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

New data from the Central District of California was posted on Prof. Jonathon Hayes, Bankruptcy Prof. Blog:

• Pro per filings for the Jan through Sept, 2011 period were 28.3% of the total.  The national average is 7.9%. 
• The central district clerk's office processes one bankruptcy petition every 3 minutes, 44 seconds. 
• The next highest number of filings after the central district is the middle district of Florida.  The C.D. Cal has 146% more filing than M.D. Fl. 
• The central district expects 141,000 filings this year, up from 109,000 in 2009, and 66,000 in 2008.  

From the looks of those numbers above, we have a large population of debtors filing bankruptcy without an attorney.  I wonder if people are just trying to save what little money they have left, or do they just think filing bankruptcy is little more than filling out forms anyway, so you don't need a lawyer?  I know it's hard to pass that freeway billboard that says, "Bankruptcy $799."  However, if you read the fine print, even though it shows a man's picture and has the name of a law firm, it says that hiring the attorney will cost more.  I find advertising like that to be misleading the public.

The Office of the United States Trustee for the Central District of California has placed informational fliers inside the courtrooms in Los Angeles, warning debtors without attorneys that some debtors have been victimized by unscrupulous practices on the part of those who assisted them in preparing their bankruptcy petitions.

FEDERAL LAW REQUIRES: all non-lawyers who assist debtors in the preparations of bankruptcy petitions to: (1) sign the bankruptcy documents; (2) provide their names, addresses and social security numbers; (3) have debtors review all documents before they are signed; and (4) disclose any fees they have paid or are still owed.  Remember that only a licensed attorney can answer your legal questions that includes help with properly completing the petition, schedules and bankruptcy papers, which set of exemptions to use, etc.

There is a Bankruptcy Self-Help Desk located at the Federal Building, 300 N. Los Angeles Street, 1st Floor, Los Angeles, CA 90012 on Mondays and Wednesdays from 10:00 a.m. to Noon and from 2:00 p.m. to 4:00 p.m., except for court holidays.  The Self-Help desk can provide information about Chapter 7, Chapter 13, bankruptcy forms and access to reference material and more importantly, referrals for additional legal assistance.  Income eligible individuals can apply to attend the Chapter 7 Bankruptcy Self-Help Clinic. This project is sponsored by Public Counsel, Central District Consumer Bankruptcy Attorneys Association ("CDCBAA"), and the Los Angeles County Bar Association Commercial Law & Bankruptcy Debtor Assistance Project Subcommittee.

If you simply cannot afford an attorney, FREE legal help may be available to you.  For more information, contact Public Counsel's Debtor Assistance Project Hotline: 213-385-2977, ext. 704.  Some of our local bankruptcy practitioners will also offer their services on a low or pro bono basis. Hiring a competent lawyer is worth their price so your case moves smoothly through the bankruptcy process and you're not faced with losing your discharge, an inquiry from the U.S. Department of Justice, or countless hours in trying to correct errors in your bankruptcy papers.

Photo Credit: Eversheds, LLP.

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The new debt limits under Chapter 13 effective April 1, 2010 pursuant to 11 U.S.C. 109(e) were increased to $1,081,400 for secured debt and $360,475 for unsecured debt. This change represents about a 7% increase in the allowed debt limits. However, this increase still excludes many California homeowners who bought into the Jumbo loans sold during the bull market up to the crash in 2008. This means that if you’re a homeowner owing more than $1,081,400 on your mortgage(s), then you are not eligible to file under Chapter 13. Now what do you do? Well, unfortunately, you have the option of either filing under Chapter 7, if you pass what is called the Means Test; or, you must file under Chapter 11, if you want to save your home.
 

Many of these high debt homeowners have been short selling their homes as a means to eliminate or effectively deal with their underwater mortgages mostly because the IRS, in 2007 enacted The Mortgage Forgiveness Debt Relief Act and Debt Cancellation.  Now, I am not a tax adviser and encourage you to consult with your own tax adviser to determine your eligibility for income tax forgiveness. The problem with this remedy is that in a short sale, you’re giving up your home. What do you do if you want to keep your home and stop the foreclosure process? You will need to file bankruptcy under Chapter 11.
 

An individual considering filing bankruptcy under Chapter 11 faces both legal fees obstacles and lack of attorneys willing to perform the complex case requirements of a Chapter 11 bankruptcy case. Additionally, there are more complex and detailed reporting requirements to the Court. Just to get started in Chapter 11, you’ll be required to complete a prefiling credit counseling course; provide income tax returns; insurance policies; complete a real property questionnaire; and you must open new bank accounts, three in fact before your case is filed. The great news is that debts discharged through bankruptcy are not considered canceled debts by the IRS.

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For those attorneys who are new to the area of bankruptcy law and who need to know how to get around in the Central District; here are ten (10) steps you can take to significantly improve your bankruptcy knowledge and practice.

1. Join the Central District Consumer Bankruptcy Attorneys Association and Read the list serv:  As much as you can.  I also create folders in my email account and distinguish them by the chapters so I can later reference them.
2. Read Professor John Hayes Book, A Summary of Bankruptcy Law
3. Buy Practice Guides from the National Consumer Law Center
4. Sign up for the Bankruptcy Mastery Ecourse [FREE]
5. Volunteer for Public Counsel and take their training Course [FREE] contact Marisa Hawkins at: mhawkins@publiccounsel.org
6. Get Your Own Mentor and take them to Lunch!  Be willing to volunteer to help your mentor, co-counsel with them, etc.  Our experts are busy practicing law and have been so generous as to answer our newbie questions . . . lunch is a great way to get questions answered and build your network at the same time. 
7. Read Blogs from NACBA and join NACBA while you're at it.
8. You Must Read the Local Bankruptcy Rules
9. Attend all the MCLE programs put on by the CDCBAA, NACBA, OCBF, ABI, CEB, etc. that are in town. 
10. Volunteer your time to help improve our group because you care! 

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