Sacramento Bankruptcy Attorneys Blog

Unemployed Sacramento residents facing possible foreclosure or Chapter 7 or Chapter 13 bankruptcy may be glad to know that the California Housing Finance Agency has finally decided to start the application process that will give unemployed homeowners up to $3,000 per month to pay their housing mortgages according to an article published in SFGate.

California has decided to implement the first of four programs launched by the United States Treasury as part of the Hardest Hit Fund. This fund consists of $7.6 billion that will provide the 18 hardest hit states with the largest drops in housing prices or high unemployment rates.

In order to qualify, a homeowner must meet specific eligibility requirements that are based on age as well as income restrictions. Additionally, the individual homeowner's loan servicer must agree to participate in the federally funded program. Unfortunately, only three mortgage loan servicing companies had decided to join the program, but CalHFA plans to more than double that number over the upcoming week.

California intends to implement three other programs under the name "Keep Your Home California," which will: give up to $15,000 to homeowners who have fallen behind on their mortgage payments, provide borrowers with up to $50,000 to reduce principal balances who owe more money than what their homes are worth, provide homeowners with up to $5,000 in transition assistance who give up their homes in connection with deed-in-lieu of foreclosure or a short sale. Homeowners may qualify for more than one program but are not eligible for more than $50,000 in total assistance.

While CAlHFA had planned to begin these programs last Fall, the process was delayed since the programs require the participation of loan servicers. Unfortunately, assistance from the corporate servicers has been difficult to achieve even though the lenders have something to gain from these programs as well.

These assistance programs are structured as a non-recourse, non-interest-bearing lien against the homeowners property which will be forgiven after three years. If the homeowner defaults on his or her payments then the homeowner would risk having to repay the loan. As of Friday, only Chase, CalVet and CalHFA have signed up for the unemployment assistance program.

As a Sacramento Bankruptcy Attorney I am pleased to inform individuals about the existence of these sorts of public assistance programs. Numerous people may benefit from the assistance offered and should explore these as well as the other options available to them in order to get through these difficult financial times. If you or someone you know is facing possible foreclosure you may be eligible for one of these programs. It is important to get informed and contact an individual who may be familiar with the many options available for debt relief.

As a lawyer who represents people interested filing Chapter 7 or Chapter 13 Bankruptcy in the Sacramento Metropolitan area I am often frustrated by the misinformation individuals receive surrounding the bankruptcy process. While bankruptcy remains a complicated legal matter and, as such, can be an unsettling consideration for just about any individual. I find that few people take it upon himself or herself to become better informed about the bankruptcy process from the numerous individuals who have previously sought relief under the Bankruptcy Code.

Peoples' general lack of information about the bankruptcy process has created a stigma for many individuals which causes unnecessary anxiety and other problems for individuals who may be experiencing financial turmoil. As the Philadelphia Inquirer noted on December 26, 2010 life after bankruptcy is not the "financial desert" many individuals fear is a result of filing for Chapter 7 or Chapter 13. As a matter of fact, paranoia created due to this unrealistic fear of turning to the bankruptcy code for financial relief has drained too many individual's assets that could have been preserved had the individual consulted with an attorney sooner rather than later in the process. Furthermore, individuals plagued with incessant calls from angry creditors could again return to times where they were unafraid to answer the telephone without fear of having to deal with annoying or harassing calls regarding unpaid debts.

While filing for bankruptcy is not free of long term consequences, in that the filing becomes a matter of public record that can stay on your credit report for a number of years, these consequences are often times softened compared to the combination of potential benefits a bankruptcy filing can have on an individual's economic circumstances. Few people take into account that many people begin to receive offers for the extension of credit within a year after filing for bankruptcy (although these offers are often for minimal amounts and on bad terms for a borrower). There are studies which show that Debtors have been able to get home loans within two years of being discharged from their previous debts. This of course presumes that those individuals have taken the time to reestablish themselves financially.

On the other hand, the consequence of waiting too long to file for bankruptcy after a person has begun to consider the idea can be drastic. Often times an individual begins to liquidate his or her retirement assets in order to pay debts that could have otherwise been discharged and at the same time protect their retirement accounts. The decision to delay a bankruptcy filing also denies the debtor the protections offered by the automatic stay, which halts wage garnishment, eviction, foreclosure, car repossession, and other lawsuits. This halt can give a debtor enough time to regain his or her composure and figure out the best way to proceed financially.

In my practice as a Sacramento Bankruptcy Attorney I always encourage individuals experiencing financial distress to look at their economic outlook from a detached and objective standpoint as difficult as it may be. While it may be easier to ignore the financial problems looming against you, the lack of decision can lead to more problems in the future. Some individuals may be better equipped to use non bankruptcy alternatives to deal with the financial problems facing them. However, that determination remains a difficult decision to make without an attorney able to give his professional opinion on the matter.

The decision to file for either Chapter 7 or Chapter 13 is a big one. This decision is one that requires substantial consideration and expertise. One of the most significant aspects of my work as a Sacramento Bankruptcy Attorney is to advise Sacramento area residents as to whether bankruptcy is a viable decision for him/her to begin with. Many individuals who schedule a consultation with my office are anxious to avoid filing Chapter 7 or Chapter 13 and come to my office in an attempt to explore the options available to them. In some cases, potential clients have specific matters that need to be addressed under their economic circumstances.

The first thing a person considering bankruptcy needs to take into account is the amount of debt the person has looming over his/her shoulders. Chapter 7 or Chapter 13 is really not a wise step to take if your debt to income ratio or debt to assets ratio are relatively low. The Bankruptcy code was revised in 2005, making it more difficult for a person to qualify for Chapter 7 in the first place. Thus, this question of whether bankruptcy can provide a solution to the debtor is often resolved by a simple mathematical equation. If an individual qualifies for Bankruptcy under the revised code, then there is a high probability that the individual has a high debt to income ratio which can be resolved by filing.

A simple way to calculate this ratio is for a person to examine his/her monthly expenses for all your necessary monthly obligations. This means the debtor needs to compile his/her monthly payments for things such as housing, vehicle, and living expenses. Do not include payments for credit cards or other nonessential expenses. Next, the debtor must compare that number with his monthly income. As a general rule, if the debtor cannot pay off his outstanding debts with the balance of his income that exceeds the necessary monthly expenses, over a three year period, bankruptcy may be a good option.

Sacramento residents considering bankruptcy must also remember that Chapter 7 or Chapter 13 is not a solution for every type of debt. Certain debts are not dischargeable under the bankruptcy code. For example, a debt incurred through fraud, debts for child or spousal support, taxes, criminal fines or penalties, and most student loans cannot be erased. If a person is saddled with these types of debts then bankruptcy may help to the extent that any unsecured debt becomes eliminated and permits the debtor to use his income to pay those outstanding obligations instead of the other debt.

The decision to file bankruptcy is not only complicated but requires some degree of strategic planning. This is why a person should always seek legal counsel when making the decision to file Chapter 7 or Chapter 13. As a Sacramento Bankruptcy Attorney I am prepared to offer legal options beyond traditional bankruptcy to individual's struggling with burdensome debt or in otherwise financial distress. Whether a person wants to negotiate a debt settlement plan or defend against a foreclosure action I always recommend taking the time to schedule a consultation to explore the best available options.

Sacramento area homeowners facing foreclosure may be able to save their homes by filing Chapter 7 or Chapter 13 bankruptcy. CNNMONEY.com posted an article by Les Christies today regarding the impact filing for bankruptcy may have on an individual seeking to save his or her home from foreclosure.

There is no question that filing for bankruptcy can stop foreclosure proceedings and eliminate harassing phone calls from debt collectors temporarily. The question, however, posed by many of my clients is "Can bankruptcy save my house?" My answer to this question is "it depends." The biggest factor that determines whether a debtor can stay in his or her house is his or her ability to continue making payments on the mortgage.

Chapter 7 bankruptcy eliminates all unsecured debt and eliminates any personal liability on those debts. However, when an individual has his/her debt secured by something like a house or a car the lender has the right to foreclose on that property if the borrower fails to make payments. Thus, if one of my clients does not have enough income to continue making the payments on his or her house a bankruptcy will not save the house from foreclosure. In this scenario, all the bankruptcy will provide the debtor is extra time until the house is ultimately sold by the lender.

On the other hand, if a person is in the position to free up additional monies by eliminating his unsecured debt, which allow the debtor to make the mortgage payments, then the bankruptcy will in fact save the debtor from foreclosure. For example, let's say a person has $1500 of income every month and has a $900 mortgage payment along with $400 in monthly expenses in addition to $30,000 in unsecured debt that has minimum payments of $300 every month. In this case the debtor's liabilities exceed his income by $100 every month. This is when people caught in this situation begin to fall behind or their credit card and mortgage payments. The debtor who finds himself with this problem has several options to remedy the situation; mainly, he or she can either increase his income or decrease his monthly expenses to break even.

Unfortunately, many people can't make ends meet due to multiple factors and this is where the bankruptcy comes in to play. If the debtor in the above described situation were to file for Chapter 7 he would eliminate the $300 minimum payments in the unsecured debt every month upon receiving his or her discharge. This would therefore place the debtor in a situation where he has $200 extra a month and can be in a position to pay his mortgage and continue to make the monthly expenses payments. Thus, one of the solutions to the debtor's financial problems, in this situation, is the bankruptcy.

Of course, the decision to file bankruptcy is an extremely important decision and has multiple consequences that must be taken into consideration before you determine that Chapter 7 or Chapter 13 is the best option for you. This is why I suggest that you contact a Sacramento Bankruptcy Attorney who is familiar with these concepts and possible impact that the filing may have on your independent situation.

One of the big changes to the Bankruptcy Code implemented in 2005 by the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) is the requirement for debtors to attend mandatory credit counseling before filing the bankruptcy petition and to complete a financial education course before receiving their discharge. This law affects all Sacramento Area residents who have considered filing for Chapter 7 or Chapter 13 bankruptcy and serves as an absolute bar to discharge if not complied with.

Critics of this requirement argue that the mandatory classes add needless barriers to discharge, are condescending, and put debtors who may be experiencing economic distress through no fault of his or her own, like those who have been laid-off or incurred substantial medical debts, in the same category as those who are unable to manage their financial affairs. Supporters of the mandatory classes mark the educational value these courses provide to a debtor. To evaluate whether these mandatory classes warrant any justification, the University of Illinois along with Money Management International (MMI), the largest nonprofit, full-service credit-counseling agency launched a multiphase study that "tracks debtors through the entire bankruptcy process...to assess the long-term educational requirements on their overall financial well-being."

Preliminary results of the study, published today by the University of Illinois, indicate that 99 percent of debtors noted improvements in their attitudes, behavioral intentions, and financial knowledge after taking the mandatory 60-90 minute pre-filing counseling course. The pre-filing classes focus on rudimentary personal finance concepts that assist a debtor look for ways to cut expenses or increase their income in order to improve their economic situation. The study also noted that numerous factors exist which play into an individual's decision to file for bankruptcy. These initial results show that the mandatory classes may be a legitimate way to help debtors deal with their finances and obtain a fresh start after bankruptcy.

In my experience, an individual's decision to file Chapter 7 or Chapter 13 is made after intense deliberation and internal frustration. This is why I ordinarily do not support a requirement that creates an additional element to the filing process that makes it more difficult than it should be. However, as a Sacramento Bankruptcy Attorney, I am elated to see that multiple avenues exist to improve the financial status of my clients after they have decided to file for bankruptcy. While I may not support the administrative requirements imposed by BAPCPA, I am happy to see that these hurdles may wind up serving a purpose that actually improves the long term financial prospects of a debtor.

The Law Offices of Matthew D. Roy is a bankruptcy law firm located in downtown Sacramento. We serve couples and individuals seeking protection through Chapter 7, Chapter 13, or other types of bankruptcy. We offer free, confidential consultations, so you have no risk taking the time to call us and discuss your financial situation. To set up a consultation, send us an e-mail or call 1-916-361-6028.

Sacramento area residents who consult my law firm often have questions regarding their rights with regard to creditors who contact them once they have become delinquent paying their credit card bills or home mortgages. This situation often times becomes extremely frustrating or frightening for a person already under significant amount of stress due to his or her turbulent financial situation.

Once a debtor falls behind on his or her credit bills a creditor can become particularly bothersome. In fact, often times, the creditor becomes downright obnoxious. These measures are typically an attempt by the creditor to shame or persuade a debtor into paying the balances owed or make a last ditch effort to recover some portion of the debt. I have heard numerous horror stories regarding the extreme and sometimes outrageous behavior creditors have taken in order to "persuade" a debtor to pay. This sort of conduct by creditors is shameful. Fortunately, California law provides that a creditor's outrageous conduct can be stopped! However, in order for a debtor to silence the aggressive debt collector, one must have a grasp of the creditor harassment law that applies to him or her in California.

Both federal and state law protects individual debtors from a creditor's harassment. This includes both methods and conduct employed by the creditor against a debtor. The National Fair Debt Collections Practices Acts (NFDCPA) is the federal standard that limits the measures a creditor may engage in to collect a debt owed to them. California's counterpart is referred to as the Rosenthal Act and is laid out in California Civil Code § 1788.

California's creditor harassment law states specifically that creditors cannot repeatedly call you just to make your phone ring to annoy you; they cannot be obscene or profane; they cannot threaten the use of physical violence; creditors cannot say or imply that failure to pay a debt is criminal (except for the extreme case where it would be true, such as if you committed fraud, for instance; but not paying a typical debt is in no way criminal); or refuse to tell you who they are collecting on behalf of (i.e., which credit company is their client); nor can they pretend to be a lawyer; there are lots of things that the law prevents a creditor from doing to collect the debt. This law was specifically designed to help people just like you and me.

There are particular measures you can take as a debtor to take advantage of the California creditor harassment law and NFDCPA. Both laws permit you to substitute a lawyer in your place, so that all attempts made by a creditor to contact you must be made to your attorney instead. If you are receiving harassing phone calls from a creditor and interested in obtaining relief from the chaos the creditor attempts to create, you should call a Sacramento Bankruptcy Attorney who is familiar with the tactics employed by creditors and has experience dealing with preventing the harassment. Of course, your attorney will be able to remind the creditor of the elements of NFDCPA and the Rosenthal Act and demand that the creditor discontinue contact. This should provide you with enough breathing room so that you will no longer be afraid to answer your own phone.