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

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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Taking my cue from Cathy Moran's blog article entitled, "C is for Counseling," where she wrote "Maybe my “C” word should have been “Congress” who created this travesty," I will discuss.

On a dark and stormy night on April 20, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was passed by Congress and enacted into law by then President Bush. Bankruptcy practitioners, courts throughout the nation and even the U.S. Supreme Court have been scratching their heads to interpret these changes ever since.  The changes are too numerous to list, but you can check out the FAQ page at the U.S. Courts website for key changes.

We all see BAPCPA as a boon to the creditors to make it more difficult for the consumer to even file for bankruptcy with the installation of the Means Test to qualify to file under Chapter 7 of the Bankruptcy Code. I see it as yet another strategic maneuver by the banks and Creditors to reduce losses and increase profits.

Consider that the banks knew that the housing bubble was likely to burst and that our economic growth was due to our nation's proportional rising DEBT, the banks scrambled for a solution.  They decided to make it more difficult for consumers to file bankruptcy and so they created BAPCPA with its Means Test.  MBNA America Bank, N.A. was a major financial contributor to the Act and the top contributor to George W. Bush's presidential campaign.  Does that answer your question as to whom Your Congress works for?

What the BANKS failed to consider in all this strategic planning was the increased unemployment rate, and underemployment rate that would take away many American incomes, allowing many more people to now pass the Means Test and qualify to file under Chapter 7 of the Bankruptcy Code. Kiss your government goodbye by getting your FRESH START today and kick debts to the curb for good.  Your financial freedom from debts will choke the banking system because We the People choose to pay ourselves by saving rather than spending our way out of this mess!

Check out other Blogs discussing Bankruptcy Alphabet and the letter "C"

Collection Agencies, Cramdown, Creditor's Meeting

 Photo Credit:  Leo Reynolds

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We have a serious issue here in the Central District with the BPP ["Bankruptcy Petition Preparer"].  The Central District of California has more than 25% of the entire nation's Pro Se Debtors, which are Debtors that file their bankruptcy case without an attorney.  That's a whopping 38,667 cases filed without an attorney.  This volume of self-represented parties in bankruptcy has a significant impact on judicial resources and access to justice for all in bankruptcy.  Extra time is required of the court's clerks, judges and attorneys to provide assistance and correct errors when these self-represented parties make mistakes in their papers.  A significant portion of these Debtors seek the assistance of a Bankruptcy Petition Preparer, The BPP.  Problems can and do occur when Consumers use non-lawyers to assist them.  You may be saving money now, but might need to hire an attorney later to fix mistakes if you hire the wrong BPP.  Last week, I posted a warning in, Attention Debtors Without an Attorney, and provided important information on where to get help for FREE.

11 U.S.C. Section 110 provides for penalties for persons who negligently or fraudulently prepare bankruptcy petitions.  The bankruptcy courts are now tracking BPPs and prohibiting those that frequently make mistakes from filing cases within the district.  The most common mistakes made by the BPP is the wrong exemptions are used to protect assets of the debtors from being taken by the Trustee.  So, when you hear horror stories of someone who filed bankruptcy and the trustee took their property to pay creditors, it could be they hired someone who incorrectly applied exemptions and the Debtor suffered the consequences.  This usually can be corrected, and this a good reason to hire an attorney from the beginning of your case.

Remember that a BPP cannot give you legal advice or tell you which set of exemptions to use in preparing your bankruptcy case and, if they do, they are engaging in the practice of law without a license to do so.  Cal. Bus. & Prof Code Sections 6125-6128 define what constitutes the practice of law and persons authorized. There is no substitute for proper advice from an attorney.  I cannot emphasize enough that many of our local practitioners will provide a FREE consultation to help you choose whether to file bankruptcy, if so, which Chapter to file under and what you can expect from the bankruptcy process.  Only a licensed attorney can provide such advice. 

There is help if you've been defrauded by a BPP.  We have fee shifting remedies where the fees paid can be diverted to the attorney you retain to correct the BPP's mistakes under 11 U.S.C. Sections 523, 526 and 110.  It's important to cooperate with the attorney and sign a declaration that states the problems you've had and why you had to hire an attorney.  Then, be sure to attend the hearing on that matter and explain the situation to the judge.  This will help you obtain the assistance from this attorney, perhaps without any additional money being paid out of pocket for the much needed service. 

Other B Words in the Bankruptcy Alphabet: Beware of These Credit Card Offers, Bar Date, and Bank Account Levy.

Photo Credit: Leo Reynolds

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Many Consumer Debtors have a difficult time understanding how their attorney gets paid in a Chapter 13 case. So, today I want to discuss what is called an Application for Compensation. When you first meet with your attorney to retain them to represent you in your Chapter 13 Bankruptcy case, you are retaining that lawyer for a period of three to five years depending upon the length of your case.  You are also retaining them to not only manage the underlying case, but to provide ongoing counsel to you, and provide additional services that may give rise to their filing an application for compensation with the court in your case.

Here in the Central District of California, attorneys will enter into a fee agreement with their clients and most will also enter into a Rights and Responsibilities Agreement or "RARA." However, the RARA is optional and some attorneys choose to charge only an hourly rate and will file an application for compensation with the court for managing the case from the start. The RARA will provide a flat fee arrangement with our clients for the work in preparing your case, filing with the court, representing you at your meeting of creditors, and your confirmation hearing.  There is a lot of work involved in managing a Chapter 13 case, which is why additional fees can be incurred for managing the case and filing required motions, etc.

The fee agreement and the RARA will outline how your attorney gets paid in your bankruptcy case.  Once your case is filed with the court, your counsel cannot collect their fees directly from you and must file an Application for Compensation with the court, which is a motion. If you receive a letter and invoice from your attorney, it should state that it was submitted in conjunction with a Supplemental Fee Application and filed with the court.  You MUST read and review the information because you have only 20 days to OBJECT to the fees your attorney is asking for.  If you object, you must notify your assigned Chapter 13 Trustee.  If you do not object, the trustee still may object.  The judge assigned to your case will always get the final say in whether your attorney is entitled to the amount they seek. It's important to understand how your attorney is compensated for all the hard work they put in on your behalf so that you're not caught off guard when you see their application for compensation.

Once approved, the Chapter 13 Trustee will pay your attorney from the money you pay into your Chapter 13 Plan.  Your Plan payment will not be impacted by additional fees being sought by your attorney, if you are paying some money to your unsecured creditors.  Remember to call your attorney with questions or concerns you may have about your case.

Photo by:  Leo Reynolds

Learn more about the Bankruptcy Alphabet with Consumer Bankruptcy attorneys throughout the country.  Other Lawyers Playing the Alphabet Game with the Letter A:

Abandonment, Abuse, Adversary Proceeding, Asset, Alimony, Arrest, Ask, Assumption, Attorney, Automatic Stay, and Avoidance.

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