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 » ]]>

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 lot of sense for both parties to file for bankruptcy. As long as you are still married to your spouse, you can file for joint bankruptcy. This will generally mean less attorney fees as only one petition needs to be prepared and filed. Divorce is painful enough as is and the goal should be to come out on the other side with little damage as possible, both financially and emotionally.

Regardless of whether the bankruptcy is filed before or after the divorce, support obligations, such alimony and child support cannot be discharged in bankruptcy.

Disclaimer: Unfortunately, it is impossible to give legal advice over the internet, no matter how well researched or written. Before relying on any information I give, contact a lawyer to discuss your particular situation. I am a San Francisco bankruptcy attorney. The information given is based on California law.

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.

I came across an excellent article by a fellow Charleston Bankruptcy Lawyer. Russell DeMott, which addresses the impact of bankruptcy on credit report. If you are concerned about impact of bankruptcy on your credit report, consider the following:

Your Credit Rating is Already Screwed Up!

My answer to this question is usually the same: “you already have bad credit.”  The vast majority of clients who see me are delinquent on their debts.  This, of course, is why they came to me in the first place.  They have 30 day lates, 60s, 90s, lawsuits, judgments, and everything in between.

Having debts problems is like a tumor, though.  You get rid of it two different ways: (1) you pay off the debt–and that’s not an option much of the time, or (2) you file bankruptcy and discharge it.  If you do nothing, the tumor just grows and grows.  Continue Reading » ]]> Written by San Francisco Bankruptcy Lawyer, Jeena Cho

I came across an excellent article by a fellow Charleston Bankruptcy Lawyer. Russell DeMott, which addresses the impact of bankruptcy on credit report. If you are concerned about impact of bankruptcy on your credit report, consider the following:

Your Credit Rating is Already Screwed Up!

My answer to this question is usually the same: “you already have bad credit.”  The vast majority of clients who see me are delinquent on their debts.  This, of course, is why they came to me in the first place.  They have 30 day lates, 60s, 90s, lawsuits, judgments, and everything in between.

Having debts problems is like a tumor, though.  You get rid of it two different ways: (1) you pay off the debt–and that’s not an option much of the time, or (2) you file bankruptcy and discharge it.  If you do nothing, the tumor just grows and grows.  Cutting it out allows you to heal.  It allows a fresh start. And remember, for some of you your good credit rating got you into the mess you’re in.  It allowed you to obtain too many loans, too many credit cards, insanely high credit limits, and to get just plain overextended.  It was the financial industry’s idiotic blind faith in the almighty credit score at work.  In case you didn’t know, your credit score doesn’t take into account your income or your assets.  Those used to be pretty important for bankers.   But those times are long gone.  Actually analyzing a client’s entire financial picture would take too much work and require someone to actually think.  So we have “thescore.” No thinking.  It’s like magic.  And that’s likely why some of you fret about the score too much.

Oftentimes, it’s not unusual for my clients to report a big bump in their credit score approximately 12 months after filing for bankruptcy. Why? Because of debt to income ratio.

Okay, okay.  But How Long Will it Be Before I Have a Good Credit Rating?

Fair question.  After all, you want to be able to refinance your house, buy a new house, or finance a car.  For mortgage loans, the bankruptcy will “screw up” your chances at getting a mortgage for two to three years, depending on whether you do a conventional mortgage or an FHA mortgage.  Interestingly, foreclosure is far worse than bankruptcy for your mortgage chances.  Foreclosure screws you up for four years.  So the damage caused by bankruptcy is not forever.  And bankruptcy is better than doing nothing and allowing a foreclosure to happen.

This holds true for auto loans as well.  In fact, you’ll be able to get an auto loan right after your bankruptcy is completed; you’ll just pay a high interest rate. No worries.  The world is awash in used cars, and you’ll get a loan for one.  If you must take this route, just don’t get an expensive car.  Keep it at about $10,000 or less.

Most importantly, consider the fact that once you no longer have debt, you will be able to save and pay CASH for the things you purchase. That’s right. Cash. I practice what I preach and I made a decision to only buy what I have money for in my bank account. Not based on what I can borrow.

As Russ says…

The real issue is whether or not you can get through your financial problems without filing bankruptcy.  If not, bankruptcy is your only option.  If, on the other hand, you can avoid bankruptcy, you should.  But in either case your credit will recover.  You won’t be in financial purgatory forever.

If you need to file bankruptcy, worrying about your credit rating is senseless.  If it’s not already bad, it probably will be very soon, whether or not you file bankruptcy.  The concern should be solving your financial problems.  And bankruptcy helps lots of people do that every day.

There may be some relief coming to those with overwhelming private student loan. Rep. Steve Cohen, D-Tenn., recently held a hearing on legislation (H.R. 5043) he authored that would allow for the discharge of privately issued student loans. He said interest rates and fees on private student loans can be 15% or more. Such interest rate can exceed that of credit cards. Many student loan companies prey on students too young to understand the consequences of taking out huge student loans. They are often misled to believe it would not be a problem to repay such loans because everyone with a degree can make 6 figure income.

This would be welcomed news should it pass (but I’m not getting my hopes up yet).

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

Written by San Francisco Bankruptcy Lawyer, Jeena Cho

Can bankruptcy help with student loans? – This is a frequent question I get and a common situation. Most unsecured debts such as credit cards are dischargeable through bankruptcy. However, student loans, both federal and private have an immunity card. In general, student loans will not be discharged after bankruptcy. So, what should you do if you have too much student loans and do not have any realistic hope of ever repaying? There are a few options to consider.

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

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 debt was obtained for a non-consumer purpose (e.g., business purpose), you are not subject to the means test. This is particularly useful for those business owners who either has another high paying job or has a spouse with a high paying job.

As for the business assets, we would exempt those assets, hence being able to continue operation of the business after bankruptcy. Sometimes, it may be advantageous to incorporate the business as well.

Example #2. Let’s assume the same facts as above but that the business has a liquidation value of $60,000. In this situation, Chapter 13 may be an appropriate solution. In a Chapter 13, you would repay some of the debt. One of the common misconception about Chapter 13 is that you would have to repay all of your debt. Not true. The amount of your Chapter 13 is determined by the greater of the “liquidation analysis” or “disposable income.”

Liquidation analysis would be the portion of your assets that we could not exempt. In Example #2, the business owner would have to repay the unexempt portion of his business assets. The Wild Card exemption in California is approximately $23,000. Hence, leaving $37,000 of his business assets unprotected. That’s the amount which would have to be repaid in a Chapter 13 ($37,000/60 = $617/mo). (This is a very simplistic explanation because certain deductions are also made such as hypothetical trustee commission, cost of sale, taxes, etc.)

Disposable income test is a long calculation based on the Means Test where we take your gross income and make certain adjustments (e.g., taxes, medical expenses, health insurance, term life insurance, mortgage payments, etc.) At the end of the equation, whatever amount is left over would be paid to the Trustee for either 3 or 5 years.

In either Chapter 7 or a Chapter 13, at the conclusion of the case most of the debts (including credit card debts, SBA loans, and other business related debts) would be discharged, leaving you and the business free to continue to operate the business.

In the next article, I will address special consideration for businesses that are incorporated.

If you have a struggling small business, please call us for a consultation at (415) 963-4004.

Disclaimer: Unfortunately, it is impossible to give legal advice over the internet, no matter how well researched or written. Before relying on any information I give, contact a lawyer to discuss your particular situation. I am a San Francisco bankruptcy attorney. The information given is based on California law.

Let’s take

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

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 different options to deal with your debt including debt settlement and bankruptcy.

Our goal is to educate you with the options available.  One of the most frequent comment I get at the end of a consultation is “I feel so much better” or “I should have come in a long time ago.” We hope to do the same through these workshops.

For more information or to register, go to http://www.jclawgroup.com/workshop/

Every bankruptcy case involves the 341 meeting of creditors.  This is where the trustee swears a debtor under oath and examines him or her about assets and representations made in the bankruptcy petition. Recently my client and I were sitting next to each other waiting for the trustee to call the next group of five debtors to be examined under oath at the 341 meeting of creditors.  An attorney walked in and asked the trustee if he could jump the line and have his case heard first because he had a hearing he needed to get to.  The trustee being her usual accommodating self said, “Sure.  What’s your client’s name?”  The attorney furled his brow and responded, “I don’t know.”  He then started rummaging through his papers.

My client leaned over to me and whispered “I’m glad he’s not my attorney.  I would Continue Reading » ]]> By Jeff Curl

Every bankruptcy case involves the 341 meeting of creditors.  This is where the trustee swears a debtor under oath and examines him or her about assets and representations made in the bankruptcy petition. Recently my client and I were sitting next to each other waiting for the trustee to call the next group of five debtors to be examined under oath at the 341 meeting of creditors.  An attorney walked in and asked the trustee if he could jump the line and have his case heard first because he had a hearing he needed to get to.  The trustee being her usual accommodating self said, “Sure.  What’s your client’s name?”  The attorney furled his brow and responded, “I don’t know.”  He then started rummaging through his papers.

My client leaned over to me and whispered “I’m glad he’s not my attorney.  I would fire his ass.”  He’s a candid person.

Generally, the 341 meeting of creditors gives my clients the most anxiety in the bankruptcy process.   It is at that moment that a client wants their attorney to be there.  For those few who decided to file without an attorney, it is when they regret going without counsel.  Often the attorney can quickly clarify an issue and diffuse the situation or protect the client if needed.

At these hearings, I always watch my colleagues for the little details.  For example, at the hearing the trustee will ask me to announce my appearance.  I say, “Jeff Curl appearing on behalf of John Smith.”  Many attorneys say, “Attorney so-and-so appearing on behalf of debtor.”  It’s apparent that some refer to their client as “debtor” because they do not appear to even know their client’s name.  Or some are coverage attorneys; they never handled this person’s case, but were sent to cover the hearing.  Given that this hearing can make or break a case, this casualness surrounding the 341 meeting of creditors is a little alarming.

There are some high volume attorneys that get a lot of clients through spending gobs of money on advertising.  That’s great from a business perspective.  But if the quality of counsel and advocacy by the attorney is subservient to the mighty dollar, something is wrong. 

If the attorney does not even know your name, how well do you think he or she knows your case?

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: 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 the necessary. There was barely enough money for her and her son, never mind any of the credit card debt. She certainly could not afford to lose 25% of her paycheck to wage garnishment.

At 50, she had not saved a dime towards retirement, or any money for her son’s college education. She had spent the last 5 years making monthly minimum credit card payments of $500 (which has now increased to $1,200). Barring some miracle such as winning the lotto, I did not see how she was ever going to pay off her $100k in credit card debt. Still, she resisted.

Don’t get me wrong. Bankruptcy is a big decision and it should be the last resort. However, it’s one thing to have an exit strategy where you are working towards being debt free vs. living in denial knowing there is no exit strategy. If at the end of the day, you have no exit strategy, and bankruptcy is inevitable, there are definite do’s and dont’s you need to be aware of.

My #1 advice to anyone struggling with overwhelming debt is to assess your situation now. Ask yourself:

• If I continue my current path, can I get out of debt?
• What will it take for me to get out of debt?
• How long am I willing to struggle with my debt?
• What is my 3 year plan? My 5 year plan? What will it take to get there?

You may want to consult with a financial advisor to assess your financial situation.

If you want to discuss the possibility of bankruptcy, call us. (415) 963-4004. Read more about our first meeting here.