Friday, February 24, 2012

If I file Bankruptcy can I keep my credit cards? - February 23, 2012

The general answer is no. More often than not the root cause, pushing someone towards bankruptcy is credit card debt. That debt is what the client wants to get discharged. However, when there is a credit card held by the debtor which is in good standing at the time of filing or has a $0 balance, the debtor assumes many times (incorrectly) that they can keep that card after the bankruptcy. While I cannot speak for all creditors, most of them will still cancel your account. When you file a bankruptcy, you are required to list ALL of your debts, and ALL of your assets. You cannot leave specific cards out and even though you are only required to inform your attorney about cards with a balance, the cards in good standing, and without a balance will soon find out about the bankruptcy and likely close your account. People seem to be frightened at the thought of not having any credit cards to fall back on, what they don’t realize is the hundreds of dollars they are paying towards those credit cards every month will free up and actually become available funds. With those funds you can purchase a prepaid "Debit" card that looks like, and is useable as a credit card.

If you have any questions please contact our Fresno Bankruptcy Attorneys at The Law Office of Timothy C. Springer. You can reach us at (559) 225-3622 to find out more about the bankruptcy process as it pertains to your situation. 

Thursday, February 23, 2012

Preparing for Bankruptcy - February 23, 2012

 People file bankruptcy to find relief from a situation where finances have spiraled out of control. They may seek to discharge all the debt, through a chapter 7; or reorganize the debt and pay a more reasonable per month payment through a chapter 13. (Income variables apply when determining qualification) If you are looking to file a Bankruptcy, there are a few things you want to watch out for in preparation of the act of filing.

1) Payments made to creditors or on a personal loan will be scrutinized during this process if the payment made was over $600 and within 90 days of filing the bankruptcy. Try and stay away from these types of transactions prior to filing.
2) Stop using your credit cards if you are considering bankruptcy. Use of cards just before filing will also be scrutinized and possibly even viewed as fraud. Make sure that you discuss any recent transactions along with your intentions with your attorney.
3) Transferring or selling personal property just before filing may cause unnecessary complications in your case. In most cases "exemptions" can be used to protect any property you have from becoming property of the bankruptcy estate. If the Trustee of your case sees you have transferred recently or sold something hastily, they may get it back and then because we didn't protect it by exempting it, it will become property of the bankruptcy estate.

Bankruptcy can be confusing for people who know little about the bankruptcy process (most people fall under this category), it is important to consult a bankruptcy attorney about your situation before taking matters into your own hands, these items are listed as precautions and not legal advice.

If you have any questions about Bankruptcy please contact our Fresno Bankruptcy Attorneys at The Law Office of Timothy C. Springer for more information.
Read Original Article

Friday, February 17, 2012

Is Bankruptcy possible with a reverse Mortgage?

Bankrate's reader, John, submitted a question worth re-posting. He asks, 

"If somebody has a reverse mortgage, could he file for bankruptcy and still keep the house -- of course meeting all the other obligations to the mortgagor?"

-Firstly, Justin Harelik of suggests to consider three points; home value, current balance and monthly payments. When considering bankruptcy with a reverse mortgage, make sure you can protect or exempt whatever amount of equity you currently have in your home. Hiring an appraiser is the most efficient way of acquiring that amount.
-Secondly, even on a reverse mortgage, you must find the current balance of your home. Mr. Harelik suggests requesting a "10-day payoff" from the lender which should show the current balance. This information will be required for the bankruptcy paperwork.
-Lastly, the monthly payment point comes into play and may reduce or remove the need for bankruptcy at all depending on your situation. You will need to review the loan documents to figure out if you will still have access to the monthly distributions or the home's equity.

 In conclusion, the article outlines that if you find the answers for your situation, you may well be able to file a bankruptcy and keep your home. Once you have the researched these three key points, contact our fresno bankruptcy attorneys at the Law Office of Timothy C. Springer for a free consultation.

Original article posted at

Wednesday, February 15, 2012

Beware of Zombie Debt Collection - February 15, 2012

    I saw a great article at about "Zombie Debt Collectors" and how you should beware of them.

     Have you have ever received a solicitation for payment of a long lost debt or a debt you don't recognize at all? If so, you have most likely been targeted as an unsuspecting victim of a Zombie Debt collector. How and why does this occur? Greed is the answer. Creditors stoop to new lows everyday with their aggressive, sometimes fraudulent collection practices. 
     Beware. In an attempt to maximize profits, some companies are buying very old debts and even though they can be: past the statute of limitations, never owed, owed by a deceased parent, previously paid in full, previously settled, or otherwise not legally collectible, they still make the attempt to collect. Collectors pay pennies on the dollar for these debts so for very little, they stand to make a very large profit. Sometimes what seems like a run-of-the-mill credit card offer is actually a guise to get you, the consumer, to sign yourself back on the hook for a portion or all of a Zombie Debt.     
     Consumers don't realize they are reanimating a Zombie Debt, as described in the very, very fine print of the new cardholder agreement and can now be sued for a balance which they were previously not legally responsible for. Consumers must be very careful and weary of creditors who try and circumvent the statute of limitations, it is important protection which is put there for a reason. If you feel that you have been a victim of this Zombie Debt collection practice, contact our office below to explore your options.

For more information on ways Bankruptcy can help rid you of new and old debt, contact The Law Office of Timothy C. Springer
See similar stories at, Beware of Zombie Debt Collectors, and
MoneyLand, Zombie Debt: A Real Life Horror Story.

Monday, February 13, 2012

Debt Consolidation/ Negotiation verses Bankruptcy, February 13, 2012

The concept of “Debt Negotiation” was created by creditors to keep you out of bankruptcy. However, the true intent (all the PR hype, notwithstanding) was to keep the creditors in control.

There are a few different methods to the debt negotiation approach. However, the usual is to have you sign up and then they tell you to stop making payments to your creditors. The reason for this is there is no reason for creditors to negotiate with them if you are making your payments on time.  You then make payments to the debt negotiation company. They take their fees off the top, and place the remainder in a trust account. When they have saved up a large sum they will then approach a creditor with an offer.

Example:  You have a credit card with XYZ Bank. You owe them $5000.00. The company has you stop making payments to XYZ and saves up the payments you make to the company. When you have say $2500 in the company’s trust account, THEN they go to XYZ and offer that amount to settle the debt. In the meantime XYZ has been hounding you constantly for a payment. There is NOTHING that says XYZ must deal with the negotiation company, and they are still looking to YOU to get paid. Maybe they’ll deal with the consolidation company, maybe they won’t. If they refuse, they can (and will) still call you. They can still sue you, and they often will. When you bring this concern up to the company they often shrug, and say “they simply will not deal with us, but we tried, so we earned our fee.”

In Chapter 13 you and your attorney create a repayment plan based upon your income, and what you can afford. What your payment is depends on your income. In nearly all cases the interest on unsecured debt stops. A Chapter 13 Plan is created and submitted to the court for approval. If your plan is confirmed, you’re done. Just make your payments to the Chapter 13 trustee, and they divide it up amongst the creditors. At the end of your plan, (in most cases) any balances owed on the unsecured debt are discharged, and you come out debt free. (Each case is different. An “experienced” bankruptcy attorney in your area can advise you how your case is likely to come out.)

In the Debt Negotiation model you make payments to that company. In Chapter 13 you make payments to the Trustee. Each divides it up amongst creditors. In debt negotiation, the creditors are in control. In Chapter 13, you and your attorney are in control and YOU ARE PROTECTED BY THE COURT. The creditors cannot refuse to negotiate.  They cannot call.  They cannot sue.  The creditors do not have much say in a 13, as long as your plan is reasonable.

In Chapter 13 you have the protection of the Bankruptcy Court. In debt Negotiation you have NO protections. That is the simple difference. At the very least, talk to an experienced bankruptcy attorney before making a decision about which direction to go.

Posted Originally on by Timothy C. Springer, Esq.

Did changing of the bankruptcy laws help cause the financial meltdown?

In 2005 the Congress passed a new law reforming bankruptcy protections. While arguably some changes were needed, the sweeping changes enacted have made the process much more difficult for the average person, who is already going through a difficult time.
At the time the media widely reported (falsely) that bankruptcy would no longer be available, and the average person would have to pay all their debts back. Believing this media blitz, the average person in 2006 thought they could not file and overall filings were down 80%. These same people were then taking the money that they would have used to pay their mortgages and gave it to the credit cards instead. As a result their mortgages went into default, foreclosures increased, and the U.S slid into a recession.

            The public became aware that Bankruptcy protection was still available, and filings increased to record proportions in 2009 to 2011. Filings seem to be slowing down, but are still high.

            The questions still remain though. If Congress had not made the safety net of bankruptcy so difficult in 2005, would the resulting recession have been this bad?

            Bankruptcy protection is still available in Fresno. If you have further questions, contact the The Law Office of Timothy Springer in Fresno, California.

Friday, February 10, 2012

Bankruptcy Questions Answered

Does Bankruptcy get rid of all debts?

Not necessarily. Some examples are alimony, child support, certain property settlement agreements in divorce, certain income tax liabilities, Department of Revenue sales tax liability, Internal Revenue Service pay roll tax liability or trust fund liability, and many student loans. Also, many debts created by fraud, embezzlement, or conversion can not be discharged. (An example of this would getting a large cash advance just before filing. That could be considered fraud.)

If I like a particular credit card, can I not list that company and keep the card?

You must list ALL debts that have a balance, because all creditors must be treated equally.

What if I pay a card off? Will they let me keep it?

We cannot speak for the creditors policies. However, our experience is if you pay off one thinking you will be able to keep it, the likelihood is the creditor will still cancel your account. Also, because creditors have to be treated equally, if you pay more than $600 within 90 days of filing the Trustee can and may make them give it back and disperse it to all creditors who file claims in your case.

Will I Be Able to Save my Home by Filing for Personal Bankruptcy?

One of the big benefits of declaring personal bankruptcy is this: from the moment your Chapter 7 or Chapter 13 bankruptcy is filed with the court, foreclosure actions against you must stop. The foreclosure can be held off while you catch up the payments. However, you must be able to show the court that you CAN make the regular payments from now on, plus an amount to catch up what you are behind to make it work. If you can not make the payments the lender will get relief from the bankruptcy fairley quickly.

Can I transfer my car, boat, collectibles, home, tools, etc. to another person to keep those items out of bankruptcy?

This is NEVER a good idea. Transferring property to keep it away from creditors, and out of the Bankruptcy can be considered fraud. The transfer can be reversed for 2 years under Bankruptcy Law, and 4 years under California's Fraudulent Transfer Act. It could also be considered a crime, and/or you could lose your discharge of the debt.

Are bounced checks dischargeable in bankruptcy?

Usually the DEBT is discharged. However, bouncing checks is a crime and bankruptcy does not keep you from being prosecuted if a criminal complaint is filed by the District Attorney.

Is there a difference between Chapter 7 and Chapter 13 as to what debts can be discharged?

Yes. (Example: It is sometimes possible to get rid of a second mortgage in Chapter 13, but not Chapter 7, depending on the facts) The details as to what can and cannot be in what chapters are more than can be easily listed here, and are specific to your case. If you want to know specifics call for a free consultation.

Will my credit union or bank close my bank accounts if I file bankruptcy?

Possibly. If a credit union loses money because of the Bankruptcy, they will likely cancel your membership. With some banks there is a risk, if you owe them money, they will clean out, or freeze your account when they find out you filed. The short answer is if you owe them money you should open an account somewhere else.

Will my bankruptcy affect a co-signer on the debt?

Yes. When the person co-signed they were guaranteeing the debt would be paid by them in the event you do not pay. If they do not file their own Bankruptcy the creditor can and will go after them. Sometimes, in Chapter 13 it is possible to protect them. Call for more information.

May my employer fire me for filing bankruptcy?

No. In Federal law is the anti-discrimination section of the Bankruptcy Code (11 U.S.C. § 525) that precludes a public or private employer from discriminating against any employee solely because he or she filed for bankruptcy. Employers almost always honor this section and there are normally remedies if they try to violate it.

How long does bankruptcy remain on my credit report and can I obtain credit before that time period runs?

A bankruptcy can be in your credit report for 10 years. However, this DOES NOT mean you do not have credit any for 10 years. How quickly you recover will be up to you. You have to rebuild your credit. The average debtor is usually back on track in 3 to 5 years. There are creditors that want to give you credit, because they make money giving you credit.

What is credit counseling and must I take it?

The new Bankruptcy law requires you to do 2 counseling sessions on debtor education. One session before you file, and one after. (Your ticket in and your ticket out) Both are done on the internet, and are not difficult. They can be completed at our office if you do not have internet access. Our office will help you get through them, and it is part of your total fee.

Does your fees include ALL THE FEES I will have to pay??

Yes. We charge one fee and it includes the attorney's fees, the filing fee for the court, the counseling, and credit reports. You may find cheaper prices quoted. However, when you get there you will likely find out it does not include the court filing fees, ($299 for Chapter 7). Then you will be told to go get your own counseling, (and pay for that yourself) then bring back the certificate. Also to go get your own credit report and bring that back to them.
We have no surprises later. Also, beware of "out of town" companies that quote low prices and make the service sound too good to be true. Ask yourself (logically) if a company 200 or more miles away is going to travel to Fresno to represent you in court. We HIGHLY RECOMMEND that you go to some Bankruptcy Court hearings. Then watch what happens to the poor people that made the mistake of hiring these out of town companies. A simple rule of thumb is if you cannot meet the individual you are hiring IN PERSON, and look them in the eye BEWARE!!

Chapter 7 FAQs.

How do I qualify for Chapter 7?

Your income is a factor that must be looked at. If you make too much money, (based upon a formula congress created in 2005) then you are not allowed to do Chapter 7. It is simply a fairness argument. If you can afford to pay SOMETHING (Based upon that formula mentioned) then they will not let you simply walk away from your debts. However that does not necessarily mean you have to pay ALL of it back. You pay back based upon the formula. Contact us for an appointment and we will help you figure out exactly what YOUR situation is, and what you qualify for.

What is a discharge?

A Chapter 7 discharge is an order signed by the bankruptcy judge which wipes out most unsecured debt. This keeps those creditors from attempting to collect the debt from you. You will normally receive your Discharge about 4 months after the Chapter 7 case is filed. There are some exceptions to discharge, (like most student loans). If you are not sure, ask us.

What is a Chapter 7 trustee?

The Trustee is the one who administers your case. It is their duty to look for things to sell and pay the creditors. However, most Chapter 7 cases do not have any property that can be taken and sold.

What is the meeting of creditors and what happens there?

The meeting of creditors is conducted by the Chapter 7 trustee. The debtor(s) are examined under oath concerning their assets and debts. It is the creditor's "opportunity" to question you while you are there and under oath. Creditors who choose to attend the meeting, either in person or through their attorney, can ask questions about the case. Normally creditors do not come. The average meeting of creditors lasts about three to five minutes and is held approximately 30 days after the Chapter 7 bankruptcy is filed. You MUST appear at the meeting of creditors. Your attorney will appear with you at the meeting.

Can creditors ask to have their debt held non-dischargeable?

Yes. Creditors have a right to complain if they believe there is a good reason. (Example: getting a large cash advance on a credit card the day before filing would likely be deemed non-dischargeable, and maybe even fraud)

What is a Reaffirmation Agreement?

If you are making payments on items, (like a car, furniture, computer) these are considered "secured" by that property. This simply means they can come and take it if you don't pay them. The new Bankruptcy law requires you to basically sign a new contract with the creditor you are making the installment payments to. This is called a "Reaffirmation Agreement". The problem with Reaffirmation Agreements is that you are putting yourself back on the hook for the full amount of the amount owed. Example: you owe $20,000.00 on a car that is now worth $10,000.00. If you reaffirm, and later can't make the payments, they would repossess the car and you will be on the hook for the remaining balance.
To avoid debt discharge in a bankruptcy action, mortgage companies and car, furniture, and appliance financers typically want the debtor to sign a document known as a Reaffirmation Agreement. Signing this agreement results in the debtor waiving his Chapter 7 discharge and agreeing to continue to make payments as called for by the original loan documents.
You should consult your attorney before making any decisions regarding reaffirmation.

What are exemptions?

The word exempt means: "released from, or not subject to, an obligation, liability, etc." (Ref: When you file Chapter 7 you are giving permission to the Trustee to sell things that you can NOT exempt. (Examples are: the new Jaguar that is paid for, the Lear jet, or the $10,000.00 antique hutch you inherited from grandma). For most debtors in California the exemptions cover everything, so there is nothing left for the Trustee to take and sell.
If you are concerned about your assets, and what CAN be exempted, call for an appointment with one of our attorneys to determine your rights.

What is redemption?

In Chapter 7, if an asset is exempt, it can be purchased from the creditor by paying what it is worth NOW in a lump sum (not payments). The balance of the debt will be discharged. An example would be a computer that has gone down in value at the time of bankruptcy to $700 and the balance of the debt owed on the computer is $2,000. The computer can be redeemed for $700 and the $1,300 difference is discharged. The process requires filing a motion with the court, and should be discussed with your attorney.

Can the trustee or a creditor object to my Chapter 7 discharge?

Yes. Objection to discharge comes under federal law. If someone with standing objects and the court sustains the objection, all of the debts owed by the debtor can never be discharged in bankruptcy. This issue generally comes into play where the debtor has transferred an asset within two years (or 4 years under California Law) of filing bankruptcy with the intent to hinder, delay or defraud creditors or hide it from the Chapter 7 trustee. This can also happen if the debtor is unable to explain a reduction in assets just prior to bankruptcy.
If you are concerned about this you should discuss it with a competent Bankruptcy Attorney prior to filing.

If the Trustee does take something, is it possible to buy it back?

The Trustee's job is to turn non-exempt property into cash, which is then distributed to the creditors that file claims. Normally a value will be placed upon the property, or can be negotiated with the Trustee. If you can come up with an amount that is reasonable it IS possible to buy the item back from the Trustee.

Can one spouse file for Chapter 7 bankruptcy without the other spouse filing?

Yes. Sometimes it is a good idea because one spouse can then maintain their good credit score. All of these possibilities can be explored in the initial consultation. When your ready, make an appointment.

What happens if I come into a lot of money after filing for a Chapter 7 bankruptcy?

If there is a windfall of income, (you win the lottery, or your rich uncle dies and leaves you his fortune) within 180 days of filing your case you MUST inform the Trustee and it may be made available to creditors. If you anticipate an inheritance in the near future, you should discuss the situation with your attorney.

If I filed a Chapter 7 in the past, how long before I am eligible to file another Chapter 7?

You can not file again and receive a discharge for 8 years and a day.

Chapter 13 FAQs

What is Chapter 13?

Chapter 13 is a repayment plan. However, it is based upon what you can afford, NOT what you owe in unsecured debt. Putting together a workable Plan can be very difficult, and you definitely want an attorney who is experienced building Chapter 13 Plans. Our office has built hundreds of plans over the years, and we can walk you through the process safely. Because the process of Chapter 13 is complex it is best to explain YOUR possibilities in person. Call today and we can schedule an appointment for a free consultation to see if Chapter 13 is right for you.

Why would I file Chapter 13 instead of Chapter 7?

If you qualify for Chapter 7 that would normally be the first choice. However, there can be some advantages to filing a Chapter 13.
If your house is in foreclosure and you file a Chapter 13 before the sale date it will keep them from going through with the sale, and we can hold them off from foreclosing while you catch up the payments. (However, to make this work you need to be able to make the regular payments from now on, plus some extra to catch up what you are behind.)
If your car was just repossessed, and you want to keep it, filing a Chapter 13 before the car is sold can get it back for you and hold them off while you catch up the payments.
If you have 2 or more loans on your home, and you owe more on the 1st mortgage than what the house is worth, it may be possible to strip off the 2nd mortgage.

Why would I not qualify for Chapter 7?

As explained above, if you make too much money you may not be able to do Chapter 7. However Chapter 13 may still be a possibility. Call for an appointment, and we will help you figure it out.

When is the first plan payment due, who do I pay it to, and how are the payments made?

The first payment is due on the 25th of the month following the month when the plan is filed. (Example: if you file between July 1 and July 31, your 1st payment will be due August 25, and all payments after that will be on the 25th of the following months.) The payment is made by cashiers check or money order, (No personal checks, or automatic withdrawal) payable to the Chapter 13 trustee. The debtor's name and case number must appear on the face of the check or money order. The payments are sent to a PO Box in Memphis, TN as instructed in a letter sent to the debtor by the Chapter 13 trustee at the beginning of the case.

Is it possible to obtain credit while I am making payments on my Chapter 13 plan?

You must obtain permission from the Chapter 13 trustee and/or the court to incur new debt while you are in a Chapter 13 bankruptcy. It requires a Motion to get the trustee or the court to approve new credit until the plan is confirmed, which normally occurs two to three months after the case is filed. To get this Motion approved you will need a really good reason, (Like your car broke down, and you need a new one.) The counter argument is "If you have extra money to make an extra payment with, why are you not giving that to your creditors?"

Can the trustee or a creditor object to confirmation of a Chapter 13 Plan?

Yes. It is the trustee's responsibility to object to Chapter 13 plans that are deficient. A creditor may also object, but generally most objections will come from the Chapter 13 trustee. Most objections are worked out or resolved prior to the confirmation hearing but occasionally the judge will have to decide.

Can only one spouse file a Chapter 13 and stop foreclosure on a house owned by both spouses?

Yes. This occurs, but is not often recomended. If one spouse does not need to be in bankruptcy other than for the foreclosure, then that particular spouse can be left out of the bankruptcy.

What effect will a Chapter 13 have on a co-debtor who does not file bankruptcy?

The Chapter 13 may show-up on the non-filing co-debtors credit bureau report alongside of that particular debt. It won't show in the public records section, because they did not file. The creditor may still be able to proceed against the co-signer.

What is the co-debtor stay?

If the joint debt is a consumer debt and the plan proposes to pay the debt in full, the creditor is blocked by the Chapter 13 filing from taking collection action against the non-filing co-debtor.

What happens if I inherit something during the three to five years that I am paying creditors under my Chapter 13 plan?

The inheritance must be turned over to the Chapter 13 trustee to be distributed to the unsecured creditors, depending upon claims filed. If there is a possibility of this happening, you need to discuss the matter with us. Some or all of it may be exemptible.

If my Chapter 13 does not work, can I convert the case to a Chapter 7?

Yes. A Chapter 13 plan can be amended if changes in your financial affairs occur. However, sometimes it is possible to simply convert it to a Chapter 7. You should talk to us to explore the best options.

What if I previously filed a Chapter 13 but my case was dismissed? May I file another Chapter 13?

Yes, but it has many pitfalls, and should not be done lightly. Several technical things need to be done to keep the new one alive, and hold off the creditors. If you need to file a new case, call us and we will go over it with you. 
Originally Posted by:

The Law Office of Timothy C. Springer