Can bankruptcy help you save your home?

Friday 5th of October 2012 01:49:10 AM

If you are a homeowner in distress and you are being made offers to file bankruptcy, find out what bankruptcy really will (and won’t) do for you if you file.

Bankruptcy can offer you many powerful options in your fight to keep your home.  There is a virtual soup of misinformation out there on different ways to save your home.  Time and again clients have come to us having fallen viction to one form of scam or another.  It’s time to sort out the good from the bad and learn once and for all if bankruptcy is going to offer you a way out.

To do so, I prepared a 4 part short video tutorial for you.  The videos are short and as ‘to the point’ informative as I could make them.  I couldn’t cover everything, but I think I got the basics down for you.

You can view the videos by enrolling at

If you still have questions, feel free to call us.  Please keep in mind that we are a Los Angeles, California based practice.  If you are located outside of the Los Angeles, Orange County, Riverside, San Bernardino or Ventura County areas, you are best to contact a local bankruptcy attorney as bankruptcy laws can be very location-specific and must be filed close to home.

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Why Filing Bankruptcy is Better Than Debt Settlement.

Friday 5th of October 2012 01:47:25 AM

If you have considered filing for bankruptcy, debt settlement may also be on your radar.  Here is how the two size up in my eyes.  The ads are everywhere, the straight talk is right here.

You may not qualify for bankruptcy, in which case debt settlement may by your only option.   However, if you do qualify for bankruptcy, here are some good reasons why it’s your better choice.

1. Cost:    When you work with a debt settlement company, you will be asked to send them a fixed sum of money on a monthly basis.  The money is pooled into a sizeable sum in the hope that they will be able to negotiate a lump sum payoff of your creditors; one by one.  The premise of the approach is fine; most creditors are more willing to cooperate if you can offer a lump sum settlement.  In practice however, it can get costly.  It could take you months to gather enough money to make any sort of reasonable cash offer that your creditors might accept.  Second, debt settlement companies take a hefty cut of each monthly payment, making it doubly difficult to accumulate enough money to entice a settlement.  If you are able to afford such payments, you can open a separate account for yourself and make the deposits every month without paying a cut to someone else.  Once a deal is made, you will have accumulated enough money to close the deal.

2. Debt Settlement Does Not Stop Collections!  When you are inbankruptcy, creditors cannot continue with ANY collection efforts (no nasty calls, no direct communication with you, no garnishments, levies, repos, foreclosures).  Debt settlement affords no such protection.  I have heard one horror story after the other of debtors hiring debt settlement negotiators only to be served with collections lawsuits in the meantime.  Most debtors are shocked to learn this, so consider yourself warned.  Creditors don’t have to (and usually won’t) stop collection against you just because you are trying to negotiate a settlement.  As long as you are behind on your payments and have not filed for bankruptcy, creditors are free to proceed with collection.

3. Debt settlement does not provide finality:  A bankruptcy can eliminate many debts (especially unsecured debt like credit card debt) once and for all within a matter of months.  Debt settlement plans can take years to complete, oftentimes without a guarantee that the creditor won’t come after you for the full balance.  In fact, most debt settlement plans are set for monthly payments over 2-5 years.  Most plans clearly state that if one payment is late, the creditor has the right to demand  the full original balance.  No such thing takes place in bankruptcy.  Once your bankruptcy is complete, the debt is dealt with and is final.

4. Tax Implications of debt settlement:  As a general rule, debt forgiven is considered taxable income.  If a creditor forgives some of your debt, they are going to issue you a 1099 for the forgiven amount.  You will likely owe taxes on the forgiven debt.  In bankruptcy, you will not be required to pay taxes on debt that is discharged.

5.  Credit Implications:  Let’s face it; if you fall behind on several payments to your creditors, your credit profile is already shot.  At such a point, you have to ask yourself whether worrying about a bankruptcy on your record is worth it.  Compared to the clean, fresh start that bankruptcy can offer you; it usually isn’t worth worrying about.  Which is easier, getting a fresh start and rebuilding your credit, or saddling yourself with settlement arrangements you may not be able to honor?

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Bankruptcy and tax debt: Can I discharge my tax debt in Bankruptcy?

Friday 5th of October 2012 01:46:25 AM

I am often asked this question by clients.  The short answer that most clients will get from their attorney is “No.”  However, this is oversimplifying it.  You CAN get a discharge of tax debt under the right circumstances.

I recently read an expertly written article on this topic.  Here is the link:

Bankruptcy: Can I discharge my tax debt if I file bankruptcy?

Thank You Attorney Coats for your very informative and well written article on the topic.

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If I File Chapter 7 Bankruptcy, Can I Still Keep My House?

Friday 5th of October 2012 01:44:15 AM

If you are considering filing Chapter 7 bankruptcy Glendale, you are probably asking, “Can I keep my home in bankruptcy?” The answer to that is varied, depending on your personal situation.

Exemptions & Equity

The first thing to know is what your home equity is, and what state homestead exemption you qualify for. When you file for bankruptcy, lenders will want to know if you have any built up home equity (or value) that can go towards paying off your debts by selling the home. However, when filing bankruptcy you can also apply for state homestead exemption, so a certain amount that your home can be worth that is exempt from being used to pay off your debt. Be sure to find out the details  so that you can calculate if you have any non-exempt home equity. If it is, your home will likely be sold off (while leaving you with the state exemption amount). This will influence which of the following options you may want to look into when filing for bankruptcy:

If you are behind on mortgage payments, there are several paths you can take:If you’d like to work towards trying to keep your home, you may opt for a loan modification. This should be done before filing bankruptcy and will allow you to renegotiate your mortgage to a level where you can once again stay up to date on payments and not face foreclosure.If you are facing foreclosure because of being behind on your mortgage, when you file for bankruptcy any foreclosures can be given what is called an automatic stay. This will freeze the foreclosing process for a time, while also freeing you from paying the mortgage as you have filed for bankruptcy.If you are keeping up with your mortgage payments, here are your options: Reaffirm the loan. While Ch. 7 bankruptcy basically erases your responsibility for a home loan, if you do not file for reaffirmation the mortgage company will only let you stay in the home as long as you stay up to date with payments. Reaffirmation gives you more options should you get behind on payments.If you are up to date and your home does not have any non exempt equity, you can easily keep your home while also freeing you from debts when you file for bankruptcy. Consult a professional and discuss all options  in detail!  You may reach us at 888-607-7460.

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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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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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