BANKRUPTCY REPORT: GET A LAWYER BEFORE FILING FOR BANKRUPTCY:  Success In Less Than 61% of Cases Without Lawyer in Chapter 7, and just 1% in Chapter 13.

May 22, 2012  by Phillip Myer  · Leave a Comment

There is an old saying, "You get what you pay for."  Now there is an impartial report from the Bankruptcy Court for the Central District of California that debtors who file without a lawyer have a much higher risk of having their case dismissed and not receiving a discharge of their debts.

Bankruptcy Court Report

A new report issued by the United States Bankruptcy Court for the Central District of California found that debtors who represent themselves pro se (without an attorney) in a Chapter 7 bankruptcy case succeed in obtaining a discharge of their debts only 61% of the time, versus 95% for those represented by attorneys.  In Chapter 13 cases the success rate was less than one percent for those not represented by an attorney versus 55% with an attorney.

Failing to discharge  your debts may not be the only drawback of a debtor representing himself.  In some cases you may be permanently barred from discharging certain debts.  You may also be barred from re-filing a case for at least 6 months, allowing your creditors to proceed with collection and foreclosure actions.  And you may not receive the benefits of the long "automatic stay" which keeps the creditors from collection, repossessions and foreclosures in a future filing.

And, although representation by a knowledgable bankruptcy lawyer, such as Pasadena bankruptcy attorney Phillip Myer, does not guarantee 100% success, it vastly increases your success chances in chapter 7, and especially in chapter 13, which has an almost zero chance of succeeding without a lawyer.   There are many reasons for failure cited in the report, including not filing papers in a timely manner, making mistakes on the paperwork, incorrectly claiming exemptions for your property, not filing counseling certificates on time, and non-payment of chapter 13 payments.  And if creditors file claims in the case, especially in a chapter 13, the debtor usually does not know how or when to file an objection to the claim.

LESS THAN 61% SUCCESS IN CHAPTER 7, AND JUST 1% IN CHAPTER 13 without a lawyer!  Do you need a better example of people being "penny wise and pound foolish"?  A typical debtor has thousands and thousands of dollars at stake in a bankruptcy case.  Don't try and save a few bucks only to end up in failure.

If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.

FAMOUS PEOPLE WHO HAVE FILED BANKRUPTCY -- DON'T BE EMBARRASSED

When clients come to my office, the Law Office of Phillip Myer, contemplating either a chapter 7 or chapter 13 bankruptcy filing, they are often embarrassed to file for bankruptcy.  They think they are doing something wrong; that they have failed themselves and their families; that filing for bankruptcy will make things worse; that they even will be put in jail!  My best advice is:  "Don't be embarrassed."  The purpose of the bankruptcy laws is to give people and companies a fresh start.  The concept of forgiving debts goes all the way back to the Old Testament.  In Deuteronomy the Israelites were instructed to forgive the debts owed to them by others every seven years.  And this seven-year timeline was used by the bankruptcy courts in the US until the reform act of 2005.  It is a very old concept.

Some of you may be surprised to learn that many famous successful people have filed for bankruptcy and came out on the positive end of the process:  Abraham Lincoln; Henry Ford; Milton Hershey, Walt Disney; Burt Reynolds; H.J. Heinz; P.T. Barnum and Donald Trump, to name a few. 

If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.

REAFFIRMING A HOME LOAN, OR NOT?

At the Law Office of Phillip Myer, our clients often ask me whether they should sign a reaffirmation agreement for their home mortgage loan.  The answer depends on the type of loan you have, and your particular circumstances. 

There are, generally, two types of mortgage loans: recourse and non-recourse.  A recourse loan is one where the lender can come after the borrower if the loan is not paid and the security is insufficient to retire the debt.  What that means is that the mortgage company can come after you if you don’t pay the mortgage, the house is foreclosed upon and there isn’t enough money received from the home to pay off the loan.

A non-recourse loan, on the other hand, means that the lender can’t collect any money from the borrower if, after a default, the house doesn’t pay off the loan.  So, don’t ever reaffirm a recourse loan because, if you do, the lender can come after you even though you have filed bankruptcy.

But, there are some situations where my clients want to reaffirm a non-recourse loan.  Although it doesn’t make any difference to the lender to have such a loan re-affirmed since they can’t proceed against the borrower personally anyway after the bankruptcy, many banks are asking to have these signed.
The problem my clients are experiencing is that if they don’t sign a reaffirmation agreement on their mortgage, the lenders are refusing to report payments to the credit reporting companies, and therefore my clients get no benefit to their credit score by making those payments!  This is annoying since making regular payments is the fastest and surest way to rebuild your credit.
In some states, like California, almost all loans used to purchase a home are non-recourse, and there can be no personal liability of the borrower.  But your state may differ.  It is always best to check with a qualified bankruptcy or real estate attorney in your state.

If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.

When Should I Consider Bankruptcy?

Many people are in over their heads these days.  They wonder if a bankruptcy lawyer can help them. The economy has been bad for 2 years and there is no good news which leads me to believe this will improve any time soon.  Unemployment is still over 9%.  Housing prices are still going down.  2.5 million homes are in foreclosure and over 1 million more are 90 days past due - headed for foreclosure.

Are you having trouble making your monthly payments on your bills?  Are you borrowing just to meet your monthly expenses?  Are you losing sleep worrying about your finances?  Is your house worth less than what you owe on it?  Have the banks jacked up your credit card interest rates because you've missed a payment?  These are all danger signs which you should not ignore.

CONSULTING A BANKRUPTCY LAWYER SOONER RATHER THAN LATER.

It is natural to try and solve your problems by yourself.  It is also natural to want to pay your bills and to delay even thinking about filing for either a chapter 7 or a chapter 13 bankruptcy.  But I have seen, over and over again, that I could have saved my clients a lot of money if only they had come to see me sooner rather than later.  Every month you only make a minimum payment on your credit cards is another month that the bank gets your money and you are only "treading water" and not actually improving your financial situation.

If your house is upside down and you have a second mortgage, in many cases the bankruptcy court can remove the second mortgage from your house so you only have to pay the first mortgage.

GETTING A FRESH START.

The sooner clients take positive steps to consult an attorney to consider their bankruptcy options, the sooner they can get back on the road to financial health.  The bankruptcy court is the place for many people to get a fresh start.


If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.

I have heard that you cannot discharge Student Loan debt in bankruptcy. Is this really true? Can it be discharged under any circumstances?

Under the bankruptcy code, student loans are generally NOT dischargeable. This means that if you have student loans and file bankruptcy you will continue to be liable for the full payment of these obligations in most cases. Unfortunately, courts do not really care about the amount of your student loan debt or how long you’ve had these loans.

The Undue Hardship Standard

However, student loans can be discharged under some circumstances. The only way you can discharge your student loans is if a bankruptcy court determines that they cause an “undue hardship” on you. Be advised that this is a narrow exception and that the undue hardship standard is very stringent, meaning that very few people qualify. Although you may believe the amount of your student loan debt causes you an “undue hardship”, the term has a legal meaning that extends beyond a normal understanding of hardship.  Legally speaking, the term denotes a three-part test that courts use to determine whether or not your student loans can be discharged.

Undue Hardship Test One

First, your current income must be low enough so that if you are required to repay your student loans, you will not be able to sustain a minimal standard of living. While it is difficult to define what a minimal standard of living is, it is likely that if you can provide some acceptable form of shelter for you and your dependents, such as an apartment, and have enough money for basic things such as food and clothing, you are probably not going to pass the minimal standard of living test. Basically a minimal standard of living probably means something less than living paycheck to paycheck. However, given the variance by which courts have applied this standard it is important to contact your attorney.

Undue Hardship Test Two

Second, your inability to maintain a minimal standard of living must NOT be a temporary situation; rather, there must be a sufficient likelihood that this inability will continue over the period of the loan. This means that even if you currently fall below a minimal standard of living, you will not pass the second part of the test if your situation is only temporary and likely to improve in the future.

Undue Hardship Test Three

Third, you must have made a good faith effort to repay your loan. While this does not necessarily mean that you must have made payment on your loans, a court could find a lack of good faith if you attempt to hide money that could have been used to help pay off your student loans. Also if you are buying luxury items, such as new T.V’s or computers, a court may take this as evidence of a lack of good faith.

Conclusion

As you can tell the “undue hardship” standard is very tough, and very few debtors actually qualify for a discharge of their student loans. It is important to consult an attorney who can advise you whether you have a chance of discharging these types of loans. Unfortunately, since courts determine on an individual basis whether a debtor meets the undue hardship standard, it is extremely difficult to predict whether your specific situation will meet the court’s standard. Nonetheless, an attorney can ensure you have the best chance of discharging your student loans in bankruptcy

If you would like more information on this topic or other bankruptcy topics, please contact  our Pasadena office at  888.368.8941 (toll free) or 626.389.8575.  Mr. Phillip Myer will be happy to answer your questions for you.  . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help!  Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/  to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.

How Bankruptcy Can Help With Foreclosure

If you’re facing foreclosure, and you can’t seem to strike a deal with your lender, filing bankruptcy may be able to help.

If you fall behind on your mortgage payments, your lender may take steps to foreclose on the property – meaning it may take back your home and sell the property at a public auction.

The foreclosure process doesn’t happen overnight. In California a foreclosure typically starts after you fall behind on your payments for at least two months, and often three or four. This window of opportunity (commonly the reason behind a “strategic default”) will provide some time for you try alternate methods, such as loan forbearance, a short sale, or a deed in lieu of foreclosure.

If you’ve already tried these options, filing bankruptcy may provide another option to avoid or stall foreclosure. Here are some examples of how filing for bankruptcy can help you –

The Automatic Stay Delays Foreclosure

When you file either a Chapter 13 or Chapter 7 bankruptcy, the court automatically issues an order (called an “Order for Relief”) that contains a powerful tool known as the “automatic stay.” The automatic stay is a shield that legally forces your creditors to cease all of their collection activities immediately – no excuses. If your home is scheduled for a foreclosure sale, the sale will be postponed by the Bankruptcy Court while your bankruptcy case is processed, which typically takes three to four months. However, there are two important exceptions to this rule:

Motion to Lift the Automatic Stay.
If the lender obtains the bankruptcy court’s permission to proceed with the sale by filing a “Motion to Lift the Automatic Stay”, you may lose the customary three to four months. But even then, your bankruptcy filing will typically postpone the sale for at least two months (or more), depending on the speed with which your lender files its Motion to Lift the Automatic Stay.

Foreclosure Notice Already Filed.
Unfortunately, bankruptcy’s automatic stay won’t stop the clock on the advance notice that most states require before a foreclosure sale can be held (or a Motion to Lift the Automatic Stay can be filed).

How Chapter 13 Bankruptcy Can Help

Many people will do almost anything to stay in their homes for the indefinite future. If this describes you, and you’re behind on your mortgage payments with no feasible way to get them current, the only way to keep your home is to file a Chapter 13 bankruptcy.

How Chapter 13 Works.
Chapter 13 bankruptcy lets you pay off the “arrearage” (late, unpaid payments) over the length of a repayment plan you propose (usually five years). You will need to demonstrate to the court that you earn enough income to at least meet your current mortgage payment at the same time you’re paying off the arrearage. Assuming you make all the required payments up to the end of the repayment plan, you’ll be able to avoid foreclosure and keep your home.

Stripping Off Second and Third Mortgage Payments.
Chapter 13 may also help you eliminate the payments on your second or third mortgage. This is because, if your first mortgage is secured by the entire value of your home (which is possible if your home has dropped in value recently), you may no longer have any equity with which to secure the later mortgages. In this scenario, the bankruptcy court may allow you to “strip off” the second and third mortgages and re-categorize them as “unsecured debt.” Then, under your Chapter 13, you’ll be able to discharge these debts after successfully completing your Chapter 13 plan.

Canceling Debt.
 Chapter 7 bankruptcy will also cancel all the debt that is secured by your home, including your mortgage, as well as any second mortgage(s) and home equity loans.

Canceling Tax Liability for Certain Property Loans.
Thanks to a new law, you no longer face tax liability for losses your mortgage or home-improvement lender incurs as a result of your default, whether you file for bankruptcy or not.

However, the new tax law doesn’t shield you from tax liability for losses the lender incurs after the foreclosure sale if:

- Your loan is not a mortgage or was not used for home improvements (such as a home equity loan used to pay for a car or vacation); or
- Your mortgage or home equity loan is secured by property other than your principal residence (for example, a vacation home or rental property).

This is one way Chapter 7 bankruptcy helps. It exempts you from tax liability on losses the lender incurs if you default on these other loans.

Chapter 7 Cannot Cancel the Foreclosure.

With all this debt being cancelled, you may be wondering why the foreclosure on your home won’t be cancelled too. The trouble is, when you bought your home you probably signed two documents (at least)—a promissory note to repay the mortgage loan, and a security agreement that could be recorded as a lien to enforce performance on the promissory note.

Chapter 7 bankruptcy will discharge your personal liability under the promissory note, but it doesn’t remove the lien. Chapter 7 will get rid of your debt but not the liens – you’ll still probably have to give up the house under the lien because that’s what your pledged as collateral for your loan.

If All Else Fails: Relief From Debt and Tax Liability

If you’re certain you won’t be able to propose a Chapter 13 repayment plan that a bankruptcy judge will approve, and Chapter 7 will provide only a temporary delay from the foreclosure sale, then what’s the point of either?
If you have to lose your home, you can at least view bankruptcy as the best way to get out from under your mortgage debt and tax liability. Bankruptcy also offers a way to save some money, which will help you find new shelter and weather the process of re-building your credit.
Considering filing for bankruptcy? Contact our offices in Pasadena and Altadena today for a free consultation.

If you would like more information on this topic or other bankruptcy topics, please contact  our Pasadena office at  888.368.8941 (toll free) or 626.389.8575.  Mr. Phillip Myer will be happy to answer your questions for you.  . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help!  Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/  to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.

Should I File Bankruptcy Without an Attorney

Should I File Bankruptcy Without an Attorney? Chapter 13 Bankruptcy Chapter 7 Bankruptcy     When Congress changed the bankruptcy laws in 2005, they made filing for bankruptcy extremely complex and complicated. The fact is that is it is extremely difficult to file for bankruptcy without an attorney.  Recent figures indicate that about nine out of ten self-prepared bankruptcy petitions are dismissed because the “pro-se” debtors did not properly fulfill their obligations under the new bankruptcy laws.  “Pro-se” is the Latin legal term for someone who is representing himself or herself without a lawyer. Filing Bankruptcy in Los Angeles County without an attorney is further complicated because in addition to attending to obligations under the federal bankruptcy laws, you must also adhere to the Local Bankruptcy Rules for the Central District of California. Representing Yourself in Bankruptcy is Often A Mistake Filing for bankruptcy is much more involved than reading a “How to File Bankruptcy” book.  It takes a keen understanding of federal and state law. Many debtors who represent themselves are not aware of what assets they can protect, and what assets they cannot protect.  I have seen many a case where the trustee has taken assets from a pro-se debtor because they were not exempt and protected. The Means Test Can Be Very Complicated Every person filing bankruptcy must complete the means test and must do so properly.  The means test is the court's determination that you qualify to file for bankruptcy. If the means test is not prepared the right way, it can constitute grounds for the Bankruptcy Court to dismiss your case. The means test is one of the most involved and controversial aspects of filing bankruptcy today.    Documents Must Be Filed with the Court and Provided to the Trustee The new laws also require that a debtor provide a number of documents to the trustee in a timely fashion.  I have observed that with a great number of pro-se Chapter 7 filings, the trustees have refused to examine the debtor because the debtor failed to provide the proper documents. In addition, I have never, ever seen a Chapter 13 pro-se debtor who provided all of the necessary documents to the Chapter 13 trustee when they were required to do so. Finally, if you do not file other mandatory documents with the court on a timely basis, the court will dismiss your case. You Must Know What Information Must be Provided in the Bankruptcy Petition The petition itself is rather complicated.  With most of the cases we file, the petition is close to 50 pages long. You must also understand what particulars about your financial situation to include.    Retaining an Experienced Bankruptcy Attorney is a Wise Investment An experienced bankruptcy attorney will know how to quickly and efficiently put together your petition, file your case in the proper way, and then represent you in Court. When it comes to seeking to eliminate a substantial amount of debt, it makes sense to do it the right way.  Many experienced bankruptcy attorneys, such as my Pasadena Bankruptcy Law Office, offer free consultations.   If you would like more information on this topic or other bankruptcy topics, please contact  our Pasadena office at  888.368.8941 (toll free) or 626.389.8575.  Mr. Phillip Myer will be happy to answer your questions for you.  . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help!  Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/  to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.

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