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

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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Tales of woe about bankruptcy "hijackings" began lighting up our local listserv last month where consumer attorneys discussed fraudulent Proofs of Claim that sounded so bizarre that they couldn't possibly be true. Then, just the other day, we received this message:

Due to the current rampant bankruptcy "hijacking" problem that is occurring within the Central District, where real property is "transferred" to your debtor without their knowledge, the Court has informed the bar that if a RFS motion [Motion For Relief From Stay] with a request for Extraordinary Relief is then filed against one of your debtors and your debtor(s) have no knowledge or interest in the real property, it STRONGLY recommends that you file a Response to the Motion, providing evidence (a Declaration of the Debtor) of the fact that the debtor has no interest or knowledge of this transfer or of this real property. Based on the evidence provided, the Court will then attempt to modify the Extraordinary Relief request in order to make it explicit that this specific debtor was not involved in the scheme to hinder, delay or defraud creditors.

A bankruptcy hijacking is where a fraudulent Proof of Claim is filed in an innocent Debtor's bankruptcy case to stop a foreclosure on a home that the Debtor has no interest in. This is an intricate crime spree to stop foreclosures on homes without the owners of the property actually filing bankruptcy. If you've experienced a mysterious filing in your bankruptcy case, please contact your attorney.  For Debtors without counsel, please contact your bankruptcy Trustee and report the problem.

 Local attorney Gerald McNally, Jr. of McNally and Associates, P.C. explains the mechanics of a bankruptcy hijacking:

The mechanics of the hijacking and why we as Debtors’ Counsel are burdened with this plague:

1. a random deed is downloaded from the county recorder’s database (through access to a title company or a service like Dataquick.

2. The original information on the deed is photoshopped out, and the fraudulent information is photosshopped in---leaving the original county recorder’s filing imprint, and the notary stamp.

3. This is then presented to the foreclosure trustee as evidence to stop the sale.

4. Where the fault lies is that neither the Lender, nor the Title Officer of the title company guaranteeing the trustee’s sale does what he/she/it ought to do.

5. What the Bank/T.O. OUGHT to do is take the instrument number of the deed and look it up. This is very easy to do with either the Ticor or the other major database. Then it would be easy to determine if the document was genuine. And if the document was not genuine, reject the deed and complete the foreclosure.

6. Instead, the Bank/T.O. just ASSUMES the correctness of the false deed and then contacts Debtor’s Counsel; now this pile of "doo doo" becomes the Debtor’s Counsel’s problem, and must almost be handled unpaid.

7. Compounding the crime, Counsel for the Lender, often files its MFRS with the false deed, a patent violation of Rule 9011. Even after being advised by Debtor’s Counsel with evidence that the false deed is in fact patently false.

8. So the bankruptcy system is burdened by (1) the laziness and/or cowardice of the lender and/or title company, not to mention their counsel who file these baseless MFRS documents.

9. In fact, counsel for one lender admitted that 30% of the deeds used as a basis for these MFRSs were fraudulent.

Be sure your bankruptcy attorney is well versed in the Local Bankruptcy Rules and Procedures. You can always locate a bankruptcy attorney from the Central District Consumer Bankruptcy Attorney Association website. Our members have access to our listserv, where we have access to current news and information to help our clients.

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It's Super Bowl Sunday in our great nation. I've got a bowl of chips and salsa next to me as I write about the connection between football and bankruptcy.  Yep. Let this be our little secret that in the world of football, bankruptcy is not an uncommon decision.

Leigh Steinberg, was once one of football's most powerful agents and the real life Jerry McGuire, now battles alcoholism and bankruptcy. Raiders legend Ray Guy was forced to sell his Super Bowl rings after filing bankruptcy.  Even former Baltimore Colt quarterback Johnny Unitas once filed for bankruptcy protection back in 1991. Philadelphia Eagles quarterback Michael Vick was touted as being the "Richest Bankrupt Dude Ever."

The financial problems that most people face are magnified by celebrity status and more money to lose. There are dozens of football players who can't seem to manage those millions.  It doesn't matter that the median annual salary for NFL players is $900,000 because nearly 80% ( as some estimate) squander their fortunes shortly after their retirement.

Former Pittsburgh Steeler lineman Dermontti Dawson listed $69 million in debts when he filed for Chapter 7 in 2010. He was reported as "following in the footsteps of Kentucky Wildcat Antoine Walker, former National Football League center."  New York Jets backup quarterback Mark Brunell, filed bankruptcy while still on the field. Why do you suppose the NFL is plagued with financial problems among their players and agents? It's simply a combination of their risk-taking DNA, coupled with poor investment choices, frivolous spending, hiring friends and family as financial advisors and falling victim to financial predators.

The lesson here is that we all need to learn life skills and managing what we do have. It is so basic to accounting principles that you absolutely MUST have a budget that lists all your income and expenses.  When you know where all your money goes to expenses, only then can you adjust, shop for cheaper expenses like insurance and cell phones, etc. Learn to distinguish between a "need" and a "want."  Get your emotions out of your bank account!  If you spend your monthly income on paper before the money even comes in, you've created a budget.  Using the budget as your plan you can eliminate emotional spending by simply transferring the money where you've intended it.

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