Friday, December 31, 2010

Bankruptcy and Employment Discrimination

You may have heard a lot lately about bankruptcy and employment discrimination. These days, debtors are understandably concerned about the effect that bankruptcy has on their ability to keep their current job and/or the ability to be hired for a new one. Here's the lowdown regarding bankruptcy and jobs.

Under section 525 of the 2005 bankruptcy code, employers may not terminate an employee for filing bankruptcy. They can also not factor in bankruptcies when it comes to advancements or promotions. Furthermore it is illegal for government agency hiring someone for a public job to consider an applicant's bankruptcy during the hiring process. However, there are unfortunately no laws to protect an applicant from this kind of bankruptcy and employment discrimination in the private sector.

Recently, courts have upheld that private employers are indeed able to not hire employees based on their bankruptcy history. I caution anyone who might make the decision to file bankruptcy or not based solely on this factor. If your credit history is really bad, a prospective employer is just as likely to not hire you. A bankruptcy probably isn't going to make the difference between getting a job or not if your credit history is crappy.

Below is section 525 of title 11 of the 2005 bankruptcy code.

Title 11 U.S. Code § 525, Protection against discriminatory treatment

(a) Except as provided in the Perishable Agricultural Commodities Act, 1930, the Packers and Stockyards Act, 1921, and section 1 of the Act entitled “An Act making appropriations for the Department of Agriculture for the fiscal year ending June 30, 1944, and for other purposes,” approved July 12, 1943, a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.

(b) No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt—
(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;
(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or
(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.

(1) A governmental unit that operates a student grant or loan program and a person engaged in a business that includes the making of loans guaranteed or insured under a student loan program may not deny a student grant, loan, loan guarantee, or loan insurance to a person that is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, or another person with whom the debtor or bankrupt has been associated, because the debtor or bankrupt is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of a case under this title or during the pendency of the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.
(2) In this section, “student loan program” means any program operated under title IV of the Higher Education Act of 1965 or a similar program operated under State or local law.

Wednesday, December 29, 2010

How Often Can I File for Bankruptcy?

How often can I file for Bankruptcy? That's the question I read being discussed this morning. A debtor has paid his lawyer only to find that he is not going to be able to file a chapter 7 bankruptcy due to insufficient time passing between bankruptcy filings.

So how often can you file for bankruptcy? I figured that some of you might like to know the answer to this so I'll give you the nutshell version.

A Chapter 7 Bankruptcy stays on your credit report for 10 years (Chapter 13 for 7 years) but remains on your public record for 20 years. While these are issues that should be taken into consideration when deciding whether or not to file for bankruptcy, they have no bearing on how often you can file bankruptcy and receive a discharge.

The 2005 bankruptcy laws established that a debtor cannot obtain a discharge in a Chapter 7 case if the debtor obtained a discharge in a Chapter 7 case filed within the past 8 years. Or 6 years between Chapter 13 cases. The clock starts ticking at the time of filing, not the time of the discharge.

For the best advice, "How often can I file for bankruptcy?" is a question for your bankruptcy attorney. There are some exceptions (in chapter 13 cases) and there are some additional rules. Also, there may be other circumstances unique to your case that affect your filing. I am not a lawyer.

I wish you the best 2011 possible!


Friday, December 24, 2010

Definition of Insolvency

What is insolvency? That's what I got asked yesterday...New Years makes me sad but I also found it encouraging that a friend of mine wants to finally put her financial house in order. She wanted me to define insolvent because she was trying to figure out if she's insolvent or not.

You may be wondering if you are insolvent. I'm thinking that if you have to ask you probably are but according to, the definition of insolvency is the following:

Pronounced [in-sol-vuhn-see]
the condition of being insolvent; bankruptcy.

Well that's not very helpful, is it? Okay, let's go to the definition of insolvent then. The definition of insolvent according to is:

Pronounced [in-sol-vuhnt]
1. not solvent; unable to satisfy creditors or discharge liabilities, either because liabilities exceed assets or because of inability to pay debts as they mature.
2. pertaining to bankrupt persons or bankruptcy.
3. a person who is insolvent.

Still not very clear, is it? Okay, well if you are wondering if you are insolvent or not for the purposes of filing bankruptcy I say that you are insolvent if you are unable to pay your debts. If your debts exceed your income and your assets then you are insolvent.

Problem is, a lot of people don't know whether they are insolvent or not because they don't want to take a good, hard look at their financial situation. I know it hurts. But you can gather all of your information and a good bankruptcy attorney will easily be able to tell you whether you are insolvent or not. You may not be, but if you are, that is why bankruptcy exists. To give you a fresh start.

I wish nothing but the best of luck to you in 2011 and beyond.


Monday, December 20, 2010

Bankruptcy Solutions

Lots of people today are looking for bankruptcy solutions. I would argue that there really are no bankruptcy solutions. The word solution implies that there is some remedy which does not impose side effects...a magic wand, an attractive genie, some paranormal activity with regards to your finances. Difficult to prove.

However, insolvency is not the end of the world in most cases. Take corrective action and you can turn your life around.

The recent recession and individual circumstances have caused more and more people to become insolvent. If you are in over your financial head, there are no bankruptcy solutions short of winning the lottery this second in time. The sooner you realize that there is going to be no miracle cure to disolving your debt, the better off you'll be.

To some, bankruptcy is the solution. It then becomes a question of whether to file a chapter 7 or a chapter 13. A bankruptcy attorney will be able to tell you which chapter is right for you after hearing the details or your case.

Other options that some might consider bankruptcy solutions are actually bankruptcy alternatives. These could include consumer credit counseling, debt settlement, or debt consolidation loans.

There really aren't a whole lot of other options. And you need to be careful when making decisions. Not all debt settlement services are reputable and there are things to take into consideration when selecting a bankruptcy attorney. Please see my tips below for selecting the right one and as always Best of Luck to You!

Tips For Selecting The Right Bankruptcy Attorney

Thursday, December 16, 2010

What To Do About Creditor Harrassment

Before I filed for bankruptcy, I was being harrassed by creditors like you wouldn't believe. Creditor harrassment is very real. There are laws governing the debt collecting process, especially in California and creditors break them all the time.

I am going to get into the FDCPA (Fair Debt Collection Practices Act) eventually but in the meantime, you can read what one California lawyer has to say about Creditor Harrassment.

Bankruptcy Code Time Machine

For anyone interested in bankruptcy law, I just found this really cool bankruptcy tool. It is called the Bankruptcy Code Time Machine and it allows you to look up the way the bankruptcy code was written on any given date back to January of 1980.

This would be especially helpful for those wanting to know the differences in the bankruptcy laws prior to 2005. Access it through: BankrLaw

Have at it!

Sunday, December 12, 2010

Why Bankruptcy? Reasons For Bankruptcy Continued

It occurred to me, after writing my last post, Reasons For Bankruptcy, that while I may have addressed the questions Why bankruptcy? and What are the reasons for bankruptcy?, I may not have answered the question: For what reasons is a person granted a bankruptcy discharge?

If you are reading this, you already likely know the reasons that people file for bankruptcy. At least you know why you are considering filing bankruptcy. What you may be looking for are the reasons why bankruptcy discharges are granted.

Am I right? If so, keep reading....there are some bankruptcy myths that you should know about.

First of all, you don't need a "valid" reason for bankruptcy. You can either pay back some or all of your debts or you can't. Unless you are committing bankruptcy fraud (that's a topic for another post and one that you should discuss with an attorney), there are no "invalid" reasons for bankruptcy. For example, you may have lost your job but even if you QUIT your last job, you can still file for bankruptcy.

Every situation is different, of course, and you should discuss yours with a bankruptcy attorney, which I am not. However, in most cases, the court will only look at the bottom line and see if you pass a means test. The bankruptcy means test is exactly what it sounds like. It is basically a six month look back at your finances and assets and it will determine if you have the means to pay back some or all of your debts. Then you will do so according to a court order.

In a chapter 7 bankruptcy (which not everyone qualifies for), all of your debts are discharged but your assets (beyond an allowable exemption which varies from state to state) may be seized and sold to pay your creditors.

In a chapter 13 bankruptcy, you are required to pay back some or all of your debts and put on a payment schedule for up to five years.

Common Bankruptcy Myths include:

· The 2005 bankruptcy laws made it impossible to file for bankruptcy
· You can't file for bankruptcy if you have quit your job
· Your credit rating will be ruined if you file bankruptcy

Oh, let me address that last one really quick. Sure, bankruptcy does not help your credit rating. But for the average filer, the credit rating is already shot. Bankruptcy, believe it or not, will not make this worse in many cases. Again, always talk to a bankruptcy attorney before acting upon any advice you find on the internet. Best of luck to you!

Sunday, October 24, 2010

Reasons For Bankruptcy

If you’re anything like I was, you are not making the decision to file bankruptcy lightly. That was, by far, the hardest part of my bankruptcy. It was difficult to justify my reasons for bankruptcy because bankruptcy went against everything I’d been taught all my life.

It was a struggle, but once I conceded the fact that it was going to have to happen, like it or not, and stopped trying to think of an acceptable reason for bankruptcy, things got a whole lot easier.

First off, I’d like to remind you that your reasons to file bankruptcy are personal and you don’t need to justify them (or even explain them) to anyone. However, I do realize that you might be trying to justify your reasons to file for bankruptcy to yourself. That’s not necessary either but I get it.

Most people confuse the causes for bankruptcy with the reasons for bankruptcy.

Top Causes for Bankruptcy include:

· Medical Bills
· Job Loss
· Divorce
· Overwhelming Credit Card & Personal Loan Debt
· Poor Money Management Skills (I’m guilty of this but I’ve learned my lesson)

Top Reasons for Bankruptcy include:

· Receiving a fresh start. The bankruptcy laws expressly exist to give you a fresh start. You deserve to start fresh if you need to. If you didn’t, these laws would not exist.

· Getting the creditors off your back. Once you file for bankruptcy, an automatic stay goes into effect and your creditors may not contact you from that point forward. They may show up at your 341 hearing (more later about the 341) but you can stop that phone once and for all from that maddening ringing off the hook. Do you even have it on the hook? I didn’t. I couldn’t take it.

· Protecting your family by keeping your assets. You will need to discuss this with an attorney. I am not an attorney and nothing I write is intended to be legal advice....but for many people it is possible to keep essential assets through strategic planning.

It is important to plan your bankruptcy whether you have many assets or none. For tips on choosing the best bankruptcy attorney, visit Bankruptcy Attorney Tips.

Of course, there are good reasons not to file bankruptcy too. These include the facts that bankruptcy can have long-term negative effects on your credit rating, make it hard to find a job and make it hard to rent a place.

My credit was already screwed up, so my bankruptcy discharge actually helped my credit, but I live with the very real possibilities of not being able to find a good job or decent place to live somewhere in the future.

If you decide to start fresh by filing for bankruptcy, I wish you nothing but relief!!

Friday, October 1, 2010

Going Bankrupt Is Not As Hard As They Say

Before I enter another post about my own bankruptcy, I need to dispell a myth. I keep hearing that you can't go bankrupt anymore unless you are Donald Trump or some other mega mogul. This is bugging me because it's flat out wrong.

If you are thinking about going bankrupt, and you are not familiar with how bankruptcy works, you may think that having a successful bankruptcy is next to impossible. You have probably heard that you can’t anymore. And you probably heard this from people who have never had to file for bankruptcy. People who don’t know what they’re talking about.

In 2005 the bankruptcy laws changed and the news from on high was that simple folk like us could no longer declare bankruptcy. Or that is was next to impossible. We believed this news. I know I believed it and was scared to death that I wouldn't be able to file.

It is true that the 2005 bankruptcy law changes made it tougher to file for a chapter 7 bankruptcy. Income and expenses are now used to determine which chapter of bankruptcy a debtor will qualify for. It is now also required that debtors complete credit counseling classes to receive a discharge (don’t worry—these are fairly easy and cheap and can be taken online). The purpose of these changes was to reduce number of people that were wiping out debts that they could afford to pay back.

A chapter 7 bankruptcy is one in which your assets, above and beyond what you can exempt, are liquidated and the proceeds are distributed to your creditors. Don’t panic at that thought! Most of what you have is not worth what you think it is and nobody wants your old furniture or clothing. For more information see Chapter 7 Bankruptcy Information.

More people are forced into a chapter 13 now than before the 2005 bankruptcy code changes. In a chapter 13 bankruptcy, you are determined to have enough income that you can pay some or all of your debts to your creditors and you are put on a payment plan which lasts up to five years. This is a rigid program and you must live up to the terms of your bankruptcy, but it is far easier than swimming in a mountain of debt that you will never be able to pay back.

Don’t get me wrong. Going Bankrupt is a tough thing to go through. Especially emotionally. But it is not as difficult an achievement as a lot of folks would have you believe.

Whether or not absolved of some, most, or all debt, bankruptcy may be the only way back to financial health for the insolvent debtor. Much will depend on your unique situation----no two bankruptcies are alike. Make an appointment with several attorneys to discuss your options. For help selecting your attorney, read my Bankruptcy Attorney Tips.

As always, best of luck!

Monday, July 12, 2010

Chapter 7 Bankruptcy Information

For filers wanting clarification on the different types of bankruptcy, here is some chapter 7 bankruptcy information. Chapter 7 bankruptcy is popular with people who have very little property or assets to protect because it is actually possible to keep everything you own.

I filed a chapter 7 bankruptcy because I fell into this category. Mine was what is known as a simple 7 no asset case. What type is best for you will depend on your individual circumstances and it is best to consult a chapter 7 bankruptcy attorney when making this determination.

In a chapter 7 bankruptcy you are petitioning the bankruptcy court to discharge all or most of your debt*. The bankruptcy trustee may take any property that you own that is not exempt from collection in order to sell it and distribute the money to your creditors. I will discuss exemptions in another post but you should know that different states have different exemptions and 15 states also allow you to choose federal exemptions over state if you want. California is not one of these states.

You will not be able to file chapter 7 bankruptcy unless you meet the eligibity requirements. If, after taking a means test, it is determined that you are able to pay back all of some of your debt to your creditors over a five year period, you will have to file a chapter 13 bankruptcy instead. However, if you if you have secured debts of more than $1,010,650 and/or unsecured debts of more than $336,900, you cannot file a chapter 13 bankruptcy.

If you qualify for and have a successful chapter 7 bankruptcy, you will probably be discharged about 3 months from the date of filing but there are no guarantees. My case, simple as it was, was not discharged for a full six months. California bankruptcy courts tend to be backed up, especially in the central district.

*Not all debt is dischargable. Some examples of non-dischargable debts are student loans, recent taxes, child support & alimony, and criminal fines.

Tuesday, June 29, 2010

Should You File Bankruptcy Pro Se?

Should you file bankruptcy pro se?

Say what? Pro Se. Pro Se is Latin for by oneself or without an attorney. So should you file bankruptcy pro se? I don’t know, how smart are you? You may be a perfectly capable and very intelligent person but there is a great deal of debate going on about whether or not you should file bankruptcy pro se because one mistake can foul up an entire bankruptcy outcome.

I like to think that I could have filed bankruptcy pro se but I’ll never know because I opted to hire an attorney. It was comforting to know that there was going to be someone with me at my 341 hearing (meeting of the creditors) and I wanted to be able to refer creditors to someone else.

My phone was ringing off the hook and I had stopped answering the phone. Not only were they calling me at home; some were calling me at work and a couple even contacted my relatives. Once I retained my attorney, I started answering the phone and gave each creditor, one by one, my attorney’s name and number. My phone did not go completely silent but grew much, much quieter. This was a huge relief.

One reason that you may want to file bankruptcy pro se is obvious. You have NO money. Hiring an attorney is expensive and you have no idea how you are going to come up with the dough.

The good news is that many bankruptcy attorneys will let you pay them off over time. They will not file until they have been paid in full (including the filing fee) but may handle creditor calls for you in the meantime. This is a good question to ask when interviewing potential attorneys.

Another reason you may want to file pro se is to be the master of your own destiny. After all, who cares more about your bankruptcy than you do? Well, that makes sense but can also be risky. Your best bet is to educate yourself, hire a good attorney and then stay on top of all proceedings. Don’t be afraid to ask questions when you think something might be overlooked.

Many people filing bankruptcy on their own make mistakes that cost them a successful discharge. Still many do file bankruptcy pro se successfully. The decision is yours to make so make it carefully. If you do decide to file bankruptcy pro se, buy a good book on the subject but make sure it is up to date with the current bankruptcy laws. The Nolo Press books have a good reputation amongst pro se filers.

Good luck whatever you decide!

Monday, May 31, 2010

I Found My Los Angeles Bankruptcy Attorney on eBay!

I'm not kidding! I wasn't really looking for a Los Angeles bankruptcy attorney on eBay..that would be absurd...but not as absurd as actually finding one on eBay.

I was looking for books on bankruptcy and stumbled across this law firm's ad for Los Angeles bankruptcy attorneys. I had already consulted with a few other bankruptcy attorneys that I had found online, but hadn't yet found one that I was both comfortable with and could afford.

This guy sounded affordable so, after googling him and finding that he and his firm had a good reputation, I called and set up a consultation for that afternoon.

I had been doing my homework online for months preparing for this bankruptcy so I already had a list of questions but I was nervous. He quickly put me at ease though, and that was no easy feat.

So after a successful consultation, I finally had an Attorney. It was the strangest feeling. I had a bankruptcy attorney.

I would not hesitate again to find an attorney online. Mine no longer advertises on eBay--I just checked--I don't know why. Guess it wasn't as good for him as it was for me...ahem. Unless you know someone who can recommend a good bankruptcy attorney, which isn't likely since no one likes to discuss bankruptcy, finding your lawyer online is probably the best way. If that makes you uncomfortable, well, there's still the yellow pages.

Or if you're one of those broke but brave types, you file pro se (without an attorney) but I'll discuss that in another post. Me, I needed the comfort that came with having an attorney. I needed a bankruptcy blankie.

My Los Angeles Bankruptcy attorney has to be my best eBay find ever!


Sunday, May 30, 2010

Bankruptcy Los Angeles County Court Experience

The decision to file bankruptcy in Los Angeles Court was the toughest one I've ever had to make. I was scared......terrified actually. I had been completely mismanaging my money for years and I felt like a colossal failure. My self esteem was at an all time low and I had no idea how I was going to get through this.

To top that off I had no one to talk to. The big recession hadn't quite kicked in (at least no one was admitting it yet), and filing bankruptcy was still considered the social equivalent to throwing a puppy out of a car window on a busy metropolitan freeway. To this day, my filing remains my dirty little secret.

If I had to do it over again, I would have done it much sooner. Filing bankruptcy in Los Angeles County court just a couple years earlier would have lessened the pain for both me and my creditors. Instead, because of the terror that the mere thought of bankruptcy invoked, I just kept borrowing money to pay on what I already owed. I kept telling myself that eventually I would miraculously be able to pay my bills off. I was gonna write that book or win that lottery. Of course, eventually, no such thing happened. Eventually the well ran dry and there simply was no more credit to be had. I was nearly 85K in the hole and there was nowhere else to turn.

Don't get me wrong. I am fully aware that there are plenty of people who are forced to file bankruptcy through no fault of their own. (Donald Trump comes to mind..snicker) There are serious illnesses and unexpected job losses that financially ruin people all the time.....that's just not the case for me and I have to own up to that.

Perhaps the best advice I came across in my quest for knowledge prior to my bankruptcy filing, is that filing bankruptcy is a business decision. I can't take credit for that little pearl but I am thankful for it. After all, the law does afford us this privilege. Bankruptcy is meant for us to get a Fresh Start...a second chance. That little piece of advice allowed me to proceed in, for the most part though I did have my moments, a rational and calm manner.

Of course, things have changed a bit in the last couple years. The recession has seen to that. With more and more people filing bankruptcy, it has almost become common place if not acceptable. But it's still a very tough pill to swallow.

If you are considering filing Bankruptcy in Los Angeles Court, there aren't many people who will be able to, or willing to, openly relate to what you are going through. Me, I've been there, done that, got the discharge.


Saturday, May 29, 2010

California Bankruptcy Information

This section includes California bankruptcy information---abbreviations, definitions, general information, and helpful links regarding credit card and other types of bankruptcy. I will be adding to this section as more California bankruptcy information becomes relevant. Please refer to it as needed.

BK: Bankruptcy
BK7: Chapter 7 Bankruptcy
BK13: Chapter 13 Bankruptcy
CBC: California Bankruptcy Central
CA: Collection Agency
CC: Credit Cards
CCCS: Consumer Credit Counseling Service
CD: Cease & Desist Letter
CO: Charge Off
DV: Debt Validation
FDCPA: Fair Debt Collection Practices Act
JDB: Junk Debt Buyer
OC: Original Creditor
SOL: Statute of Limitations
UST: U.S. Trustee
341: Meeting of the Creditors

Automatic Stay: an injunction that prevents creditors, with certain exceptions, from engaging in debt collection activities from a debtor who has filed for bankuptcy

Secured Loan: a loan in which the borrower pledges some asset (e.g. a car or property) as collateral

Unsecured Loan: a loan that is not backed by collateral

PACER: Public Access to Court Electronic Records

Pro Se: refers to the legal representation of a person representing himself or herself in a court proceeding

California District County Alignment
Central:Los Angeles, Orange, Riverside, San Luis Obispo, Santa Barbara, San Bernardino, Ventura

Eastern: Alpine, Amador, Butte, Calaveras, Colusa, El Dorado, Fresno, Glenn, Inyo, Kern, Kings, Lassen, Madera, Mariposa, Merced, Modoc, Mono, Nevada, Placer, Plumas, Sacramento, San Joaquin, Shasta, Sierra, Siskiyou, Solano, Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolomne, Yolo, Yuba

Northern: Alameda, Contra Costa, Del Norte, Humboldt, Lake Martin, Mendocino, Monterey, Napa, San Benito, Santa Clara, Santa Cruz, San Francisco, San Mateo, Sonoma, Santa Rosa

Southern: Imperial, San Diego