Sunday, May 29, 2011

Bankruptcy Home Exemption California 2011

The bankruptcy homestead exemption (also referred to as the bankruptcy home exemption) protects a certain amount of equity in your home when you file a chapter 7 bankruptcy. This is the amount that you are allowed to keep before unsecured creditors are paid. Unsecured creditors are those without a lien or judgment against you.

Californians are not allowed to use the federal bankruptcy home exemption. Instead, they have two sets of bankruptcy exemptions to choose from. Under the one set, the homestead exemption increased by $25,000 as on January 1, 2010.

A homestead is defined as any real or personal property that you occupy and could include a mobile home, boat, condo, or community apartment.

Under one set of bankruptcy exemptions (system 2 and the one you would normally choose if you own a home in which there is a lot of equity), the amount of equity that is protected is:

$75,000.00 if single and not disabled
$100,000.00 for families if no other member has a homestead
$150,000 if age 65 or older or physically or mentally disabled
$100,000 if 55 or older, single and earn under $15,000 or married and earn under $20,000.

Another set of bankruptcy exemptions (system 1) in California provides for only $20,725 and these may be the exemptions that you choose if you do not own a home or have very little equity in one. Under this set of bankruptcy exemptions, the unused portion may be used to exempt or protect any real property.

For example, if you only have 5K equity in your home, you could use the remaining $15,725 to cover the property of your choice. If you do not own a home, you can use the entire $20,725 to cover the property of your choice.

I chose system one which was a no brainer since I did not own a home. This allowed me to protect some additional stocks, bank accounts, cash and jewelry.

As always, please consult with a qualified bankruptcy attorney before making any decisions as to which bankruptcy home exemption to use as you may have circumstances unique to your case. I am not a lawyer.

Wishing a fresh start to all who need one,


Friday, May 27, 2011

Bankruptcy and Paypal

Learn what I did about choosing a bankruptcy lawyer here, or skip ahead to find out about Bankruptcy and Paypal.
Wanna know what happens to your PayPal account when you file bankruptcy? I did and it was one of the few pieces of bankruptcy information that I couldn't find prior to filing.

I was very concerned about my PayPal account when I filed bankruptcy because I'd been selling on eBay for years and needed to be able to continue using my PayPal account or I wasn't going to have any money at all coming in. I also had PayPal Buyer Credit (not sure that still exists) through GE Money Bank.

I paid off the PayPal Buyer Credit account prior to filing because I didn't want it to harm the regular PayPal account. I also kinda wanted to keep my PayPal buyer credit. My bankruptcy attorney said I didn't need to but I was paranoid. Since the balance was under 600.00, this was not a preferential payment. However, paying that bill was like throwing that money down the drain since all my debts were discharged and GE Money Bank closed my PayPal Buyer Credit Account anyway.

In fact, they also added themselves to my creditor matrix (yes, even though I owed them nothing at this point) and this ended up delaying my bankruptcy discharge. I called them when they did this and tried to straighten it out but they wouldn't talk to me because of the automatic stay...I tried telling them that YES, they could talk to me because I did not owe them anything but it fell on deaf ears.

They said to have my lawyer call them but I didn't. (I should have but when you're in the middle of bankruptcy, things get overwhelming and sometimes you just don't want to deal with stuff, even though you should) Eventually someone at GE Money Bank figured out their mistake and they withdrew themselves from my bankruptcy. My discharge followed.

Anyway, I am happy to report that nothing happened to my PayPal account or my PayPal debit card. PayPal is actually a money transfer service, not a bank account.

Also worth mentioning is that the bankruptcy trustee never asked to see any PayPal statements or documentation, but I suppose he could have, so be ready to share that information if requested to do so. As long as you are doing everything on the up and up, you should have nothing to worry about.

And, as always, consult with a bankruptcy attorney to determine what needs to be done in your own, unique bankruptcy.

Wishing a fresh start to all who need it,


Wednesday, May 25, 2011

A Bankruptcy Lawyer Speaks

Every once in a while I like to post articles which show other people's perspectives. This one is from a Charleston bankruptcy lawyer and I think it's a good read but you need to read the whole thing in order to get the true tone.

It sounds harsh at first but it's really not. The bankruptcy lawyer illustrates the work that you need to put into your own bankruptcy to have a successful outcome and I think it's important for people to realize that they will need to be involved in the process to ensure that success. The original article can be found here.

Want to File Bankruptcy? Then NO WHINING!
Written by Charleston Bankruptcy Lawyer, Russell A. DeMott

Filing bankruptcy requires some work. Sure, you expect the bankruptcy lawyer to work, but there’s also some work that the client must do.

The straight scoop

If you take time to get to know me, you’ll discover that I’m, well, blunt. As subtle as a Toby Keith song, I like to say. I speak plainly, and I say what I mean. I can take a very complicated concept and break it down so that a six-year-old can understand it.

Most people appreciate that. We live in a world full of spin–a polite way of putting it. And since I keep my blog G-rated, I won’t give it any other names. But I view the attorney-client relationship as important. And in any important relationship, there must be communication and honesty. So here goes.

My Clients: “Bless their hearts”

One of the things I love about the South is that before you say something negative about someone, if you preface it with “bless her heart” or “bless his heart,” then it’s okay to just tell it like it is. (“Bless her heart, but she’s just nothing but a tramp.”) I don’t know who thought of this, but it was brilliant.

Well, bless their hearts, but some of my clients are just whiners. Don’t get upset with me now; I said “bless their hearts!”

I love the vast majority of my bankruptcy clients. I feel bad for them. I genuinely like them. I want to help them. Sometimes, I have to fight back the tears when they tell me what they’ve been going through. I feel their pain. I’ve had financial problems and known the stress. (I wrote about it in the post, “Bankruptcy Fears: Nothing to Fear But Fear Itself.”)

But when it comes to getting me what I need to file their cases, you’d think I’m asking some of them for a kidney.

We’ve been over this before

Filing bankruptcy under our new and messed up Bankruptcy Code is maddening at times. The Code requires a lot of work on things it really shouldn’t and which don’t lead to useful information–like the means test form, which I refer to as “the colon of the Bankruptcy Code” because of what it produces. Lots and lots of work and number crunching is involved in that *&*# form, and it just doesn’t yield any useful information. I’m with you on this; it’s frustrating.

To be successful with your bankruptcy, we must get a bit obsessed with documents and information about your finances. I explained all this in “Bankruptcy Documents: It’s a Moving Target” and “Bankruptcy Documents–”Turn the Page.” I also go through the process in great detail in my bankruptcy guide.

But it’s really not that bad

But it’s not that bad. Sure, I’ll need two years tax returns, six month’s pay stubs (plus any received right up until you file bankruptcy), and six months bank statements, just to name a few things.

Think of it this way, though. Say I charge $2,000 as an attorney fee to file a particular bankruptcy. You say, “that’s a good fee.” But wait a second. What if my hypothetical bankruptcy client has $75,000 of debt he’ll be discharging and it takes him 15 hours of work to get through the process (meetings with me, getting documents, filling out forms, going to court, emailing me, making phone calls )? THAT’S $5000 PER HOUR tax free! Not too shabby. That’s way more than I make per hour, more than any bankruptcy judge earns per hour, and more than your trustee or the U.S. Trustee earns per hour. And many clients have significantly more than $75,000 in debt–some $500,000 and some over $1,000,000. You do the math.

It’s all in your perspective

The key is the big picture. Sure, the Code’s a mess. Some of the requirements are odd and illogical, but keep the benefits in mind. $5000 per hour (or $10,000 or $50,000?) isn’t bad–especially when it’s tax free!

So understand that yes, I’m sympathetic. I know you feel ashamed, scared, humiliated. But keep in mind that bankruptcy is a “gift from the federal government” as one of my friends calls it. Don’t take out your frustrations on me or my staff–especially not my staff. Congress didn’t ask me about how to draft the Bankruptcy Code. (They didn’t even ask the bankruptcy judges!) I’m just playing the cards we’ve been dealt.

Always remember this: You’ll get more of a benefit from the bankruptcy system than anyone else will. So act like it and quit whining!

Postscript: The overwhelming majority of my clients are cooperative and get me the information and documents I need to file their cases. This post is directed at the small minority of clients–you know who you are–who expect the benefits of bankruptcy without putting effort into their cases. It just doesn’t work that way, and I hope you appreciate being told the truth about your responsibilities.

So there you have it. The "straight scoop", as he calls it, from an experienced bankruptcy lawyer. Be prepared to do a little work and you will get your fresh start.

Wishing a fresh start to all that need it,


Monday, May 23, 2011

Filing For Bankruptcy Requirements

What Do You Require While Filing for Bankruptcy?

In the present recession, there is a drastic rise in the number of people confronting debt problems. People are discovering themselves up to their necks in debt. A minority of people are able to remove their encumbrances by taking advantage of debt relief programs like debt settlement services. Others are devastated and are left with only the resort of bankruptcy.

This last group should be aware of the requirements of filing bankruptcy before actually filing. At one time, every debtor in the USA had the right to file for bankruptcy under chapter 7. But since the bankruptcy laws changed in 2005, it has become more difficult for every debtor to qualify for filing a chapter 7 bankruptcy. They now need to meet certain criteria for filing a bankruptcy under chapter 7.

Below are some of the important considerations for filing bankruptcy:

1. Filing for Chapter 7 bankruptcy is not an easy task, but it is achievable. The bankruptcy court will require you to pass a Means Test (bankruptcy form 22A. This will decide whether you are eligible for a chapter 7 bankruptcy. Your monthly income level is measured against the median of your state and your allowable expenses are also taken into account. You may or may or may not be able to file for a chapter 7 bankruptcy, where all debts are discharged. If you do not meet the criteria for filing a chapter 7, you may have to file a chapter 13.

2. Filing bankruptcy under chapter 13 does not require a means test to ascertain your monthly income. If it is determined that you can pay back some or all of your debts over a period of time, you will be put on a payment plan of no longer than five years. However, it also depends on the amount and type of debt that you owe.

3. When you file for bankruptcy, you must abide by all the terms and conditions related to it in order to get the bankruptcy discharge. You need to abide by all federal, state, and local rules and regulations or your case could be dismissed.

All required forms need to be filed correctly and in the right jurisdiction. This is why it really is critical to consult with a bankruptcy attorney when filing for bankruptcy.

Good luck to all.

This article was guest authored by Anya Bennett, and edited by epiphany.