Pauperis – Colorado Springs Bankruptcy Attorney, Bob Doig
Insiders – Los Angeles Bankruptcy Attorney, Mark J. Marcus
Insiders – Metro Richmond Consumer & Bankruptcy, Mitchell Goldstein
Insolvency – Wisconsin Bankruptcy Lawyer, Bret Nason
Instant – San Francisco Bankruptcy Attorney, Jeena Cho
Insurance – Pittsburgh Bankruptcy Attorney, Shawn Wright
Internal Revenue Service (IRS) Tax Debt in Bankruptcy - Livonia Michigan Bankruptcy Attorney, Peter Behrmann
Involuntary Bankruptcy – Cleveland Area Bankruptcy Lawyer, Bill Balena
Involuntary Petition – Omaha & Lincoln Nebraska Bankruptcy Attorney, Ryan D. Caldwell
IRA’s, Pensions, etc., will you lose them in Bankruptcy? – Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
IRS – Northern California Bankruptcy Lawyer, Cathy Moran

Investigate Your Options -- Philadelphia Bankruptcy Lawyer, Kimberly Coleman

Photo Credit:  Leo Reynolds
 

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Chapter 13 is typically considered the chapter of choice for those wage-earners seeking to catch up on missed car or house payments and avoid repossession of a vehicle or foreclosure of a home. Confirmation of the chapter 13 plan that provides for payment of such arrearages over many months is necessary to begin the process of making up for missed payments. Completion of a chapter 13 plan through discharge can take 36 to 60 months, and is very difficult to achieve even in attorney-represented cases. Approximately 55 percent of attorney-represented cases reach confirmation. The number of self-represented debtors that manage to get to confirmation of a chapter 13 plan is 0.4 percent – clearly demonstrating that it is nearly impossible for this population to succeed in chapter 13. This is according to the 2011 Pro Se Annual Report published by United States Bankruptcy Court, Central District of California.

The report entitled, "Access to Justice in Crisis: Self-Represented Parties and the Court," notes common problems in self-represented debtors’ cases include: the failure to file required documents, resulting in dismissal; filing a chapter which may not be correct for the debtor’s circumstances; choosing incorrect property exemptions; unnecessarily filing bankruptcy in the first place; not filing the required credit counseling or financial management certificate; being unable to answer or adequately defend an action seeking to deny discharge; and not understanding the significance of certain motions or adversary actions.

Filing bankruptcy is difficult enough as it is, but when you're filing Chapter 13, you don't want to take the chance of filing without an attorney.  I know that many of my colleagues will provide complimentary consultations and take a small amount of their fees up front to file the case.  Then, when the Plan is confirmed, they will earn the remainder of their fees.  We also have a court approved Rights and Responsibilities Agreement [F 3015-1.7.RARA] that many of us will enter into with our clients that outlines how we earn our fees and the work to be performed in your Chapter 13 case. 

Photo Credit:  Lincolnian (Brian)

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Everyone asks the question, "Do I qualify for bankruptcy?" This is more complex than you might imagine and it's not simply a yes or no question.  I've answered this question in a prior article, Do You Have Too Much Income For Chapter 7? What we're really talking about is this Means Test, which simply put, is a determination of whether your income is at or below the median household income for households of your size? Well, these numbers constantly change and they're about to increase effective May 1st.

The table shown above is the new median household income figures for California effective May 1st.  The good news is that our income is increasing.  Using the table above, you would first locate the number of people in your household, then look to see if your gross income is below that figure.  If it is, you automatically qualify to file under Chapter 7 of the Bankruptcy Code to have your debts discharged. 

Don't give up if you're income is greater than these figures.  If you make more than what is shown in the tables, it's important to continue the analysis and more important to seek the advice of an attorney to help determine whether you qualify for Chapter 7, or whether you may look to Chapter 13 or if bankruptcy is even right for you.

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Back in February we first broke this story of bankruptcy hijackings and tales of woe here in the Central District. The Hijacking continues and we now report that you need to be on the lookout for your Chapter 7 and 13 cases.  However, the scheme under Chapter 11 is to transfer the house ("asset") into an LLC or other corporate entity and then have that entity file under Chapter 11 to stop the foreclosures.

We now know that real estate agents and brokers are behind the scheme to defraud desperate homeowners out of their mortgage payments or what ever amount they can afford to pay these fraudsters on a monthly basis.  The false promise is that they will stop the foreclosure and keep them in their house.  It's nothing more than a rent skimming scheme and when the foreclosure is about to occur, the house is then transferred ("fraudulent transfer") into the name of some random innocent debtor in bankruptcy.  As a result of the transfer, the lender takes the position that the Debtor's automatic stay applies to this home.  The lender will then file a Motion For Relief From the Stay that could create problems for the innocent debtor.

If this happens in your case (for unrepresented persons), or your client's case (attorneys representing debtors), it is important to take action. Usually, the debtor has no knowledge of the property or the transfer, which makes them innocent. An Opposition to the Motion For Relief MUST be filed and should emphasize that the debtor has no knowledge of the property or the transfer.  Usually a declaration from the Debtor is appropriate.

The reason for the opposition is not to stop the relief from stay, but to prevent the order from including language that the Debtor's case was filed in bad faith, which is not true.  Here, we have an innocent debtor with a fraudulent action happening in there case.  That's the distinction. If no opposition is filed, the Court can make a finding of bad faith and that could cause huge problems for the future of the innocent debtor's case. 

Photo Credit:  Eva The Weaver

Other Lawyers Playing The Bankruptcy Alphabet

Cathy Moran claims H Is For House. Mark Markus of Los Angeles agrees.
Kim Coleman says H Is For Hardship Discharge
Cate Eranthe says H Is For Homeowner Association Dues
Stuart Ing of Hawaii proclaims H to be for Household Size
Bill Balena from Cleveland tells us H Is For Honesty
Mitchell Goldstein agrees with me that H is for Household
Detroit bankruptcy lawyer Kurt O’Keefe asks How Much Your Home Is Worth

Southgate, Michigan Bankruptcy Attorney Christopher McAvoy says that H is for Harrassment by Creditors

New York Bankruptcy Lawyer Jay Fleischman explains that H is for Household

Hearings, Household Median Income, Honesty, Honest But Unfortunate Debtor, Home is Where the Heart is, and Homestead
 

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I recently had the privilege and honor of attending the investiture ceremony of Julia W. Brand as United States Bankruptcy Judge held Thursday April 12, 2012 at 4:00 p.m. at Edward R. Roybal Courthouse, Courtroom 1375, Los Angeles, California. The opening of the Court began promptly at 4:00 p.m. followed by the pledge of allegiance led by family members. To welcome their newest colleague to the bench were the Honorable Audrey B. Collins, Chief Judge, United States District Court, Central District of California and the Honorable Peter H. Carroll, Chief Judge, United States Bankruptcy Court, Central District of California, along with many other District Judges, Magistrate Judges, and Bankruptcy Judges from throughout our Central District.

The administration of oath is found in 28 U.S.C. § 453. Oaths of justices and judges.  Each justice or judge of the United States shall take the following oath or affirmation before performing the duties of his office:

‘‘I, _______, do solemnly swear (or affirm) that I will
administer justice without respect to persons,
and do equal right to the poor and to the rich,
and that I will faithfully and impartially discharge
and perform all the duties incumbent
upon me as United States Bankruptcy Judge under the Constitution and
laws of the United States. So help me God.’’

It was moving to see her husband Michael Brand and her sons Alex and Jeffrey perform the investiture of the robe, a symbol of her office. Many of the remarks spoken about Judge Brand were that her family was a big part of her life and she would spend her time with colleagues not talking about work, but her family.

We learned the importance of telling your friends and family whom you have chosen to be a reference for you from a story told by Lori Payne, Managing Partner of Payne Financial Forensics. One of our judges had named a neighbor as a reference and failed to let her know of this.  One day, as the judge had arrived home, the neighbor came running over to her and exclaimed, "The FBI was here asking questions about you, but I didn't tell them anything!!"  Unfortunately, this would have been the rare occasion to tell the FBI all the great things about this judge applicant.  I did get a glimpse into the inner sanctum of the bench through the description Lori provided about our judge's chambers.  They are bigger than a house [at 814 square feet, everything is bigger than my house] with a private bathroom for the judge and she gets to decorate how she pleases. 

I was deeply moved by the difference she had made not only in the lives of her family, friends and colleagues that supported her in her journey, but her community service and changing the law for Chapter 9 municipalities duties before filing bankruptcy. It got me thinking about who I have in my life that would speak so highly of me and my sense of gratitude for them was strengthened.

Becoming a judge was a dream come true for Judge Brand, so I just know she will serve our bankruptcy community well. We deserve the best and the brightest on our bench and she is coined, "The most ZEN lawyer," with the intelligence and temperament required for the job. She will listen first to what is happening and she knows that bankruptcy practice is justice with a human face.

This experience brought me square back to my own law school graduation when I witnessed Judge Brand's eyes well up from the bench as she thanked her husband and sons for standing by her side on her journey of making her dreams come true. I know that pride, humility and honor she and her family felt in that moment.  I understand her commitment, dedication and focus required to achieve dreams and I acknowledge her courage and tenacity to dare to achieve them.

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In the now infamous case of Gomes v. Countrywide Home Loans, Inc., 92 Cal.App. 4th 1149 (2011) is the first published California appellate court decision in which the role of Mortgage Electronic Registration System ("MERS"), in the context of a non-judicial foreclosure proceeding, was tested. The Gomes Court held that MERS had authority to initiate foreclosure on Gomes’ property pursuant to their being named in the Deed of Trust and Gomes is Estopped from pursuing a cause of action premised on MERS’ authority.

However, according to MERS' own testimony in MERS v. Nebraska, 704, N.W.2d 784, 785 (Neb. 2005), MERS has no beneficial interest in the note at all but has rights in the DOT or Mortgage as "nominee" for the "Originator and for all successors and assigns." Unfortunately, the fact that MERS acts solely as a Nominee, or agent of the transferor, requires we make an agency law argument.

CA.Civ. Code §2356

(a) Unless the power of an agent is coupled with an interest
in the subject of the agency, it is terminated by any of the
following:
    (1) Its revocation by the principal.
    (2) The death of the principal.
    (3) The incapacity of the principal to contract.
(b) Notwithstanding subdivision (a), any bona fide transaction
entered into with an agent by any person acting without actual
knowledge of the revocation, death, or incapacity shall be binding
upon the principal, his or her heirs, devisees, legatees, and other
successors in interest.
(c) Nothing in this section shall affect the provisions of Section
1216.
(d) With respect to a proxy given by a person to another person
relating to the exercise of voting rights, to the extent the
provisions of this section conflict with or contravene any other
provisions of the statutes of California pertaining to the proxy, the
latter provisions shall prevail.
 

There still might be a glimmer of hope in California Bankruptcy Courts though with In re Veal, 450 B.R. 897 (9th Cir. BAP 2011).  After an exhaustive analysis of UCC Articles 3 and 9, the court held that lenders must show a clean, clear documentary trail for both security instrument and the debt instrument, which effectively places the burden of proof square on the lender to demonstrate standing to enforce those instruments. This is not surprising, given the bankruptcy court's role in protecting debtors.

Photo Credit:  see-c

Please take a few minutes to check out these other blog posts on the letter “G.”

Garbage In, Garbage Out - by Wisconsin Bankruptcy Lawyer Bret Nason

Garnishment - by New York Bankruptcy Lawyer, Jay S. Fleischman
Garnishment - by Maui Bankruptcy Attorney, Stuart Ing
Garnishment - by Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
Garnishment - by Daniel J. Winter, Chicago Bankruptcy Lawyer
Gee!!! - by Philadelphia Bankruptcy Lawyer, Ray Kempinski
General Unsecured Creditor - by Omaha/Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
Gifts - By Los Angeles Bankruptcy Lawyer Mark J. Markus

Goals - by Colorado Springs Bankruptcy Attorney Bob Doig
Good Faith - by Taylor, Michigan Bankruptcy Attorney, Christopher McAvoy
Good Faith - by Metro Richmond Bankruptcy Attorney, Mitchell Goldstein
Good Manners - by Cleveland Area Bankruptcy Lawyer, Bill Balena
Good To Me - by San Francisco Bankruptcy Attorney, Jeena Cho
Guaranty - by Northern California Bankruptcy Lawyer, Cathy Moran
Guaranty - by Livonia Michigan, Bankruptcy Attoney, Peter Behrmann
Guilt - by Jacksonville Bankruptcy Attorney, Monica D. Shepard
Guilty - by Detroit Michigan Bankruptcy Attorney, Kurt O’Keefe
Gumshoe - by Marin County Bankruptcy Attorney, Catherine Eranthe

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STOP!  Before you even consider filing for bankruptcy as a small business owner, it's important to understand how your business is structured, and whether you made any personal guarantees on any of the debts.  The U.S. Small Business Administration ("SBA") wrote this great article on bankruptcy and the small business, which provides more detail on the subject.  Today, I will focus on the Sole Proprietor, which tends to cause many financial woes to the small business owner and their family.

A Sole Proprietor is a form of small business that is owned by one person and there is no legal distinction between the owner and their business.  The owner is personally liable for the debts of the small business and usually the debts are taken in the owner's name.  In the event that the owner of this structure of business cannot pay his debts, he would file a personal bankruptcy case under either Chapter 7, 11 or 13 depending upon the amount and nature of his debts.

It's important to be prepared to meet with your bankruptcy lawyer by first meeting with your accountant and tax adviser. Your accountant can prepare your income and expenses from the operation of your business, so that you can properly determine your net income and any income taxes that will flow from the operation of your business.  Once you have these important numbers, then you can prepare your personal household income and expenses and present that information to your bankruptcy attorney to analyze whether filing bankruptcy is right for you. If you need to file for bankruptcy, your attorney will advise you which chapter of bankruptcy is right for you.

A Fresh Start may be just what your business and family needs to get you back on track toward your financial goals.  Every situation is unique and requires a personal approach.  The decision to file bankruptcy requires a great deal of thought and planning.  Your planning should include short range and long range goals.  It's also extremely important to begin planning and consulting with your accountant and bankruptcy lawyer as soon as you become aware of financial difficulties with your business. Waiting until the very last minute to make important financial decisions is never a good idea because you deprive yourself of effective decision making and the real benefits that bankruptcy has to offer.

Photo Credit:  Paul Keleher

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Exceptions to your bankruptcy discharge are important to understand before you file your case.  There are certain debts that are not discharged.  Today, I am focusing on the exceptions under 11 U.S.C. §523(a)(4).  Specifically, Fraud or Defalcation While Acting as a Fiduciary and Embezzlement.

Fraud or Defalcation While Acting As a Fiduciary

Each of the provisions of Section 523(a)(4) must be proven. F.R.B.P. 7009, incorporating F.R.C.P. 9 in adversary proceedings requires all averments of fraud shall be stated with particularity. A creditor must establish all Elements of Common Law Fraud. In re Slyman, 234 F.3d 1081 (9th Cir. 2000)
 

The Elements of Common Law Fraud are:
(1) a representation of fact by the Debtor
(2) that was material
(3) that the Debtor knew at the time to be false
(4) that the Debtor made with the intention of deceiving the creditor
(5) upon which the creditor relied
(6) that the creditor’s reliance was reasonable
(7) that the damages proximately result from the misrepresentation
 

In re Cantrell, 329 F.3d 1119(9th Cir. 2003). Acting in a fiduciary capacity has been limited by the courts to technical or express trusts created by contract between the parties or by statute. In this case, the Contract between Big Sky and Paradigm was for services and created no technical or express trust. Fiduciary relationships are those such as an attorney-client relationship.

Embezzlement

Embezzlement is the fraudulent appropriation of property by a person to whom such property has been entrusted, or unto whose hands it has lawfully come.

In re Bryant, 147 B.R. 507 (Bankr. W.D. Mo. 1992)

The elements to prove embezzlement are:

(1) the appropriation of funds for the Debtor’s own benefit by fraudulent intent or deceit;

(2) the deposit of the resulting funds in an account accessible only to the debtor; and

(3) the disbursal or use of those funds without explanation of reason or purpose.

The American Bankruptcy Institute has published this paper entitled, EXCEPTIONS TO DISCHARGE, MEANS TESTING AND OTHER ISSUES IN LITIGATION IN CONSUMER CASES and provides greater detail on dischargeability issues in bankruptcy.  This is a must read for practitioners and consumers alike who are concerned about whether a particular debt might be excepted from discharge. 

Photo Credit by Hiten Mistry

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You will find a great deal of information on the National Mortgage Settlement here. The settlement was reached with Ally/GMAC, Bank of America, JP Morgan Chase, Wells Fargo, and Citi.  This means that if your loan is being serviced elsewhere, you're out of luck.  Remember that

HELP IS FREE AND YOU SHOULD PAY NO ONE FOR ASSISTANCE IN OBTAINING WHAT YOU MAY BE ENTITLED TO UNDER THIS AGREEMENT. 

Here's how to find out if you're eligible; click here.  It looks like the entire process from selecting administrators to getting the money into the hands of the consumers is likely to take nearly three years to complete. Be sure to check out the Fact Sheet, which provides a broad overview of where the funds are to be distributed. Great news is that California has already selected UC Irvine Professor and Consumer Law Expert, Katie Porter as it's watchdog, according to this Los Angeles Times article.

Now let me put this into some perspective for you.  During the mortgage boom and leading all the way up into the housing crash in 2008, there were more than 95 million mortgages that were turned into asset-backed securitized bonds and sold on the bond market.  So far, HAMP, HAMP 2.0, HARP, and any other version of Obama Modification programs have only help maybe 2 million homeowners.  This national settlement may help another 2 million homeowners, but what about the remainder of home owners or some 80 million other home owners who haven't yet lost their homes to foreclosures?  What will happen when these other mortgages begin to adjust and their payments become unaffordable?  What will happen then?

This is an absolute failure and I couldn't agree more with Barry Ritholtz over at the Washington Post who wrote, Foreclosure settlement a failure of law, a triumph for bank attorneys.

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FEAR has been defined as an acronym:  False Evidence Appearing Real and Former Experience Actually Repeating. Temple Hayes struck a cord with me when she said in her recent article, Fear in the Daily Journal, "What we fear is often what takes us deeper, fuels our growth, and helps us shine."

The powerful emotion Fear can paralyze and impair our decision making ability.  When it comes to your finances and the decision whether or not to file bankruptcy, fear of failure can mean financial ruin if you tap into your retirement account to pay bills rather than consider bankruptcy.  Or, fear of failure can motivate you to turn to financial professionals to help you sort through your situation BEFORE you make any major financial decision, so that you can avoid life long financial setbacks rather than your current temporary situation.  Fear cuts both ways.

It's important to acknowledge that you're afraid of financial failure and move through it.  A prudent and wise move would be to consult with your tax professional and your local bankruptcy attorney and take a close look at your financial situation.  All Fear really is, is not enough information to make a well informed decision.  Seeking professional advice can save you money down the road and your retirement accounts.

Other Bankruptcy Alphabet blogs using the letter F:

 Failure Begets Success, Future Flow Agreement, Financial Fatigue, Foreclosure, Fresh Start, and Free Consultation

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I was talking the other day with Scott Schang, branch manager at Broadview Mortgage, Katella Branch in Orange Ca. who is also the Dean of Home Ownership University blog.  Our lively conversation centered upon our common goal to bring TRUTH to the consumers and he struck a cord with me when he mentioned his blog article entitled, Buy Again After Bankruptcy, Short Sale, or Foreclosure? received over 400 comments.  Some of these comments shocked me when Scott explained some of the things consumer bankruptcy attorneys are telling their clients.  I know there are two sides to every story and I've had to explain complex legal matters several times and break it down in "civilian" terms, so my clients could understand what was actually happening. So, it's either the attorneys giving incorrect information, or the consumer misunderstood what the attorney was trying to explain.  Miscommunication or Malpractice? I'll stay neutral and try to break it down for you here.

When a consumer files for bankruptcy, they are required to list all of their assets ("stuff") and all of their liabilities ("debts" and payment obligations "bills") on their bankruptcy petition papers and schedules. This includes your HOME.  And NO, you cannot keep your home out of the bankruptcy because it is part of your bankruptcy estate when you file bankruptcy. So, you list your home and its value, then you list the mortgage company and what you owe them.

When you receive your bankruptcy discharge, your legal obligation to pay on that mortgage is permanently discharged.  This means that IF you never made another mortgage payment ever again, the lender could not come after you to collect on that debt.

HOWEVER, here in California, if you have a mortgage, that lender also holds a LIEN against your home.  So, while they will NOT be able to collect on your mortgage, they can still FORECLOSE on your home, if you choose not to pay your mortgage. So, this means that if you intend to keep your home, you MUST continue to make your mortgage payments. 

NOTE:  YOU ARE THE LEGAL OWNER OF YOUR HOME UNTIL TITLE TRANSFERS TO ANOTHER OWNER, OR BACK TO THE BANK!!!!

If you intend to surrender your home, then you have several options.

1.  Foreclosure:  If you want to re-enter the market and buy a home in the future, this is NOT the route to take.  As Scott mentions quite frequently in his blog, mortgage lenders make you wait longer to qualify for a mortgage after a foreclosure.  The other reason that this is not your best option are found in the blog comments where folks are stuck in limbo because the banks are delaying these foreclosures due to missing paperwork.  You simply do not have control over when the foreclosure will happen and this leads to uncertainty about moving on with your life.

2.  Deed in Lieu of Foreclosure:  In this transaction, you are deeding the home back to the bank.  This is NOT ideal because it's still not solving the the banks problem.  You see, banks are not in the business of owning homes, they want to get paid on the debt.  Also, this may be better in some states than others, so I encourage you consult with your local attorney and learn about all your options before deciding the best route to take.

3.  Short Sale:  In my opinion, this is the best option, if the bank approves it.  What you're doing here is actually selling your home to a bona fide buyer for less than what you owe.  When title transfers to this new owner, the bank gets to offload the house and satisfies part of the debt you owe and the bank benefits in these transactions.  The consumer benefits because they will qualify for a new mortgage much sooner than with any other options.  Also, until the end of this year, the IRS and in CA, the Franchise Tax Board are waiving income taxes on canceled debt where a mortgage is involved.

I encourage every consumer to consult with their tax professional, and attorney before making important financial decisions such as these.

Photo Credit:  Sean Dreilinger

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When I sat down to write, Money is a Matter of the Heart, I knew there was a disconnect between the huddled middle class masses and the wealthy. I believe I understood the difference between the "Haves and Have Nots"; EMOTION. I’ve written several blog articles about emotional spending and I find that many of my client’s emotions about filing bankruptcy start with shame and guilt over facing bankruptcy. Feeling such powerful emotions usually puts folks in a overwhelmed state of being, such that they cannot make a decision while their financial world continues to crumble all around them. Worse yet, they tend to make poor financial decisions, like using savings or retirement accounts to pay their unsecured creditors to avoid being contacted or bombarded with collection calls.
 

Emotional decisions are usually to avoid pain or seek pleasure. When you really let that statement sink into your bones, you just might stand a chance to transform how you relate to money. Money is an object, just like any other. It’s the emotional relationship and how you relate to money that makes all the difference. Emotionally disconnecting from money requires you take certain actions and be a good steward with your money.
 

Action Steps Toward Good Financial Stewardship

1. Pre-spending your money each month.

This means set up an income sheet with all your sources of income each month, then deduct all your payroll deductions for taxes, insurance, retirement, and insurance, etc. The bottom line is your net income.

Next, make a budget of every monthly expense you have including rent/mortgage, auto, utilities, groceries, clothing, entertainment, charity, insurance, property taxes, car registration, kids, etc. For the annual bills that come only once per year, take that payment and divide it by 12 and include the monthly amount into your budget.

Be sure you’re setting aside money into savings, including the monthly amounts for those annual bills, so the money is there when they arrive.

2. Consult with your Tax Professional

If you don’t have an accountant or CPA, you may be in trouble. They’re not as expensive as you think and many offer a complimentary consultation to help you decide whether they can assist you. What is most important is that you adjust your income tax withholding so that you maximize your income instead of setting yourself up for a huge tax refund. Don’t give the IRS a FREE loan of your money. Put it to work for you instead. Likewise, you don’t want to owe money to the IRS, so it’s important to work with a professional who can help you estimate your withholding appropriately.

3. Create a 5 Year Financial Vision Plan. 

If you’re dealing with DEBT and you won’t be able to be debt FREE within 5 years, or your budget is so tight that you can’t pay your debts at all, then being a financially responsible good steward requires you strongly consider filing bankruptcy to start fresh.

Under Chapter 7 of the Bankruptcy Code you qualify by having no disposable income to pay your debts at all. Under Chapter 13 of the Bankruptcy Code, we can help you obtain a 3-5 year payment plan to pay all of your disposable income to your creditors and any remaining balances at the end of your Plan are permanently discharged. So, you’ll be DEBT FREE in 5 years or less!
They are numbers and alone have no emotion. It is only what each of us brings emotionally to the situation that can change the course of your life forever. This is the financial lesson many of us must learn that will move this country out of debt for good.

Photo Credit: Leo Reynolds

Other bankruptcy alphabet words beginning with the letter E:

Emergency Filing, Exemptions, Executory Contract, and Emergency Fund.

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I love a good hockey game where the players fight over a very tiny puck.  Sometimes these battles are so heated I'm surprised the ice doesn't melt.  In the bankruptcy context, we consumer bankruptcy attorneys similarly do battle with creditors with the goal of assisting our clients obtain a discharge of their debts.  I bet my colleagues would love a chance to swing a stick at those creditors from time to time. Since our battles are in court rather than on the ice, the next best thing is to attend a good hockey game.

The Central District Consumer Bankruptcy Attorney Association ("CDCBAA") invites you to come experience the excitement of the LA Kings Hockey VIP Style! 

LA Kings vs. Edmonton Oilers
 Monday, April 2nd at 7:30pm
         STAPLES Center

       $150 per person

Your VIP package includes:

• VIP Credential Grants You Exclusive Access To “The Green Room”, Located On The Event Level, By The LA Kings Locker Room
• Watch The Players Walk From Their Locker Room To The Ice Up Close
• 100 Level Seats Close To All The On-Ice Action
• Access To The Green Room, A VIP Hospitality Area Throughout The Game
• All-Inclusive Catering (FREE Food!)
• Open Bar (FREE Beer, Wine, and Soda!)
• Private Appearance Following The Game By 2 Kings Players
• The Kings Will Donate Auction Items, Including A Jonathan Quick Autographed Jersey – Proceeds Benefit The EHMGT (our annual fundraiser golf tournament) and The Debtor Assistance Program

For Further Information Contact Jeffrey Smith at (310) 993-6560, or email jsmith@cgsattys.com

 This is also a great networking opportunity for those that work with or might refer business to consumer bankruptcy attorneys and a great way to build those important business relationships.  We look forward to seeing you at the ice.

 *  Subject to availability. All sales final. No refunds or exchanges. Offer not valid at STAPLES Center Box Office.

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Just when you think it's all over and you receive your Discharge Order from the bankruptcy court, your Fresh Start has just begun.  A great first step is to write letters to all three credit bureaus.  These letters, along with a copy of your Discharge Order, will instruct the credit bureaus to be sure your credit report correctly reflects that all your debts have been discharged.

My northern CA colleague Cathy Moran discusses the Discharge from the perspective of what is and is not dischargeable in bankruptcy. I would add that here in California, we have an added bonus for married persons where only one spouse files bankruptcy. Did you know that your spouse is protected by the Discharge Order too? 

Upon commencement of the bankruptcy case, 11 U.S.C. § 541 provides that Property of the estate includes all interests of the debtor and the debtor’s spouse in community property that is under the sole, equal, or joint management and control of the debtor; or liable for an allowable claim against the debtor, or both.

Rooz v. Kimmel (In re Kimmel), 367 B.R. 166 (Bankr. N.D. Cal. 2007) provides U.S.C.S. § 524(a)(3) protects a discharged spouse in a community property state from any action, process, or act to collect or recover from, or offset against her wages on account of a Judgment against the other spouse. 11 U.S.C.S. § 524(a)(3). After-acquired community property will be free from pre-bankruptcy creditor claims against either spouse even when only one spouse has filed a bankruptcy case.

Your Discharge is just the beginning of your fresh financial start. 

Other bankruptcy alphabet blogs using the letter D:

Debt Relief Agency, Debtor, Do's and Don'ts, and Domestic Support

Photo by Leo Reynolds

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