Los Angeles Bankruptcy Lawyers Blog

In Chapter 13 Bankruptcy Appraisals are Key

Fri, 12 Mar 2010 16:41:06 -0800

Minimal research of Chapter 13 Bankruptcies in Pasadena will reveal that the main advantage of this option is to save your home from pending foreclosure. However, with an appraisal of your home, you may be able to strip away your second lien ("lienstripping) as long as the following is true:

Your home value must be below the value of your first lien. In other words, if the home is sold, only the first lien holder would get paid because there is nothing left for the second lien holder.

In this case, one can totally strip away the second and convert it into unsecured status, which gets treated like a credit card. If you can successfully maintain your payment plan in a chapter 13 throughout the payment period (3 to 5 years), then any remaining unsecured debt is wiped away. You can emerge with a fresh start, and a home that no longer has a second mortgage on it.

If you have a job, want to keep your home, but are having trouble making ends meet, give us a call or e-mail and we will guide you through this process and see if a Chapter 13 Bankruptcy can be the right solution for you.

Kirk Laron
Pasadena Bankruptcy Attorney

Bankruptcy Attorneys in San Gabriel Valley Invaluable and Worth the Money

Mon, 08 Mar 2010 11:00:54 -0800

Recently, I was asked as a practicing Pasadena Bankruptcy Attorney why someone can't just do it themselves. I love questions like this because it really allows me to highlight the headaches that people are in store for, and the value that Bankruptcy Lawyers can bring, even in a simple Chapter 7 Bankruptcy filing.

First of all, filing a petition electronically is the way to go, which can only be done by an Attorney. With numerous filing deadlines, I can file from my office at 11:59 PM and still have it accepted as if it was filed during the day. There are several papers that are required, they must be filed in a certain order and in a certain manner, depending on the area of Los Angeles you are filing. The average person would have no clue about these issues and you aren't going to read about them in Court Publications or a website. Furthermore, every US Trustee is different and knowing their preferences is key to avoiding scrutiny to your case. An individual or bankruptcy preparer simply doesn't meet with the Trustees in order to know this information like a Bankruptcy Attorney would.

In addition, an improperly filed petition is routinely dismissed as the Court simply does not have the manpower and patience to correct mistakes, nor is it really their job in the first place. A dismissal requires another filing fee, and starting all over again. If things are not corrected the second time around another dismissal could result in a Bar from filing for 180 days. Given the fact, that most debtors are being relieved of anywhere from $20,000 to $250,000 on average, the price of a Bankruptcy Attorney is a wise investment when you consider the benefits and the opportunity for a fresh start.

At the Law Offices of Frazee/ Laron our legal fees start at $999. We have saved people's homes from foreclosure hours before a scheduled sale, we have wiped out mountains of debts on hard working people who have lost their jobs or are among the underemployed, and we have allowed people to find solutions after failed loan modifications and failed short sales. Give us a call if you are ready for actual solutions rather than empty promises that waste your time.

Kirk Laron
Pasadena Bankruptcy Attorney

Pasadena Business Debtors Get Less Scrutiny for High Debt Amounts

Fri, 18 Dec 2009 16:49:41 -0800

A recent Los Angeles Bankruptcy Judge made mention to me of the fact that if you have filed Bankruptcy as an Individual and you have unsecured debts over 100K, you will be looked at far more carefully than if you file as a business. It seems that a Business is presumed to be capable of running up far higher debts than an individual and still remain "responsible" under the scrutiny of Bankruptcy Courts. Many business owners know that Bankruptcy is inevitable, but are unsure whether they should file as individuals or as a business, especially if they have personal guarantees on their debts or they are a sole propietorship.

As an individual, another difficulty in filing a Chapter 7 Liquidation Bankruptcy is that you have to pass the means test, which will hold you to not being over the median income for your State in order to qualify for a complete discharge under Chapter 7. However, if you claim that more than half of your debts are for business purposes the Means Test is assumed to be passed. This is just one of the many subtleties that an experienced Bankruptcy Attorney can provide to those thinking about declaring Bankruptcy that own a business.

If you are unsure whether to file a Bankruptcy, and if you should file as an individual or as a business, contact the Law Offices of Frazee/ Laron for a free consultation. A fresh start is just a phone call away.

Kirk Laron
Los Angeles Bankruptcy Attorney

Jobless Suffering Now More than in the 1980s: Bankruptcy for Californians Offers a Fresh Start

Tue, 10 Nov 2009 17:27:36 -0800

A recent article from the Associated Press revealed that Americans now have triple the amount of debt compared to 1982. Further, their savings rates are half of what they were back then. Finally, temporary jobs are less plentiful, resulting in people spending 10 more weeks off the job on average than back in 1982. When you combine these ill effects with the realization that workers often have less benefits such as health insurance, one can see how a job loss or medical problem can quickly bring someone living in a high priced state like California into a foreclosure or bankruptcy.

The Law Offices of Frazee/ Laron continue to help people get a fresh start by taking full advantage of Bankruptcy Protection that caters to each individual situation. If you own a home that no longer has equity, but you want to remain in it, a Chapter 13 Plan may allow you to stay and avoid foreclosure provided you have some income. Otherwise, a Chapter 7 can strip away credit card debt and allow you to protect some vital assets so you can emerge debt free and get out from under the interest and late fee charges that are consuming you.

Give us a call and you will get a free consultation to see if Bankruptcy is the right decision for you. Do not be paralyzed by fear, let us pull you from the depths of financial despair so you can get back on the right path.

-Kirk Laron
Pasadena Bankruptcy Attorney

Los Angeles Bankruptcy Hitting the Wealthy Too: Loan Modifications slow to respond

Mon, 12 Oct 2009 21:10:29 -0800

As a Pasadena Bankruptcy Attorney, new clients requesting Bankruptcy relief appears to be stronger than ever, and includes those with multi-million dollar estates. The prospect of getting rid of all your unsecured debt through either a Chapter 7, Chapter 13, or Chapter 11 Bankruptcy is becoming more and more appealing for a Los Angeles population that continues to struggle with high unemployment, high under-employment, and small business closures due to a weakened consumer demand for those too cash-strapped to spend.

A Chapter 7 typically helps someone who does not have a home, or has little equity and is not making a high salary at this time. Although many people were making significantly more money just a year ago, a Bankruptcy filing really only focuses on the last six months of earnings in order to determine your annual salary. As a result, many more people qualify for a Chapter 7 Bankruptcy than before.

A Chapter 13 Bankruptcy seems to fit those who want to keep their home, but are far behind in their payments and still make a decent wage, but have become overwhelmed by credit card debt or have had to take out a second mortgage that they can no longer afford. A Chapter 13 can strip away a second mortgage as well as the credit card debt, leaving the debtor to only pay one monthly payment that seeks to pay their arrearages on their mortgage without all of the extra debt payments that make it impossible to get by after all the bills have been added up.

A Chapter 11 is not just for businesses. Individuals can file too. For those who have debt more than approximately 1 million 10 thousand dollars, which happens more than you might imagine, it gives that person a chance to reorganize much like a Chapter 13 when their prior successes have been severely damaged by a merciless economic downturn.

If financial pressures are getting the best of you, come speak to an experienced Bankruptcy Attorney in order to find what your best solution truly is. Whether it is a Chapter 7, Chapter 13, or Chapter 11, you can be well on your way to realizing the true purpose of the Bankruptcy Laws: To get a fresh start!

-Kirk Laron
Pasadena Bankruptcy Attorney

Los Angeles Bankruptcy Pros and Cons

Thu, 17 Sep 2009 20:47:04 -0800

Some people in Los Angeles are right now wondering if they should declare Bankruptcy due to financial desperation. So, what can Bankruptcy do for you and what's it going to cost you?

1. A Chapter 7 Bankruptcy can eliminate all of your credit card debts. However, if you have assets that go beyond your maximum exemption limits, the Bankruptcy Trustee can force you to sell your assets that go beyond your exemptions in order to pay off your credit cards.

2. A Chapter 13 Bankruptcy can help you avoid losing your home. However, you must be able to afford making plan payments from 3 to 5 years, and keep making your present mortgage payments.

3. A Chapter 11 Bankruptcy can actually be used for individuals that do not even have a business if their debt load goes beyond maximum amounts under a Chapter 13 filing.

4. A Bankruptcy does not allow you to pick and choose which debts and assets you wish to disclose. It is an "all or nothing" proposition.

5. A Chapter 7 Bankruptcy can actually allow you to avoid some of your tax debts, provided they are over three years old and you have a current payment plan with the tax agency.

The downside is that your credit will be affected. However, there is a good chance your credit has already been beaten down as you have fallen into this financial crisis. After your Bankruptcy is discharged, credit companies will be salivating over the opportunity to lend money to a person who cannot declare Bankruptcy again for at least another eight years.

If you think more deeply about these issues, many questions come to mind that are unique to you. As a Pasadena Bankruptcy Lawyer, I can demystify the subtleties of the Bankruptcy Laws so that you can maximize your relief and minimize your stress and anxiety over what is sure to be a difficult decision.

Kirk Laron
Pasadena Bankruptcy Lawyer

In Los Angeles and other areas of Southern California, a Bankruptcy Judge May Be Able to "Cramdown" a Mortgage on Principal Residency if Legislation Passes

Sun, 13 Sep 2009 15:57:35 -0800

Most of us will remember the effort the Obama administration made in March and April 2009 to pass legislation permitting Bankruptcy Judges to modify or "cramdown" a mortgage to the present value of the homeowner's real estate. The legislation passed the House but was defeated in the Senate. Now, Congressman Barney Frank wants to give "cramdown legislation" another shot. The legislation would benefit homeowners whose homes are "underwater," i.e., of lesser value than the mortgage on the home, by cramming down the mortgage to the present value.

Another term getting a lot of press and a similar effect is "lienstripping" in bankruptcy. "Lienstripping" is bankruptcy jargon referring to a debtor's ability to reduce an undersecured creditor's claim to the present value of its collateral through claim valuation., Lienstripping has the effect of dividing an undersecured creditor's claim into secured and unsecured portions: The unsecured portion of the lien is "stripped" from the collateral and the deficiency between the total debt owed and the collateral's present value becomes an unsecured claim. The lien on the collateral remains only in the amount of the "secured" claim. Unfortunately, this process is limited to the reorganization cases, i.e., Chapter 11 (debtors whose debt amounts to over $1,010,050) and Chapter 13 cases and cannot be applied to the first mortgage of a debtor's principal residence (cramdown legislation would permit this extension) on the first mortgage. However, lienstripping can apply to a "junior lien" (second or third mortgage) on a principal residence. For example, Creditor 1 has a $200,000 claim on the principal resident and Creditor 2 has a $100,000 claim on the same home for a total of $300,000 and the home is only worth $160,000. By bifurcating the secured and unsecured claims, the Creditor 2's claim becomes unsecured and can be eliminated from the debtor's repayment plan.

Lienstripping applies to real estate, automobiles, boats, airplanes and other items. With exceptions and limitations, this process becomes quite complex and you should have bankruptcy attorneys such as Frazee/Laron handle these procedures for you.

--RoseAnn Frazee--
Los Angeles Bankruptcy Attorney

Bankruptcy and the Housing Crisis the Perfect Storm

Fri, 11 Sep 2009 22:25:03 -0800

If you are a Los Angeles resident contemplating Bankruptcy but are having feelings of shame or guilt, rethink those feelings as they are likely misplaced and you are being too hard on yourself. A recent article in USA Today demonstrated just how obvious Bankruptcy filings have directly followed Foreclosures linked to the Housing Crisis. Nevada now has the most filings in the United States, and the fact that the state is home to the highest foreclosure rates is no accident. The days of Bankruptcy being reserved for the irresponsible are officially over. Fortunately, an individual has some choices, and can file a Chapter 7, Chapter 13, and even a Chapter 11 to keep assets and get a new lease on life.

If you are contemplating Bankruptcy because your finances are out of control, it is likely because of a job loss or cut in hours, a serious medical problem or illness that has happened to someone who is no longer employed with health insurance, or a person who was taken by an exotic loan that ballooned out of control when the teaser period ended and can't sell the house for even half of what they bought it for.

Remember, a Bankruptcy can actually save your home if you can file a Chapter 13 Bankruptcy, or you can still keep your home under a Chapter 7 if your equity has fallen dramatically (which includes just about everyone in Los Angeles) as long as you keep up your payments. However, this choice is a serious one that needs professional attention. As a Los Angeles Bankruptcy Attorney, I can evaluate your particular situation and develop the smartest way to handle a difficult financial crisis. Take action, get the help you need, and look forward to a new beginning where you don't have to wallow in the financial misery that has swallowed literally millions of Americans.

Kirk Laron
Los Angeles Bankruptcy Attorney

Facing Foreclosure, Los Angeles Mother slays two daughters and stabs herself: Should Have Considered Bankruptcy to Protect Home

Sat, 05 Sep 2009 07:51:00 -0800

We have all read the headlines of murder-suicide by a family head facing financial difficulties in both Southern California and nationally in the past few years. There have been family murder-suicides in Yorba Linda, San Clemente, Porter Ranch, Covina and Wilimington. The Porter Ranch incident involved an unemployed financial analyst who shot his wife, three sons and his mother-in-law before killing himself last October. The recent stabbing deaths of two daughters in North Hollywood again highlights the recessive nature of the California economy and the housing crisis in driving family members to unthinkable crimes.

Fortunately, the US government established the Bankruptcy Code to help alleviate some of these extreme measures of coping with financial crisis. The Bankruptcy Code provides protection for family homes, cars and other items. If facing a financial crisis and have no money, you should still seek assistance from trained professionals. The US Court system provides a fee waiver program, and the Law Offices of Frazee/Laron stands ready to assist you.

-RoseAnn Frazee
Los Angeles Bankruptcy Attorney

Retirement Accounts and Los Angeles Bankruptcy Filing

Thu, 03 Sep 2009 21:43:02 -0800

Before considering a Chapter 7 Bankruptcy, one of the last assets a person feels forced to liquidate are their Retirement Accounts. Often times, clients will tell me that they figured it was an asset that would be taken anyway, so they might as well use it to either buy more time, or spend a little money as one last splash in the pool of wealth. You would not believe the sadness that overcomes them when they find out virtually all retirement accounts are exempt from Bankruptcy.

These exemptions only really apply to a Chapter 7 Bankruptcy, which is the far more common liquidation scenario whereby a person does not make enough money compared to other Los Angeles residents and wants to wipe their slate clean. If a Chapter 13 Bankruptcy applies, which is often used when one's income is either too high or they have an asset such as a home that would otherwise be liquidated and needs to be protected, the result is that no assets are taken at all as long as you keep up with the mandated payments.

Don't ever liquidate your retirement account to stave off a Bankruptcy. You just might discover after the fact when it is too late that you basically transferred your retirement money to a credit card company, when you could have kept the whole thing and wiped out all of your unsecured debt. There are just too many mistakes the unwary can make and the stakes are high. What is the number one reason for Los Angeles Residents to get a Divorce? - - Money Problems! Talk to a reputable Los Angeles Bankruptcy Lawyer and don't get burned.

Kirk Laron
Los Angeles Bankruptcy Lawyer

Los Angeles Bankruptcy Options - It's All or Nothing

Wed, 02 Sep 2009 21:10:34 -0800

As a Pasadena Bankruptcy Attorney, I often have clients who think they can pick and choose the Debts they want to disclose. I often tell them, Bankruptcy is an "all or nothing" proposition. You must list all of your debts and all of your assets, especially if they are listed in public records such as tax records, credit reports, and title searches.

This is just one of the common mistakes that people can make when attempting to do a Bankruptcy on their own. However, just because you have to list all your Debts and Creditors doesn't mean you have to discharge all of them. There is an option known as Affirming your Debt, which means that you can still plan on paying that debt. This usually occurs when your debt is personal - to a friend or family member, for example.

Another concern that often comes up is that people fear not having any credit cards at all after they have declared Bankruptcy. As a Bankruptcy Attorney, here's my advice: Take one credit card that you have your smallest balance on and pay that one down to $0.00. You only have to list the Creditor if you have a Balance Owed. In this way, you can still keep one of your Credit Cards when you declare Bankruptcy.

By the way, don't worry too much about it. Within months after your Bankruptcy is discharged the Credit Card offers will start arriving in the mail once again. After all, you are a safe bet for at least eight years.

Kirk Laron
Los Angeles Bankruptcy Attorney

Bankruptcy Exemptions Avoid Fraudulent Transfers

Tue, 01 Sep 2009 21:09:41 -0800

As a Pasadena Bankruptcy Attorney, I often have clients attempt to transfer property out of their name prior to declaring bankruptcy. The thinking is that they would rather give what little property they have to friends or family rather than have it taken by creditors. This is both dangerous and usually unnecessary.

Bankruptcy Exemptions under a Chapter 7 Bankruptcy are often very generous, and under a Chapter 13 Bankruptcy, you keep all your assets anyway as long as you maintain your monthly payments. In California, there are different systems of exemptions available, and often cater to those who are either homeowners or renters. Often times, the very property that one risks transferring prior to bankruptcy would never have been taken away in the first place. If a trustee discovers such a transfer, you can be prosecuted for Perjury and your Bankruptcy will almost certainly be dismissed. It is simply a foolish risk to take.

The key is to contact a Los Angeles Bankruptcy attorney who can advise you how to maximize your exemptions and avoid following popular myths related to Bankruptcy. Know the facts, knowledge is power, and know that if you feel you are doing something wrong there is a strong possibility it is illegal. Bankruptcy Trustees are usually experienced, smart, and have seen it all before.

Kirk Laron
Pasadena Bankruptcy Attorney

Dividing Debt in Divorce Means Nothing to a Creditor

Sat, 29 Aug 2009 17:13:26 -0800

Getting divorced in California, or anywhere else for that matter, typically brings the inevitable dividing of assets, which can be a never-ending fight. However, it also brings the division of debts. Many couples run into Divorce Court and get approval to divide their debts according to their agreed upon division without realizing that a Creditor must agree or it is not binding as to that particular Creditor.

Everything is fine, of course, as long as the divorced individuals keep making their payments. But, what happens when one person declares Bankruptcy or otherwise defaults on their debt payments? The creditor will look to see who is on the agreement, the ex-husband, ex-wife, or both. If both parties are on the agreement, then the creditor can go after either individual for the full amount owed! The fact that the Divorce Court has authorized the division of debt means absolutely nothing to the creditor unless that creditor has agreed otherwise. The obvious question becomes why the creditor would agree to let one of the parties off the hook, when they have no obligation to do so.

As a result, when a couple has more debts than assets, it can be wiser to file the divorce and bankruptcy at the same time. In this way, the joint debts can be discharged without worrying about whether your Ex is going to keep making their payments or not when you have not control over them. Ideally, this situation is best handled by an Attorney who performs both Family Law and Bankruptcy Law. Remember, Joint Debts survive Divorce until fully paid!

Kirk Laron
Family Law and Bankruptcy Attorney

Beware the Means Test for Chapter 7 and 13 Bankruptcies

Wed, 26 Aug 2009 20:41:31 -0800

The Means Test is the Notorious Invention of the 2005 Bankruptcy Reforms which has created controversy and confusion for many natives in California. The main reason for this is that instead of calculating a debtor's true debts, they are forced into a formula based on the Internal Revenue Service standards, which places estimations on what people's expenses "should" be based on the area they live. Two of the estimated expenses allowed are related to vehicles: ownership expenses and operation expenses.

A recent decision by the Ninth Circuit, In re Ransom, has added even more confusion, stating that if you don't have a car loan, then you cannot deduct for operating expenses. This seems to create a punishment for having a car that is actually paid off! What's more it is totally counter-intuitive, and is a trap for those who think they can calculate their own Means Test by simple on-line calculators.

Many client are disappointed to find out that the real calculations are not the same as their own because they are not aware of the many pitfalls, such as calculating vehicle operation expenses when they do not have a car loan.

As a Los Angeles Bankrutpcy Attorney, I can help you to decide whether to file a Chapter 7 filing or a Chapter 13 filing, and apply the Means Test in the proper way that can save you the time, confusion, and embarrassment of being rejected on your own Bankruptcy filing without using an attorney.

Kirk Laron
Pasadena Bankruptcy Attorney

Debt Consolidations, Loan Modifications, and Winning the Lottery

Mon, 24 Aug 2009 20:55:26 -0800

If you live in Los Angeles and have had financial difficulties, chances are a week does not go by without hearing about great programs that can easily modify your home loan to two percent or ways to have the bank write off some of your debt. Others advertise that they can simply consolidate your loan so that you make one easy payment. Here's another one: play the lottery and you can win millions of dollars! It is so sad that many of these companies not only do not deliver on their promises, they are scamming the very people who are most financially desperate out of what little money they have left just so they can believe the dream of easily getting out of debt just by signing up with these companies who just need you to sign their contract and they'll take care of the rest.

Here's a real Debt Consolidation Program: A Chapter 13 Bankruptcy. This program actually looks at what your disposable income is after all your debts and allows you to take that amount as your monthly payment. It lasts anywhere from 36 to 60 months depending on your income level, the amount never changes, and here's the best part. YOU DON'T PAY ANY INTEREST AND THE FEES COME OUT OF THE MONTHLY PAYMENT FOR THE LIFE OF THE LOAN.
So, what is the biggest concern? My credit is going to be ruined, right? Well, I have yet to meet someone on the verge of Bankruptcy who has excellent credit. What is even more interesting is that right after you declare Bankruptcy, you are a safe bet for creditors because you can't declare Bankruptcy again for another eight years. Within a few months, low and behold, credit card companies are already invading your mailbox once again.

Of course, there is more to it. But, remember, unlike the Consolidation, Modification, Lottery Markets, Bankruptcy is actually governed, regulated, and protected. Before you get scammed again, talk to a reputable Bankruptcy Attorney because the old adage is simply true: If it sounds too good to be true, it probably is.

Kirk Laron
Los Angeles Bankruptcy Attorney