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

Here's a tip; if you're going to live extravagantly, don't make that lifestyle the focus of a reality show. Teresa Guidice starred in the reality show, Real Housewives of New Jersey, with her husband Giuseppe.  Mrs. Guidice was often featured on the Bravo show going on outlandish spending sprees to furnish their newly constructed and underwater, $1.7 million dollar home. Now, the Chapter 7 bankruptcy trustee is alleging the debtors hid more than $250,000 in assets in their bankruptcy petition filed in November, 2009. 

You don't have to look very far to see the cash fly.  Teresa Guidice has a book, Skinny Italian; an online clothing boutique, T.G. Fabulicious LLC.; and the couple is also accused by the trustee of having an interest in a pizza parlor and laundromat.  They also mysteriously made more luxurious purchases after their bankruptcy filing.  Apparently, the online company made these purchases for their household goods totaling more than $60,000.  The trustee is seeking a preclusion of discharge and/or a dismissal of the bankruptcy case that would deny the debtors the benefits of bankruptcy.  The drama unfolding in federal Bankruptcy Court is worthy of a reality show all its own. 

There is a lesson in here somewhere I just know it.  I suspect that hiding assets from the bankruptcy trustee is never a wise idea.  Remember that you are signing your bankruptcy petition and schedules under penalty of perjury that you have disclosed all of your assets and all of your debts.  Bankruptcy Fraud is Prosecuted and is a Crime. 

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Let’s talk about Mr. Money today. This weekend, I decided to take in the movie, Maxed Out. What an awakening to see that over the years, we have been sold a load of crap about the economy. We are continually told to go out and spend. Again, in this recession, the people are being told to go out and spend money to stimulate the economy. Small business is being told to spend their capital as a means to stimulate the economy. Our government is spending the People's money because we can't and won't. The federal government is living in Fantasyland and the last time I checked, Fantasyland was a place I’d seen only at Disneyland.
 

An alarming statistic presented from this movie was the most popular customers of credit card companies are people who have been through bankruptcy. The reason cited was that the credit card companies know two things about people who have a prior bankruptcy;

1. First, they can’t file for bankruptcy again (or at least for 8 years), and
2. Second, they have a taste for credit. They’re willing to make minimum monthly payments forever. That’s where the banks make their money.
    

Professor Elizabeth Warren, Harvard Law School, spoke to executives at Citigroup and was told by one participant, that if you cut out the most marginal borrowers to reduce the risk of bankruptcy, you cut out the largest percentage of the bank’s income. Mr. Money was a character from a movie about money in the 1950's and excerpts from this classic film were strewn throughout. Mr. Money said that we have to ‘earn’ credit. However, many banks have found that ‘giving’ credit to college students is the same as recruiting young smokers; they’re loyal to their first credit card issuer.

I’m completely unnerved by the data collection companies such as ChoicePoint that collect data on each of us and then sell that data to the federal government. Just a reminder; you're right to privacy as provided in the Constitution, is only a right to privacy from the federal government and not private businesses.  Corporate America has been collecting information about YOU and is using it to take your money! 
 

Between 1994 and 2004 over ten million Americans filed for bankruptcy. Then, there was another rush to file bankruptcy, with more than one million bankruptcy filings just before the Bankruptcy Abuse Prevention and Consumer Protection Act, known as BAPCPA passed in 2005. This bill was promoted by the credit card issuers. The bill was written by MBNA, the primary contributor to George W. Bush’s presidential campaign. With the collapse of the economy in 2008, we are once again experiencing a historical number of bankruptcy filings in American history. A total of 781,150 consumer bankruptcy petitions were filed during the first six months of 2010. As I have been saying, we need to clear our debts and declare, “Never Again!.” Pass the bankruptcy petitions now please.
 

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So, either a friend (and they'd better be your Best Friend) or family member asked you to co-sign on a loan and you did. They just told you they're filing bankruptcy.  What happens now?  Well, you don't need me to tell you what a bad idea it is to ever co-sign for the debt of another; or do you?  Once you've signed on the bottom line, you're liable for that debt if the bills go unpaid by the person who talked you into this contract. 

When the co-signer files bankruptcy, the effect of the discharge is a permanent injunction that prevents the Creditors from collecting on the debt owed by the debtor.  However, if there is a co-signer on the account, the Creditor is free to pursue collection efforts against the co-signer.  You remain liable for the debt as the co-signor; if the person you signed for fails to make the payments.  So, what can you do if the person you signed for files bankruptcy?

Depending upon the nature of the agreement you co-signed for, you will need to contact the Creditor immediately to discuss your options.  If it's a vehicle loan and the value of the vehicle is less than what is owed, you'll be legally liable for any deficit owed.  You can work out payments, if the Creditor will allow it.  It is imperative that you take action immediately.  You may even need to file for bankruptcy protection yourself, if you are not financially able to make the required payments on this debt.

Here's my advice.  Do not co-sign for the debt of another, unless you can afford to buy what ever it is you're signing for; and, you wouldn't mind owning it in the event they fail to make their payments.  You're new mantra needs to be, "Friends don't let friends co-sign for their debts."

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The bankruptcy rule changes from Bankruptcy Abuse Prevention and Consumer Protection Act 0f 2005, or BAPCPA, created the Means Test formula for determining whether a consumer qualified to file bankruptcy under Chapter 7 of the Bankruptcy Code. Basically, the means testing requires that the debtor’s income must be below the median level for households, using Census Bureau and IRS standards. 

Based on your current income and expenses you have determined that you qualify to file bankruptcy under Chapter 7 and file your case in good faith. Now, enters the United States Trustee. The Trustee’s role in a Chapter 7 case, is to determine whether your estate has any assets that can be sold to pay your debts, or whether you have income to pay at least a portion of your debts, pursuant to 11 U.S.C. § 707(b)(3)(B). 

A June, 2010 decision by Bankruptcy Judge Randall L. Dunn, in In re Stubblefield (Bankr. D. Or. 2010) granted the U.S. Trustee’s motion to dismiss the debtor’s case pursuant to Section 707(b)(3) because the debtor’s ability to pay creditors through Chapter 13 is of primary importance when considering whether the Chapter 7 filing is an abuse. The Court determined that although the debtor’s income had declined, under the totality of the circumstances and using the six factors outlined in Price (In re Price, 353 F.3d 1135 (9^th Cir. 2004)), the debtor’s ability to pay a substantial portion of her unsecured debts was of primary importance. 

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