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

Many a wary debtor find themselves embroiled in problems in their bankruptcy cases when they hire a bankruptcy petition preparer, incompetent attorney, or go it alone 'Pro Se' in preparing and filing their own bankruptcy case. Why? The reason is Judicial Admissions. You would think that bankruptcy is a simple process to discharge your debts, but consumers and practitioners alike are overwhelmed with so much misinformation it's making my head dizzy.

When you sign your bankruptcy papers, you're signing under penalty of perjury that you have told the truth and admitted all of your assets and your debts.  Your bankruptcy papers are deemed admissions under the Federal Rules of Evidence, which are used in federal bankruptcy court. See FRE 801(d)(2).

In a prior article, "Judicial Estoppel: Why You Should Disclose All Your Assets, Claims and Debts," I discussed the reason for disclosing assets and debts to protect your legal rights to sue later. Here, we're adding to that conversation and protecting your legal rights against creditors from trying to stop their particular debt from being discharged or from the court allowing your petition papers to establish standing just because you listed that particular creditor even though you're disputing that debt.

The solution lies in the details. You can file bankruptcy without an attorney, but why would you when your financial freedom is at stake? Mistakes made on your bankruptcy papers can cause assets to be exposed to the trustee's taking, cases where you might collect can be dismissed on judicial estoppel, you expose yourself to potential criminal fraud charges, and could be liable for debts that would have otherwise been discharged.

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Dave Ramsey may have been the first to coin the term, "plasectomy," but the doctors and surgeons that most effectively execute this procedure are bankruptcy lawyers.  Dave touts self plesectomy, such a procedure will only slow the tumor's growth. To be sure, my partner John Greifendorff defines plasectomy as the procedure to remove malignant financial tumors.

Other related terms are:

PLASECTIC: adj, of or pertaining to malignant financial consumption, a person or thing that suffers from Plastectomia; and

PLASECTOMIA -- a condition of financial decay or consumption, symptoms -- credit card debt, unsecured debt,
decreased ability to control spending, stress

Symptoms of Plasectomia include:  financial nausia, stress, bounced checks, depleted savings and retirment accounts, headaches, insomnia, homelessness, wallet discomfort, shame, guilt, thoughts of suicide and even death. This list is not exhaustive.

Don't let the stress and worry of moderate to severe Plasectomia drag on your finances any longer. If you've recently done this procedure on yourself and the symptoms are recurring or worsen, it's time to consult with a bankruptcy attorney in your area.  Remember that the Bible even allows for a discharge or wiping clean of all your debts every 7 years. It's no wonder the Bankruptcy Code mirrors the Bible by allowing you to obtain a Discharge of your debts every 8 years.  That's why we offer FREE Plasectomys for our clients.

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Debt buyers and debt collectors will tell you the only way you can rebuild your credit is to move the balance due and owing a debt previously discharged in your bankruptcy case to their NEW CREDIT CARD. The letters are enticing you by convincing you that this is a great opportunity to rehabilitate your credit and clean up your credit report which is absolutely FALSE.

What they're attempting to do is take a debt that has been legally discharged in your bankruptcy case and reinstate that debt on a new credit card. They do this by telling you, "Your qualified for our credit rehabilitation program! Just sign up for our new credit card and we will give you an additional credit line of $500.00 above what you owe on this other debt." What they're doing is what we call a Back door reaffirmation agreement attempt to reinstate a debt they cannot legally collect.

Over at Credit Slips, article entitled, “How Much Do You Want For That Discharged Debt?” They explain that your bankruptcy discharge permanently prevents any creditor from collecting debts that were discharged in your bankruptcy case through the Discharge Injunction. You would think that your discharged debt no longer has any value to the debt buyers and third party debt collectors. If this is true, then why do they gobble up and keep buying that discharged debt? It’s all in the purchasing agreement for the debts themselves.

The value of your discharged debt increases when the original creditor is prevented from updating or changing the way in which the original debt was reported to the credit bureaus at the time the debt was purchased. For example, say you had a credit card with Snears and you owed $3,000.00 at the time you filed your bankruptcy case. Snears reports that debt as "charged off" to the credit bureaus and then sells that debt to a third party debt buyer like recast. In the agreement between Snears and recast, Snears agrees that they will be locked out from changing how they reported that debt to the credit bureaus.

These scams are illegal attempts to collect debts that violate many federal and state laws, even if you haven't filed for bankruptcy or received a discharge. These are unfair and deceptive tactics that also Violate the Discharge Order that is a permanent injunction from any attempts to collect discharged debts FOREVER.

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Congratulations! Your Chapter 13 Plan has been confirmed and the Order of Confirmation sets forth the terms of your trustee plan payments.  What happens next? Well, a lot can happen over the 3 or 5 years you'll remain in bankruptcy and making those trustee payments.

You now have the option of setting up electronic payments to the trustee, instead of certified funds. Every year, you will need to provide your attorney with a copy of your filed tax returns. You'll also want to stay in communication with your attorney should your financial situation change to where you can no longer afford your plan payments.

Every year, the trustee will review and analyze your tax returns in comparison to your income and expenses you reported in your bankruptcy papers to determine whether they will ask the court to increase your plan payments. So, I understand that generally, they will ask for increased payments when your income has increased to the point where your disposable income increases by 10% as their margin. Don't quote me on this, I have only heard this from one trustee here in the Central District; it's not a hard and fast rule.

With a 60% success rate of getting to your discharge, you need to be ever mindful of your budget and expenses. It takes approximately 18 months of living within the fairly strict budgeting of a chapter 13 case to really gain solid financial ground. Watch your expenses and you'll make it to the end.

Getting a discharge is especially important in Chapter 13 cases where you're seeking to avoid a junior mortgage lien on your home. That's because the lien will not be removed from your property until your case is discharged. This is the dangling carrot that propels many a debtor to complete their Chapter 13 plans. While there is some case law to support lien avoidance if you convert your case to Chapter 7, the courts are split on this issue.

Lastly, you MUST complete a post-filing financial management course. There are many court approved courses that you can take and some attorneys will even pay for this course for their clients. My favorite is Dave Ramsey, but there are other, less expensive courses you could take. If you have followed your attorney's advice and made all of your plan payments, your Chapter 13 Discharge and financial fresh start is well deserved.

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