Written by San Francisco Bankruptcy Lawyer, Jeena Cho

In this economy, when couples are contemplating divorces, they are not fighting over who’s going to get the silverware, but who is going to pay the marital debt. Frequently, there are no assets to distribute in divorce – only debt. Divorces are of course expensive. It’s costly not just in terms of having to pay for two attorneys, but the emotional toll as well. Just this week, I met with a client who had racked up over $30,000 in attorney fees all in an effort to take on as little of the marital debt as possible. Now she is contemplating bankruptcy to get rid of the attorney fees.

So, is it smart to contemplate bankruptcy before the divorce? If you are on amicable terms with your soon-to-be ex spouse and the only issue is how the debt will be divided, it may make a Continue Reading »

By: Jeena Cho, Bankruptcy Lawyer

When you hire a bankruptcy lawyer, you are not just hiring someone to fill out the bankruptcy forms. If you wanted someone to simply fill out the forms, you can hire a document preparer for a couple hundred dollars. What you are paying for is the attorney’s knowledge about the bankruptcy law.

So, what goes into planning for a bankruptcy? Why hire an attorney for your bankruptcy?

Here are few items to consider.

Timing. As with most things in life, timing is everything. Many potential problems with bankruptcy can be avoided by properly timing the bankruptcy. Just as an example, I review my client’s most recent credit card statements to see if there are any red flag items. If there is, I may recommend waiting.
Exemption. Exemption govern the property you can keep through bankruptcy. If you have “non-exempt” property, we may consider Chapter 13 to keep those Continue Reading »

What really happens to you when you file for bankruptcy? What do you have to do? How do you survive afterward?

Four real people, Michael, Robert, Robin and Andrew, shared their experiences going through bankruptcy. (Only Robert allowed us to use his real name.)

Robert Nickell, a pharmacist and chairman of the Nickell Group, filed for bankruptcy in 1999, when he was 39. He lost his business, a pharmacy in Manhattan Beach, Calif., after accumulating more than $600,000 in debt then going through a protracted divorce.

Robin, 31, thought she was covered by health insurance when she spent a week in the hospital after a car accident. She was mistaken. She was already in debt from starting a freelance copy-editing business; with the hospital bill, her debts topped $65,000. Then she lost her job. That was the last straw.

Michael practiced medicine in Oregon for 45 years. He filed for bankruptcy at age 72, Continue Reading »

By: Jeena Cho

Living in the Bay Area, I have many clients who are business owners. Oftentimes, these small businesses are heavily in debt and have little or no hope of survival unless it can shed its debts. What most small business owners do not realize is that bankruptcy may actually be a beginning rather then an end.

Let’s take two simple examples.

Example #1. You operate a business as a sole proprietorship. There is $20,000 of business assets and $150,000 of debts related to the business. In addition, the you have $50,000 of personal credit card debt.

Assuming the owner does not have significant amount of personal assets or other non-exempt assets, s/he can qualify for Chapter 7 bankruptcy regardless of his or her income. The business owner would qualify for Chapter 7 as a non-consumer case. The rule is that if more than 51% of your total Continue Reading »

By: Jeena Cho

As a society, there are two things we don’t talk about. Death & Debt. Frequently, when people are experiencing financial distress, they go into denial mode. Instead of assessing their situation and tacking the problem, they deny thinking something will change. Of course, debt problems do not get better without proactive action. It gets worse. Interest rates continue to rise, you borrow from Peter to pay Paul.

If you are experiencing financial trouble, you should seek help. Go see a financial advisor, reach out and ask a friend or a family member. You will soon find that you are not alone in your problems.

For those of you that do not see any hope of being able to reduce your debt, we are offering a free seminar. If you do not want to attend in person, you can attend on the Web. It’s totally confidential. We’ll discuss the Continue Reading »

By: Jeena Cho

One of the most frequent questions people ask me at the consultation is “do you think I should file for bankruptcy?” Of course, being a lawyer, I can’t ever give a simple “yes” or “no” answer (this is taught first day in law school). My answer is usually “if you don’t file for bankruptcy, what other options are there?” I think the question isn’t “should I file” but really “can I afford not to?”

Just last week, I met with a client who had 4 lawsuits against her. She came in for debt settlement advice. She was adamant about not filing for bankruptcy. When I asked her how much money she had in the bank account, she answered “few hundred dollars.” She also had no other source of funds to tap into. From where I was sitting, she was simply delaying the inevitable and avoiding Continue Reading »

By Jeff Curl

With the continuing economic turbulence, underwater properties and struggles to keep homes show no signs of slowing.    As of May 2010, California had 412,605 foreclosure sales on the market.  Judging by the clients walking through the doors, it’s not getting better anytime soon.

My job is to help clients keep their homes and belongings, and get rid of the debt.  For clients with homes, I have lost count of how many clients that are attempting to obtain a loan modification.  Many have given up by the time they get to me.  After Bank of America or Wells Fargo loses their paperwork for the fifth time, they just can’t go through the process again.  Or my favorite is where the bank gives the homeowner a “trial period” where the homeowner pays the agreed amount in a Continue Reading »

By Jeff Curl

I have seen my fair share of clients that spent many hours researching bankruptcy before coming in for a consultation.  They come across the numerous articles and blogs about something called the “means test.”  Sometimes they even find online means test calculators where they attempt to plug in their own numbers, but they are not sure if they did it right. 

Let me stop you right there.  I was at a conference recently where I sat in a room with over 1,000 other bankruptcy attorneys.  Judges, trustees and experienced attorneys discussed (and disagreed about) the means test for several hours.  It’s far more complicated than it looks.  The laws constantly change as to what can be deducted as an expense, and what must count as income.  Moreover, local custom and practice varies greatly.  Doing your own online calculation may Continue Reading »

By Jeff Curl

Occasionally I get the call from a client that forgot to list a creditor in his or her bankruptcy.  They received the discharge, but want to know if they are now responsible for the omitted debt.  This raises a few issues.

Was the Debt Dischargeable?

It first depends upon the type of debt.  Debts in bankruptcy are either dischargeable (you can get rid of it) or nondischargeable (you’re stuck with it).  Typical dischargeable debts include medical bills and credit cards.  Typical nondischargeable debts include student loans, child support and recent taxes.  If the debt omitted was something you could not discharge in the first place like student loans, you are stuck with it no matter what.

Was it a Chapter 7 “No Asset” Case?

But what if it was dischargeable?  What if you forgot about the $8,000 credit card you have not used for a year or two?  Continue Reading »

By: Jeena Cho

The Means Test was a new rule passed with the 2005 Bankruptcy Amendment requiring that all above median debtors complete and “pass” the test. It was supposed to prevent abuse of the bankruptcy system by making it more difficult for people to qualify and file Chapter 7 bankruptcy. The principal idea being if you make above the median income for your state, you should be required to repay some of your debt in a Chapter 13 bankruptcy.

For a single person without dependents (household of 1), the median income in California is $47,969. Everything is obviously much more expensive in the Bay Area and many people make much more than the median income. Now, you may be thinking to yourself, I make more than that so I have to file for Chapter 13 bankruptcy. Well, not always. If you make above the median income, it just means Continue Reading »