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

It's that time of year again where I gaze longingly into my crystal ball and make my predictions for the future of the American Dream; America's fresh start; and the demise of our mountain of debts.  Despite the continued negative stigma of bankruptcy and it's "last resort" paradigm, bankruptcy filings in the U.S. continue to rise during this depressed economy. 

According to the statistics found at the Bankruptcy Court's website, total bankruptcy filings in the U.S. during the 12-month period ending December 31,  2009 totaled 1,473,675.  This year, the year hasn't ended quite yet, but we have the 12-month period ending September 30, 2010 and the numbers total 1,596,355 for all bankruptcy filings in the U.S.; an 8% increase in filings throughout the country.  The folks over at Credit Slips predict a slight decline according to their recent post, "Projected Filings for 2011."

In California, we will see the slippery banks unleash a flurry of foreclosures as investigations into their business practices continue to mount.  More consumers will fight back against their securitized mortgages through chapter 13 bankruptcy litigation.  Here in the Central District of California, we will continue to see an increase in filings as the state of California struggles with its deficit and government workers are forced to take pay cuts and furloughs.  I disagree with Credit Slip's comment about lending beginning to open and any talk about economic improvement in 2011 because we still have 95 million securitized mortgages that have yet to be dealt with and the modifications of American homes has failed. We won't see an economic turnaround until well into 2015. 

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At times our clients will sail through their bankruptcy case without any offense from their creditors.  At other times, it seems that our clients must fight for their rights. If you're among the unfortunate debtors who find themselves being sued in their Chapter 7 bankruptcy case you cannot ignore the Summons and Complaint.  If you've hired an attorney to represent you in your bankruptcy case, their firm may not be equipped to defend your litigation case and may need to refer you to an attorney prepared to litigate your dischargeability action.

The most important thing you should know is that you need to act quickly as the Rules require an answer usually within 30 days.  The more you know, the better your defense strategy will be.  It's interesting to note that as the economy continues to weaken our bankruptcy courts are being clogged up with more frivolous complaints than ever before.  Our bankruptcy judges are taking notice of this trend here in the Central District.  A Savvy litigation attorney will not only effectively defend you against any Creditor opposing your discharge, they may also be able to recoup your fees and costs to defend your case.

I know you're first reaction is to panic and think that your bankruptcy case will fail because you're being sued.  Relax and be sure you obtain competent counsel to represent and defend your case.  The law is on your side in most cases. 

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There is a growing need for those entering their 'golden years' to face the reality of a fixed income that once looked like a hefty savings plan, plus Social Security is now Social Security alone; if you're lucky.  The stock market plummet has cut many Baby Boomer's nest eggs by as much as 50% with no recovery in sight.  Just a couple weeks ago, I read this article, Bankruptcy for Retirees is A Growing Problem where the author recommends that seniors contemplating bankruptcy should see a credit counselor at a non-profit organization to get their finances in order.  What finances?  Why does everyone still think bankruptcy is so bad and should be a last resort?  I'm outraged!

Seniors are facing an even tougher financial crisis at a time when they've been duped by their stock market investments in their 401k plans; Social Security is issuing IOUs; Medicare is just a fraud; and healthcare is up for grabs.  Now, you want them to consult with a credit counselor to get their finances in order before they file bankruptcy?  Absurd.

I say that medical expenses and credit card debt is bad enough without someone saying you should stay saddled with that debt and do all you can to suffer miserably until your death to pay this debt, and your taxes too.  What you really need is to consult with a financial planner and a bankruptcy lawyer to determine the right strategy for you.

There is one warning though; if you're facing additional and ongoing medical treatment, you may consider delaying filing of bankruptcy only because you will not be able to obtain a discharge of your debts but once every eight (8) years.  Otherwise, it's time to permanently discharge your debts once and for all and live with respect, dignity and debt free in retirement.

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As debtor's counsel, I get the sense that many Americans who need to file for bankruptcy are avoiding it still because of its stigma and the myths fed to them by their government, creditors, family and friends.  In spite of the 'file bankruptcy as a last resort' method to financial reform for American households, filings are soaring in 2010.

Liz Pullium Weston wrote about it in her article, Bankruptcy filings soaring again.  I can't tell when that article was written and that bugs me to some extent, but I can move on from that.  In May, the American Bankruptcy Institute issued their first quarter press release, that revealed that bankruptcy filings are up 17% in the first quarter over 2009; and, consumer filings are up 18.2% in the first quarter.  California is 8th on the list of states with the highest per capita filing rate for the 12-month period ending March 31, 2010, with our Central District experiencing a 57.8% increase. So, what does this mean for the remainder of the year?

I predict that you will see California sink into the ocean of financial despair with the continued housing market depression and the banks attempt to control the housing prices by holding inventory of foreclosed homes.  Foreclosures will continue to rise as the asset-backed securitized mortgages continue to reset over the next 7 to 10 years.  Remember that these teaser rate, sub-prime, fancy loans were sold straight into the housing crash in 2008.

When California decides to make the tough decisions in closing their budget gap, you will see more municipalities filing chapter 9, like Valejo, CA, when the state pulls funds from the communities and cuts services.  You see, states can't file bankruptcy like the local governments can.  The problem here is that the federal government can print money when they need it, and municipalities can file bankruptcy under Chapter 9 of the Bankruptcy Code, but the states have no remedial measure other than to cut services and pull funds from the local governments.

The bottom line here is that financial reform starts with every American taking personal responsibility for their own household and taking stock of their options, including the option to choose to file bankruptcy under Chapter 7, 11, or 13, depending upon your own set of circumstances.  Most bankruptcy attorneys offer free consultations by phone and you should take advantage of their advice.  We help our clients steer clear of scams and help you to take stock of your liabilities, depending upon your current situation and your financial goals.  Yes, you can keep your stuff and lose your debts.  You can save your American Dream of home ownership. 

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