How is My Income Relevant in Bankruptcy?

In a Chapter 7 Bankruptcy, income and expenses are key in determining if you qualify for Chapter 7 Bankruptcy.  The Means Test is utilized to determine if your income and expenses fall below a certain threshold to qualify for Chapter 7 Bankruptcy.  Keep in mind, expenses must be reasonable and necessary.  If debtors has significant surplus income to repay creditors, or if eliminating unreasonable and unnecessary expenses will leave debtor with significant surplus income to repay creditors, the Bankruptcy Trustee can file a motion under 11 U.S.C. 707(b) to dismiss bankruptcy case on the ground that granting debtor a bankruptcy discharge would constitute an abuse.

If you do not qualify for Chapter 7 Bankruptcy due to your income, you can file for Chapter 13 Bankruptcy.  Chapter 13 Bankruptcy, unlike  Chapter 7 Bankruptcy, involves a payment plan to your creditors.  This does NOT mean you have to pay back all your debt.  How much you pay back depends on your income, expenses, and assets.  You might end up paying as little as 1% to your creditors.

Can I File for Bankruptcy without My Spouse?

Yes, you can file for bankruptcy without your spouse.

If I File Bankruptcy Without My Spouse, Can Our Creditors Collect From the Non-Filing Spouse?

When only one spouse filed for bankruptcy, the bankruptcy discharge will discharge both the filing spouse and the marital community properties. Community properties are generally property acquired during the time of marriage. Of course, there are always exceptions to the general rule. Creditors can still try to collect from the non-filing spouse usually by lawsuits and judgements. Creditors usually enforce judgements by wage garnishment, bank levy, and lien on real estate. In this case, creditors will enforce judgment on non-filing spouse by wage garnishment, bank levy, and lien on non-filing spouse’s separate property.

Do I have to Disclose All Assets in Bankruptcy regardless of Location?

Do I have to list an asset that I own in another state or foreign country in my Bankruptcy case?

Yes. All property, real and personal, must be disclosed in the bankruptcy schedules, regardless of whether located in Sacramento, California or elsewhere. However, the cost effectiveness of liquidation decreases for the Chapter 7 Trustee if the property is in a foreign country. Nonetheless, you have to disclose ALL properties you own even if it is outside Sacramento, California. Call an experienced Bankruptcy Attorney for a Free Consultation in Offices at Sacramento, Stockton, and Fairfield, California.

Can I Keep My House If I File Bankruptcy?

If you file Chapter 7 Bankruptcy, your Chapter 7 Bankruptcy Trustee will not liquidate your house if there is no net value after the claimed exemption pursuant to the California exemption statutes, amount encumbered by your secured lender, recorded property taxes owed, recorded unavoidable judgment liens, and cost of sale like the commission to real estate agent for the sale.

If you are concerned about Chapter 7 Bankruptcy Trustee liquidating your house due to excess net equity, you might prefer a Chapter 13 Bankruptcy if you want to keep your house. Chapter 13 bankruptcy is a repayment plan based on amount of net asset after exemptions claim claimed pursuant to the California exemption statutes, amount of priority debts, other secured debts, and household income. Even though you might have to pay some of your debts back in the Chapter 13 Bankruptcy repayment plan, in many cases you are better off than dealing with your creditors on your own. In most cases, Debtors ended up paying their creditors less under a Chapter 13 Bankruptcy plan than on their own, moving on with their life, and focusing on other better things than their debts.

Should I Sell or Transfer My Properties Before I File Bankruptcy?

Generally, you should not dispose of assets in contemplation of bankruptcy. Such transfer of assets can result in avoidable transfer by the bankruptcy trustee. Even worst, such transfer might be classified a “fraudulent transfer” where the bankruptcy trustee can sue the recipient to recover the assets. Fradulent transfers are defined in two ways: any transfer made with the intention of hindering, delaying and defrauding creditors, and any transfer made while the debtor was insolvent or which rendered the debtor insolvent or which rendered the debtor insolvent which resulted in materially smaller consideration being received by the debtor than that transferred. Demonstrating intent to hinder, delay and defraud is often difficult but no such intent is required to be demonstrated by the trustee to avoid transfers in which the debtor simply ended up with the shorter end of the stick. Moreover, accusation of fradulent transfer by the bankruptcy trustee will create difficulties for debtor to receive a discharge, if not the dismissal of bankruptcy case without discharge of debt. If debtor committed perjury by failing to disclose transfer, severe penalties like fines or/and prison can follow in addition to the dismissal of bankruptcy case without discharge.

Can I Sell or Encumber My Properties Once I File Bankruptcy?

If you filed a Chapter 7 Bankruptcy, the Chapter 7 Bankruptcy Trustee becomes the owner of your properties. However, the Chapter 7 Bankruptcy Trustee is unlikely to liquidate your assets, especially if you retained a Sacramento Bankruptcy Attorney, when you claimed your assets exempted pursuant the California exemption statutes. Nonetheless, you should not enter into an agreement to sell your assets whether your assets are exempt pursuant to the California exemption statutes, encumbered by a secured lender, or is leased. You can get permission from the court to sell your assets through a motion to compel abandonment if you can show that the asset has no net value after the California exemption or encumbrance of secured lender.

If you filed a Chapter 13 Bankruptcy, you remain in possession and control of your properties. Nonetheless, you must get authorization from the court to sell your assets. Doing so can negatively impact your Chapter 13 Bankruptcy plan. It is better, with some exceptions, to sell or refinance your assets before filing your Chapter 13 Bankruptcy.

This is critical for vehicles and real estate but not so much with household furniture or clothing.

Disclosure of Inheritance After Bankruptcy Filing

If a debtor inherits asset after bankruptcy filing, must debtor report the inheritance to the bankruptcy court?

If debtor files a Chapter 7 Bankruptcy, debtor must report the inheritance to the bankruptcy court if someone dies within 180 days after the filing of the bankruptcy petition.

If debtor files a Chapter 13 Bankruptcy, debtor must report the inheritance to the bankruptcy court.

The inheritance becomes part of the bankruptcy estate and depending on the California exemptions statutes, the inheritance will likely be used to pay your creditors.

Can I Continue Using My Bank Account Once I File Bankruptcy?

In a Chapter 7 Bankruptcy, the Chapter 7 Trustee becomes the owner of all debtor’s assets upon Bankruptcy filing. However, in most cases, especially if you retained a Bankruptcy Attorney, the funds in the bank account are claimed exempt pursuant to California exemption statutes so that the Chapter 7 Trustee will not liquidate debtor’s bank account. Therefore, debtor can continue using his or her bank accounts.

In a Chapter 13 Bankruptcy, debtor remains in possession and control of his or her properties. Debtor can continue using his or her bank account.

However, if you owe money to a bank that you have an account with, especially a credit union, Muoi Chea Bankruptcy Attorney in Sacramento, California advise you to close the account because the bank will attempt to offset the funds in the account against the balances owed. If you have a bank account with Wells Fargo Bank, Muoi Chea Sacramento Bankruptcy Attorney advise you to close all accounts with Wells Fargo Bank because they interpret Bankruptcy codes to put them as a custodian of your bank accounts for the benefit of the Bankruptcy Trustee. They will freeze your account until the Bankruptcy Trustee gives then written authorization to release the funds, which the Trustee might hesitate.

Do I get to keep all my assets through Bankruptcy?

The answer depends on which Bankruptcy you file.  If you file under Chapter 7 Bankruptcy, you will lose your assets that is not protected under the California Exemptions.  If you file under Chapter 13 Bankruptcy, you can keep assets that are not protected under the California Exemption by paying your unsecured creditors through a payment plan for upto 60 months.  This does not mean that you will pay all your debt; you might pay only a fraction of your debt depending on the value of your assets and income.

In Bankruptcy, and if you resides in California long enough, you have 2 sets of Exemption to choose from:  CCP 703 and CCP 704.  (CCP is a abbreviation for California Civil Procedure)  Keep in mind these figures are subject to change.  These exemptions were last updated by the California Judicial Council to adjust for inflation on April 1, 2013. The next update will be April 1, 2016.

Unfortunately, California does not allow you to double the exemptions if you are married.  If you recently moved to California, you might have to use exemption from a different state that you had resided.

Under CCP 703 California Exemption:

• California’s homestead exemption is $25,575 for real or personal property used as a residence – 703.140(b)(1).  Homestead protects your principal residence, which can be mobile home, boat, stock cooperative, community apartment, planned development or condominium.
• Motor Vehicles up to $5,100 of equity
• Burial plot up to $25,575 instead of homestead – 703.140(b)(1)
• Clothing, household goods, appliances, furnishings, animals, books, musical instruments and crops up to $650 per item – 703.140(b)(3)
• Jewelry up to $1,525 – 703.140(b)(4)
• Health aids – 703.140(b)(9)
• Wrongful death recoveries needed for support – 703.140(b)(11)
• Personal injury recoveries up to $25,575 – 703.140(b)(11)
• Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans) – 11 U.S.C. § 522
• IRAS and Roth IRAs up to $1,245,475 – 11 U.S.C. § 522(b)(3)(C)(n)  (This amount is set by federal law.)
• ERISA-qualified pension, annuities, and benefits necessary for support – 703.140(b)(10)
• Unemployment compensation, Social Security, Veterans’ benefits, and public assistance – 703.140(b)(10)
• Crime victims’ reparation benefits – 703.140(b)(11)
• Tools, books and implements of trade up to $7,625 – 703.140(b)(6)
• Alimony and child support necessary for support – 703.140(b)(10)
• Unmatured life insurance policy, other than credit – 703.140(b)(7)
• Unmatured life insurance accrued interest, dividends, loan, cash or surrender value up to $13,675 – 703.140(b)(8)
• Disability benefits – 703.140(b)(10)
• Life insurance proceeds needed for support – 703.140(b)(11)
• $1,350 plus any unused amount of burial or homestead exemption in any property (currently $26,925 in total if no homestead exemption is used) – 703.140(b)(5)

Under CCP 704 California Exemptions:

• Homestead exemption up to: $75,000 if single and not disabled; $100,000 if family and at least one family member has no interest in the homestead; $175,000 if 65 or older or if physically or mentally disabled; $175,000 if creditors are seeking to force the sale of your home and you are either (a) 55 or older, single and earn under $25,000 per year, or (b) 55 or older, married and earn under $35,000 per year – 704.730
• Motor vehicle exemption up to $2,900 – 704.010
• Household items and personal effects – 704.020
• Residential building materials to repair or improve home up to $3,050 – 704.030
• Jewelry, heirlooms and works of art up to $7,625 – 704.040
• Health aids – 704.050
• Bank deposits arising out of Social Security payments up to $3,050 for a single payee ($4,575 for husband and wife payees) and unlimited if funds are not commingled; bank deposits from other public benefit payments up to $1,525 ($2,275 for husband and wife as joint payees) – 704.080
• Personal injury and wrongful death causes of action and recoveries that are necessary for support – 704.140 & 704.150
• Cemetery and burial plot – 704.200
• 75% of wages paid within 30 days prior to filing bankruptcy – 704.070
• Public employee vacation credits (at least 75% if receiving installment payments) – 704.113
• Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans) – 11 U.S.C. § 522.
• IRAS and Roth IRAs to $1,245,475 – 11 U.S.C. § 522(b)(3)(C)(n).  (This amount is set by federal law.)
• Public retirement benefits – 704.110
• Private retirement plans and benefits, including IRA and Keogh – 704.115
• Public employees – Cal. Gov’t Code § 21255
• County employees – Cal. Gov’t Code § 31452
• County peace officers – Cal. Gov’t Code § 31913
• County fire fighters – Cal. Gov’t Code § 32210
• Unemployment and disability benefits, and union benefits due to labor disputes – 704.120
• Workers’ compensation benefits – 704.160
• Public assistance benefits – 704.170.
• Relocation benefits – 704.180.
• Student financial aid – 704.190
• Tools, implements, materials, books, uniforms, instruments, one commercial vehicle, equipment, and furnishings up to $7,625 total, or up to $15,250 if used by both spouses in the same occupation. Commercial vehicle up to $4,850, or $9,700 if used by both spouses in the same occupation – 704.06
• Matured life insurance benefits needed for support of unlimited value, or unmatured life insurance policy up to $12,200 – 704.100
• Disability or health insurance benefits – 704.130
• Homeowners’ insurance proceeds for six months after received, up to amount of homestead exemption -704.720
• Fidelity bonds – Cal. Labor Code § 404
• Life insurance proceeds if policy prohibits use to pay creditors – Cal. Insurance Code § 10132, 10170, 10171
• Business or professional licenses – 695.060
• Trust funds of inmates up to $1,525 – 704.090
• Property of business partnership – Cal. Corporations Code § 16501

For more information call to schedule an appointment with an Experienced Bankruptcy Attorney to review your case and protect your assets.  Bankruptcy Attorney’s Offices are located in Sacramento, Stockton, and Fairfield, California.

If I Forgot to List a Creditor in My Bankruptcy Schedules, Will that Debt be Discharged?

In a Chapter 13 Bankruptcy, the creditor must be listed in bankruptcy schedules to be discharged. Sacramento bankruptcy lawyer

In a Chapter 7 Bankruptcy case, it depends if the case is an asset or no asset case. If it is a no asset case, a creditor that is not listed in bankruptcy schedules will be discharged assuming the debt was not due to fraud or the debt is not a priority debt.  However, all creditors should be listed to ensure that they received notice of your bankruptcy proceeding and will not attempt to collect from you after your bankruptcy case is completed.

Do I have to List Lienholder or Lessor as my Creditor in my Bankruptcy if I Intend to Continue Payments?

If I intend to keep my car and I’m willing to continue payments, do I have to list the lienholder or lessor as creditors in my bankruptcy schedules?

Yes. You must list ALL creditors and lessors in your bankruptcy schedules regardless of you intention on the collateral. If you are always current on your payments, insured the collateral, and reaffirmed the debt in your bankruptcy case, the lender or lessor cannot repossess the collateral.

Upon filing your bankruptcy petition, your lender or lessor is less likely to continue sending you monthly statements for fear of violating the automatic stay provision of the bankruptcy code. So if you want to keep your car or house, you must make your payments on time even if you don’t receive your monthly statement. If you do not make timely payments, your creditor can repossess your car or foreclose your house. Non-receipt of billing statement is no defense to nonpayment and will not reverse a repossession or foreclosure.

Get Relief from Wage Garnishment & Bank Levy through Bankruptcy

What is Wage Garnishment & Bank Levy?  And Can Bankruptcy Stop Wage Garnishment & Bank Levy?

If you owe money and fell behind on payments, your creditors can sue you for the amount owed.  Once your creditors received a judgment against you in court, they can attempt to collect on the judgment by recording an abstract of judgment with the county recorder.  If you own real estate, the recorded abstract of judgment will create a judicial lien or judgment lien on your real estate.  You cannot sell your home without paying off all liens recorded on your home.garnishing your wages.  Under California law, if you are a w-2 employee, creditors can garnish up to 25% of your net wages or levy your bank accounts.  Your creditor can request your county’s Sheriff Department to take money from your bank accounts up to the amount of the court-issued judgment.

You can avoid wage garnishment or bank levy by obviouly making timely payments to your creditors, paying your debt in full, or reaching a settlement that pays a portion of your debt.  However, if you are searching for a Sacramento Bankruptcy Attorney or researching Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, it is clear that you cannot keep current with your payments or payoff your creditors or reach a settlement with creditors.  A viable option then would be to consider bankruptcy.  Upon filing of Bankruptcy, whether it is a Chapter 7 or Chapter 13 Bankruptcy, Automatic Stay comes into effect.  Automatic Stay in Bankruptcy stops creditors from collection activities like Wage Garnishments and Bank Levy.  Judical Lien or Judgment Lien cannot be removed by Automatic Stay.  Your Bankruptcy Attorney must file a motion to remove the liens.  It is up you to tell your Bankruptcy Attorney if you have a lien recorded on your home, which can easily be discovered by ordering a title report or researching recorded documents in your county recorder’s office.  If you retain this office, we will tell you how to look up Judicial Lien or Judgment Lien recorded on your home.

Although Automatic Stay will stop Wage Garnishment and Bank Levy until the conclusion of your Bankruptyc case, getting a discharge of the underlying debt is a different issue.  If the debt is nondischargeable, the problem will just reoccur because the underlying debt is not eliminated.  Some debts like domestic support obligation Automatic Stay will have no effect, so wage garnishment and bank levy for child support and alimony will continue even though you filed for bankruptcy.  For more information call to schedule a consultation with Bankruptcy Attorney Muoi Chea.

Call Muoi Chea Bankruptcy Attorney to discuss if Bankruptcy is a good option for you.  Bankruptcy Attorney offices are located in Sacramento, Stockton, and Fairfield, California to provide debt relief throughout Northern and Central California and serving the following cities:

Alpine, Amador, Ione, Jackson, Colusa, El Dorado, Lassen, Modoc, Mono, Nevada, Placer, Plumas, Sacramento, Sierra, Solano, Sutter, Yolo, Yuba City, Davis, Woodland, Elk Grove, Carmichael, Citrus Heights, Orangevale, Antelope, Fair Oaks, West Sacramento, Roseville, Rocklin, Rancho Cordova, Lincoln, North Highlands, Folsom, El Dorado, Fairfield, Vacaville, Benicia, Dixon, Vallejo, Winters and nearby cities in California.  Residents in these Northern California cities will attend court hearing in the Sacramento Bankruptcy Court.

Calaveras, Lodi, Galt, Tracy, Stockton, Acampo, Manteca, Lathrop, Modesto, Ripon, Oakdale, Newman, Patterson, Sonora, Angels Camp, Arnold, San Andreas and nearby cities in California.  Residents in these Central California cities will attend court hearing in the Modesto Bankruptcy Court.

Muoi Chea Bankruptcy Attorney regularly attends hearings at the Sacramento Bankruptcy Court and Modesto Bankruptcy Court.

The contents in this website are not intended to take the place of a Bankruptcy Attorney.  All cases are unique and the issues of each case cannot be fully covered in a website.  Call for a consultation to determine if Bankruptcy is right for you.