Can Bankruptcy Stop an Eviction?

Friday 5th of October 2012 01:39:30 AM

Many tenants (or former homeowners after foreclosure) ask me this question. First, it is important to understand that no landlord in California can help themselves to possession of the property. That is, they cannot change the locks and throw you out. Landlords must go through with an eviction action, known as an action for Unlawful Detainer. Unlawful Detainers are a court process which begins with the posting of a notice (3 day, 30 day, 60 day or 90 day, depending on the situation). Once the notice period expires, the landlord must file their eviction action, serve it upon you and get a judgment against you before the Sheriff can physically remove you and your possessions from the property. The process can take anywhere from 20-75 days. If your landlord locks you out without doing any of the above, you have a great case for wrongful eviction against them. Consult an attorney.

Moving on to the Eviction itself. Once the process has begun, filing a bankruptcy may stay the proceeding…. temporarily. A landlord has grounds to ask the Bankruptcy Court for permission to proceed with your eviction. In almost every instance that permission will be granted and the landlord is free to proceed. How quickly a landlord moves to obtain this permission, called relief from the automatic stay, is what will determine how much extra time you gain.

It is entirely possible that your landlord will just wait for your bankruptcy to be over because they don’t want to spend the extra money to seek relief from the stay.

If your landlord sees the eviction process through and has now applied to the Sheriff for a lockout date, is it too late to file? There is a technical legal answer and a real life answer. Technically, once judgment has been entered against you, you no longer have a right to stay. This means that filing the bankruptcy does not have to stop a sheriff’s lockout. What happens in real life, may, MAY, be a little different. Sometimes, sheriffs are very reluctant to proceed with a lockout if the tenant is in bankruptcy. The Sheriff’s office may postpone the lockout until the bankruptcy is over or the landlord has formally sought relief from the stay. I can tell you Sheriff’s responses have gone either way in many bankruptcy and eviction cases that our office has handled.

If you are being evicted, then your time to file bankruptcy may be very short. Consult an attorney as soon as possible.

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Do I Really Need to File For Bankruptcy?

Friday 5th of October 2012 01:35:31 AM

No, I really mean it.  Please check with a bankruptcy attorney before deciding to file.  If you read my last blog post you will know that I freely make comments that may sound self serving.  But
Almost every bankruptcy attorney I know, including myself, offers a free consultation.  I also volunteer my time at a free bankruptcy walk-in clinic organized by the Bankruptcy Court.  You could be committing a terrible mistake just by filing alone. I do mean it.  I have seen dozens of disastrous bankruptcy petitions filed by people representing themselves.  Listen, it’s not easy, I know attorneys cost money and many people facing financial difficulty cannot afford one.

What could go wrong?  What could not go wrong?

I received a call recently from someone who is of questionable legal status (perhaps even illegal) who filed their bankruptcy themselves only to be staring at two United States Marshalls waiting for them at their 341a meeting of creditors.   There are ways to deal with such problems and they don’t have to end this way.

If you are filing to avoid the heavy hand of a collection agency, they may not even have legal standing to harass you that way (they may have  blown the statute of limitations on collecting the debt).  If the law is on your side, you may avoid filing for bankruptcy altogether.

Are you completely ready to walk away from your home?  If so, perhaps you could just hand it back to the bank (a deed in lieu of foreclosure) and not have to file bankruptcy.  If you hand it back, you may or may not be on the hook for the rest of the loan.  You must check with an attorney.  If you are not on the hook for the remainder of the debt, you certainly don’t need to file bankruptcy for your mortgage alone.

These are just a few of the scenarios I’ve seen; there are many, many more.  Don’t file bankruptcy unless you understand what it can (and cannot) do to help you.  The cost to find out?  Zero.

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Bankruptcy and Foreclosure; Part 1: The straight and the narrow

Friday 5th of October 2012 01:33:29 AM

Before you throw in the towel and walk away from the fight to save your home, let us take a look at your situation and see if there is anything we can do for you.  There is no fee and no obligation.

I want to congratulate you for taking the initiative to explore bankruptcy as an option.  As a real estate and bankruptcy attorney, I know that for circumstances beyond your control, you are very likely facing a financial situation that you cannot repair.  I want you to know that you are not alone.

Bankruptcy is a powerful and effective tool to remedy a person’s dire financial state, and many times today such difficulties begin with your mortgage.  If you have spent the last several

First, Bankruptcy has the power to stop a foreclosure sale until your bankruptcy matter has been reviewed by The Court.   This is because a bankruptcy filing imposes an automatic stay against all collection, IMMEDIATELY.  The stay is a federal court order which takes effect as soon as we file your case. .  Our office files its bankruptcies electronically, so we will obtain a case number and a stay order almost instantly for you.months, or even years, trying to find a way out of the problem by applying for a loan modification or other methods, and nothing has worked, then it’s time to take a hard look at the bankruptcy option and here’s why:

A second reason why bankruptcy may be for you is because it doesn’t have to interfere with your chances of being approved for a modification.  If you have applied for a modification, the process can still continue.

Third, here’s something that I want you to keep in mind.  If your bankruptcy eliminates all of your other debt (like credit card debt), then once the debt is eliminated, perhaps you may now be able to afford the mortgage,  even if it doesn’t get modified.  This way you eliminate a lot of the debt that is weighing you down, leaving only the mortgage as the only large payment you need to worry about.  I will cover this point in greater detail in later videos.

Fourth, under the right conditions, bankruptcy can even eliminate a second loan on your home.  If you have a second, third or even fourth loan secured against your home, there is a good chance that we can get those loans eliminated.  I’ll discuss this point in more detail in further videos as well.

Like I said before, don’t walk away from the fight to save your home before you let us take a look at your situation to see if there is anything we can do for you.  There is no fee and no obligation.  You can reach us through the form on this webpage, or you can call us directly at 888 607 7460.  I look forward to helping you.

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The So Called Stigma of Bankruptcy: Let’s Set the Record Straight

Friday 5th of October 2012 01:25:20 AM

I sometimes get asked, “Mr. Boulgourjian, I feel a sense of embarrassment for filing bankruptcy.”

If you are struggling with a fear that there is a stigma associated with bankruptcy, let me give you a few numbers:

More people filed bankruptcy in the past year than the entire decade of the 1960’s.  Whether you know it or not, it’s more likely that you know someone who has filed for bankruptcy.  There is no stigma left.

Congress (and the United States Constitution) both accept that there is no social or economic good in oppressing someone who simply cannot repay their debt.  It’s that simple.  If someone is in over their head, either because of unemployment, sickness, family concerns such as divorce, or other crises, there is little good in leaving them in a spot they cannot recover from.  It doesn’t help anyone.  Give that person the opportunity to move forward and once again become a contribution to society and the economy.  It is from this construct that our bankruptcy laws are borne, and it’s your right to turn to them if you need to.

There’s good reason why many lenders will try to make you feel like you are doing something wrong by filing bankruptcy; it’s because the last thing a lender wants is for you to know that you have options.  I’ve been a real estate attorney for a while.  I’ve seen mortgage lenders act very honorably and others openly break the law.  It’s in your best interest to talk to someone who can tell you if your mortgage lender is treating you fairly under the law.

Let me tell you what doesn’t work.  Trying to frighten your lender by threatening to file for bankruptcy doesn’t work.  Lenders have heard borrowers make this threat so many times that it bounces off them like they were wearing Teflon.  The only time a lender is going to take such threats seriously is if you actually file.  If you feel like you’ve been getting the runaround from your mortgage lender, bring me your case and I will tell you where you stand.  No obligation, no fee.  You can reach us through the form on this webpage, or you can call us directly at 888 607 7460.  I look forward to helping you.

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“I Won’t Qualify for Bankruptcy; I Make Too Much Money.”

Friday 5th of October 2012 01:24:34 AM

One of the biggest misconceptions held by people with a steady income is that they won’t qualify for bankruptcy.  Nothing could be further from the truth.  The short answer to this concern is that it doesn’t matter how much money you make; what matters is how much debt you are going to be able to discharge.

Let me explain this.  First, if someone has told you that you make too much money to qualify for a chapter seven bankruptcy, ask them if they have taken a look at your expenses.  True, there is a median income for your geographic area.  If you make less that median income then you will AUTOMATICALLY qualify for Chapter 7.  This does not mean that all is lost if you are over the median income, it simply means that the test goes to the second step; reviewing your expenses.  A bankruptcy attorney should review your expenses to see if you will qualify.  If someone tells you that you don’t qualify because you make more money then the median income and they have not reviewed your expenses, then run the other way because they are not qualified to assist you with a bankruptcy.

Second, if you still do not qualify for a 7, you might qualify for a 13.  There is no income limit in a 13, and there are in fact many benefits to a 13 which are only available in a 13. The only difference that your income will make in your 13 bankruptcy is in determining how much unsecured debt you will have to pay back. 

How much?  10%, 20%, 50%, 100%?  That question can only be answered once an office has thoroughly reviewed your income, debts and assets.  Our office has handled 13 plans which pay back NONE of the unsecured debt (usually credit cards) and have also handled 13 plans where clients have paid back ALL of the unsecured debt, and every scenario in between.

If you did in fact have steady income and couldn’t eliminate all of your debt, wouldn’t you want the chance to at least eliminate SOME of it?

Why would anyone want to file bankruptcy if they must pay back all of their debt?  There are several good reasons.  Keep in mind that a 100% plan is the usually the last bankruptcyoption available to a debtor.  The debtor may still find it better than not filing, because it gives them a better repayment plan than their creditors would otherwise offer them.  Example?  Debtor can keep their home and make payments toward the arrears of a mortgage loan instead of face a foreclosure.  Debtor can repay debts over the course of 5 years.  Debtors can strip junior liens from homes, making it easier to possibly sell or refinance their home should such an opportunity arise.  Debtors can reduce the principal balance on SOME auto loans.  Debtors AND THEIR SPOUSES can enjoy the protection of a stay against collection for the term of their repayment plan (up to 5 years).  All of these advantages may not have existed for the debtor prior to filing for bankruptcy.

If you are having debt concerns and want to know if bankruptcy is an option for you, finding out is free.

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Married couples. File Bankruptcy jointly or not?

Friday 5th of October 2012 01:22:29 AM

 

In California, a community property state, spouses in a marriage are both liable for any debt taken out by either spouse during their marriage.

This means that you are ultimately both on the hook for many of your debts.  The only bulletproof solution if you are facing dire financial straits would be to file jointly, as is your right.  Filing jointly offers several advantages.

First, filing jointly is usually less expensive;  You pay your filing fee once and your attorney once. Second, you have very likely formally co-signed debts together (this is especially true for mortgages).  In such situations, you are both liable for the mortgage, whether you were married or not.  If you don’t both file for bankruptcy, your mortgage lender will most certainly look to the signor that did not file for bankruptcy.

However, in the name of prudence, some married couples may elect to take their chances and only file bankruptcy for one spouse.  A creditor may make a business decision not to pursue a non signor spouse, even if they have legal grounds to do so.  This is sometimes the case when only one spouse is the formal debtor without the other spouse as a co-signor to the debt.  Keep in mind that the other spouse may always file individually at a later time should it become necessary, as is their right.

In the meantime, the marriage can rely on the non filing spouse’s credit profile as the one without a bankruptcy on it.

 

There are many non married co-debtors who wish they could file jointly.  Married couples have that option; use it to your best advantage.

If you are a married couple considering bankruptcy, a no fee no obligation consultation is the best thing to do.

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“I make too much money to file for bankruptcy.” The Means Test.

Friday 5th of October 2012 01:20:09 AM

How do you know?  Did you look it up online?  Did you ask your neighbor?  Did you ask a friend who has filed before?
The answer lies in a test so complicated that most attorneys cannot even answer the question without inputting almost all of your financial information into an incredibly complex formula known as the ‘means test’.

The means test has some basic major variables, but in truth, it’s so complicated that you need software to figure it out correctly.  If that is the case, how on Earth do you expect to get a reliable answer from friends, family or online?
Sure, there is one element to the test known as the ‘median income’ threshold, but that is only one element.  Yes, if you make less than the median, then the means test may not even apply to you, but you may have expenses that still disqualify you from filing, even with a ‘below median’ income.

Look, there is no reason why you should take an educated guess.  There is no reason why you shouldn’t know for sure.  Finding out is free and only takes a little bit of your time.
You can find out by calling my office and booking an appointment, or filling out some of the basic info on our online questionnaire.  There is no obligation whatsoever.

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“I Have Equity in my Home. Will I lose it in Bankruptcy?”

Friday 5th of October 2012 01:18:12 AM

Let me start by saying to those who were wondering; If you owe more on your home than it is worth, the Bankruptcy Trustee will have no interest in selling your home to pay creditors.

Now, what if you DO have some equity?  You are allowed to keep up to almost $150,000 of equity in the Central District of California.  How much you will be allowed to keep is a formula which includes your age, your spouse’s age, how many dependants you have and several other factors.

Don’t write off bankruptcy just because you are scared that you will be losing the equity in your home.  Let us figure out if you really run a risk of losing it.  There is no obligation and no fee.

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Cities seizing foreclosure properties to help homeowners

Friday 5th of October 2012 01:17:33 AM

The cash strapped (and now formally bankrupt) City of San Bernardino was brought to its knees by, among other things, the foreclosure crisis.  One of the hardest hit counties in the country, San Bernardino County (in which the eponymous City is located) has seen entire city blocks decimated by the real estate slump and the scourge of this foreclosure epidemic.

Some have said that there are entire streets in San Bernardino owned by the same lender.  Banks are quickly becoming the largest landlords in town.  Amongst many other problems that seem to be arising as a result (lack of maintanence, HOA dues delinquencies) is failure to pay property taxes.  Local cities and counties desperately count on property tax revenue.  With a now drastically reduced property tax revenue, the already troubled San Bernardino was forced to seek bankruptcy protection.

The City Fathers have thought of a novel approach to the problem: exercising their powers of eminent domain to seize troubled properties for the public purpose.  How does this help?  Well, lenders will now have to contend with a municipal owner and all of the complications that could arise as a result.  The lender will also have to contend with the Bankruptcy Trustee appointed to the City’s bankruptcy case.

Does this exact any sort of leverage?  Does this help homeowners?  Does this merely postpone the inevitable?  Is this even constitutional?  We’ll find out soon.

Approximately 9 months ago, clients were asking me, “How could an entire city go bankrupt?  What would happen?”  We have now seen what happens, after several California cities have already sought bankruptcy protection. Will trash continue to be collected if the City doesn’t pay its contractors?  ( a recent article suggests that it may not very soon)

Will law enforcement respond to calls?  (or will the LA County Sheriff have to bear the burden?)

Soon, we will know.  One things for certain, it’s not just the homeowners who are fed up anymore.

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Forgiven Debt, Taxable Income and Bankruptcy

Thursday 4th of October 2012 06:43:23 PM

Creditors can ‘write off’ debts; forgive them altogether.  Great, for you, right?  Well, not necessarily.

All of a sudden, you receive an IRS 1099 form, showing that your debt in the sum of (>>fill in your amount) was forgiven and can now be considered taxable income by Uncle Sam.

Such a scenario is very common in the case of junior mortgage holders who lose their lien on a property after the first mortgage holder forecloses.

However, there is still hope in bankruptcy.  Internal Revenue Code section 108 explicitly states that debts discharged in a bankruptcy case do NOT get included in income on the debtor taxpayer’s tax return.

The clincher:  Timing.  The Internal Revenue Code also states that such a discharge must take place before the event giving rise to the debt obligation.  This you would have to figure out with a tax professional, but there is hope, just make sure that you file your bankruptcy IN TIME.

There may be some exceptions carved out of the Tax Code if this scenario involves your home, but no such protections exist for other real property.

Tread carefully, take care of business in a timely fashion, and you may escape having to pay a bunch of extra tax on forgiven debt, an amount that could be sizeable if you are looking at a forgiven mortgage debt.

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