re. Chapter 7 in California?


G

Guest

Does filing 7 in California absolutely mean the sale of the personal home
especially where there is quite a bit of equity involved? Jim in San Diego
 
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T

Thoth

Does filing 7 in California absolutely mean the sale of the personal home
especially where there is quite a bit of equity involved? Jim in San
Diego

Bankruptcy does not necessarily mean selling the property. In chapter 7
cases (liquidation) California law permits bankruptcy filers to keep a
certain amount of equity in their principal residence. If the amount of
equity is less than permitted to be exempted from liquidation the debtor can
not be compelled to sell. The amount of equity the debtor can keep depends
upon marital status, age and income (but it's at least $50,000). I know the
San Diego area well (I'm in Cardiff), so I understand you may have
significantly more equity that can be exempted. In such cases I commonly
recommend a chapter 13 bankruptcy (debt reorganization), wherein debtors are
usually allowed to keep property that would not be exempt in a chapter 7.
To qualify for a chapter 13 discharge the debtor must have "disposable
income," or income in excess of the debtor's reasonable and necessary
monthly expenses. The disposable income is paid to a bankruptcy trustee for
a period of not less than 36 months. The trustee uses these funds to pay
unsecured creditors a portion of the amounts owed. After the repayment plan
is complete, which can be as long as 60 months if necessary, the debtor
receives a discharge of the unpaid balances.

So, in short, chapter 7 may allow you to keep your home (if your equity can
be exempted), but if you have too much equity a chapter 13 may allow you to
keep your home (if you have sufficient disposable income to qualify for
relief under this chapter). If you need a referral let me know.

Very truly yours,
David W. Wiese, Esq.
Tel: (760) 944-0841
Fax: (760) 632-7048
 
E

Eu. Harry Andruschak

Thoth said:
So, in short, chapter 7 may allow you to keep your home (if your equity can
be exempted), but if you have too much equity a chapter 13 may allow you to
keep your home (if you have sufficient disposable income to qualify for
relief under this chapter). If you need a referral let me know.

Very truly yours,
David W. Wiese, Esq.
Tel: (760) 944-0841
Fax: (760) 632-7048
You should also mention the problems of Chapter 13, starting with the
fact that the completion rate is less then 30%.

You are on a leash for three years, not the three months or so for
Chapter 7.

Kiss your income tax refunds goodby for three years.

Kiss any inheritence from your family goodby for three years.

Kiss ANY windfall income goodby for three years.

"Reasonable and necessary expenses" are defined by the Trustee, not
you. As are "disposable income", "good faith", "best efforts", and all
the other buzz words of Chapter 13.

Develop a taste for macaroni and cheese.

If your income goes down, you are still expected to pay. If your
income goes up, you are expected to pay more. Much more.

Remember the <30% statistic at all times.

Reconsider Chapter 7 and letting the house go.

You are like a tightrope walker without a safety net for three years.
Remember The Flying Wallendas.
 
B

Brett Weiss

Kiss your income tax refunds goodby for three years.

Not so in most states. Here in MD, for example, virtually all Chapter 13
debtors keep all their refunds for all years.
Kiss any inheritence from your family goodby for three years.
Only if you become entitled to them within the 180 days after you file.
Kiss ANY windfall income goodby for three years.
Not so.
"Reasonable and necessary expenses" are defined by the Trustee, not
you. As are "disposable income", "good faith", "best efforts", and all
the other buzz words of Chapter 13.
Actually, they are defined by the Court. If the trustee feels that an
expense is not reasonable or necessary and the court does, you win.

If your income goes down, you are still expected to pay. If your
income goes up, you are expected to pay more. Much more.
Not so. Future increases in income are generally yours to keep, regardless
of their amount.

--
Brett

*****************************************************************
* Personal Injury/Malpractice Bankruptcy *
* *
* BRETT WEISS, P.C. *
* Attorneys at Law *
* Maryland, D.C. and Federal Bars *
* (e-mail address removed) *
* www.brettweiss.com *
* *
* Small Business Estates & Estate Planning *
*****************************************************************

The Small Print: This response is for discussion purposes only. It isn't
meant to be legal advice and you shouldn't treat it as such. If you want
legal advice, speak with a local lawyer familiar with your state's laws who
can review *all* of the facts and the law applicable to your situation.
*****************************************************************
 
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E

Eu. Harry Andruschak

Just an update for those who who want. I called my brother a couple of
days ago, he said the cats were doing OK. Last Tuesday our class had
its 4th practicle test, and again I passed it just as the 15 minute
timer was runnung out. Four out of 4.

We do get a break while attending this six week Post Office school,
and that starts tomorrow, Friday, 5 Marcfh 2004. We have a 5 hour
written test from 7 AM 11 AM, 40 questions worth 20 points towards our
total of 70 out of a 100 to pass. Then we get to fly back home. I
leave the hotel at 1 PM, and will probably arrive at home in Torrance
around 9PM, which is 11 PM Norman time.

I assume I will have to apologize profously to the cats.

Saturday I will need to go through the three weeks accumulation of
mail, paying whatever bills are due. I also need to stop by the bank
for a cashier's check for the Chapter 13 payment due next month. I
hope to give some leftover funds to the dentist towards my bill for
the six new crowns. I have been putting one or two hundred dollars in
every bi-weekly payday or so for 18 months, and am now close to the
$4,800 required. Assuming no other unexpected bills or expenses in the
next two months, 12 April will be the big day at the dentist. It has
been over two years since the dentist informed me that I really needed
those crowns, but obviously the Chapter 13 Trustee and bankruptcy
Judge are not interested in your rotting teeth, just squeezing as much
blood out of the turnip as they can.

I leave the apartment at 6 AM Sunday morning to fly back to Norman for
the remaining three weeks.

@@@

I have just re-read the book PERSONAL BANKRUPTCY FOR DUMMIES, and here
are the inspiring words from page 66 on the disadvantages of a Chapter
13.

"One obvious disadvantage of a Chapter 13 is that it usually takes
about three years to complete. During this time, you may feel like
you're on a leash...because you are. You'll probably have to give up
your income tax refunds. You may receive an unexpected windfall, and
then lose it to the trustee. You won't be allowed to incur any more
debts without the trustee's consent. You can lose your job and your
ability to pay, resulting in dismissal of your case. You may risk your
homestead exemption if you move or sell your home.

"Another drawback is that about two-thirds of Chapter 13 plans fail,
and, after that happens, the debtor must permit the bankruptcy to be
dismissed or, more likely, cause you to convert to Chapter 7."

@@@
 

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