Digital Money Is An Asset That Must Be Disclosed In Bankruptcy

By Kelly M. Resnick, Resnick Law Offices, Bay Area (Oakland and Newark/Fremont office locations)

According to Fox News, AB 129 was just signed into law by Governor Brown. This law now legalizes so-called ‘Digital’ currencies as a medium of exchange in California.  Originally introduced by Assemblyman Roger Dickinson (D-Sacramento), the new law recognizes the changing landscape of consumer transactions.  Bit Coins, Amazon Coins, Starbucks Stars and other ‘crypto-currencies’ are now legal units of tender for certain debts within the state borders.  According to the Bitcoin Price Index, the price of a Bitcoin shot up from $591 on Friday, June 27 to $615 on Monday, June 30.

In response to this news, Bankruptcy Trustee’s are now directly asking the Debtor if he or she owns any of these currencies when the case was filed.  We can still use any remaining portion of the “wildcard” exemption (i.e. how your property is protected from liquidation in a bankruptcy, in short) so the Debtor can keep these currencies.  However, it benefits the Debtor most to disclose these assets to your attorney before filing, so we can discuss if these assets are protected.

My goal is to eliminate all of your debt without you losing any property whatsoever.  So long as my clients disclose everything, I can provide an accurate analysis of the events of their case once filed.  I look forward to the ever changing environment of bankruptcy, and to helping you or someone you know get back on the road to financial success!

 

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Real Estate Market–Not Out of the Woods Yet!

By Kelly M. Resnick, Resnick Law Offices, Bay Area

One of the hottest trends in bankruptcy, and the Bay Area in general, is the real estate market.  It is no secret that California real property values have come a long way back from those dreary years of 2008 to 2012.  While they have plateaued recently in most of Northern California, values are still much higher and the incidence of 2nd Mortgage Lien Stripping in Chapter 13 proceedings and Short Sales is not as prevalent as before.  However, according to the Washington Post of May 20, nearly 10 million homes in the United States are still ‘under water’, with values significantly less than the mortgages owed.  This is equivalent to 18.8% of all American homes; about four times the historical average.  Although this is an improvement to the 25.4% of homes, nationally, a year ago, it still means that a lot of homeowners are struggling.  The Washington Post went on to speculate that homeowners are more likely to hold onto their homes because they either can’t sell or they’re waiting for the upward market to improve their equity.  Because of this hesitancy, there are fewer homes on the market and their prices are being driven up because of the low inventory.  To be sure, there are also regional variances: Chicago (44.9%), Tampa (42.3%), Las Vegas (50.6%), Atlanta (53.1%) and St. Louis (44.0%) are struggling with much higher averages than out here on the West Coast.

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Can I File Bankruptcy Again If I Filed In The Past?

By: Kelly M. Resnick, Managing Attorney, Resnick Law Offices, Bay Area

You can file bankruptcy more than once. To file another Chapter 7 bankruptcy (i.e. liquidation bankruptcy), there must be at least six years time from discharge to discharge. You can file a Chapter 13 bankruptcy (i.e. repayment bankruptcy) at any time after you filed a previous bankruptcy, so long as you intend to pay your creditors 100%. If you are going to be paying your creditors less than 100%, then it needs to be at least six years from your last discharge.

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How Long Until I Can Buy Another Home After Bankruptcy…After Foreclosure…After Short Sale?

By: Kelly M. Resnick, Resnick Law Offices, Bay Area

“So, How Long Until I Can Buy Another Home ?” Bankruptcy attorneys are frequently asked this question by Debtors just before the filing of a petition or even after the Discharge has been granted.  I am happy to be able to provide the answers to many of the questions related to Bankruptcy, Foreclosures and Short Sales.

USDA Rural Mortgages
Chapter 7 3 years from Discharge or dismissal.
Chapter 13 If already Discharged

  • Between 12 and 24 months with a payment history from the Ch.13 Trustee
  • After 24 months after Discharge

If still in Chapter 13 Plan

  • At least 12 months into the Plan with payments up-to-date
  • Court consents to the new loan
Foreclosure, Deed-in-Lieu of Foreclosure or Short Sale 3 years from completion of Foreclosure, Deed-in-Lieu or Short Sale
  If the loan is for less than 80% of the value –  2 years

If the loan is for less than 90% of the value – 4 years

If the loan is for more than 90% of the value – 7 years

For extenuating circumstances *, if the loan is for less than 90% of the value – 2 years

VA Mortgages
Chapter 7 2 years from Discharge date
Chapter 13 If already Discharged

  • Between 12 and 24 months with a payment history from the Ch.13 Trustee
  • After 24 months after Discharge

If still in Chapter 13 Plan

  • At least 12 months into the Plan with payments up-to-date
  • Court consent to the new loan
Foreclosure, Deed-in-Lieu of Foreclosure or Short Sale 2 years from completion of Foreclosure, Deed-in-Lieu or Short Sale

* Extenuating circumstances

To be eligible for the reduced ‘seasoning’ time due to extenuating circumstances, the borrower must have re-established an acceptable credit score for 2 years and provided a letter of explanation and documentation proving that the reason for the legal action was not due to financial mismanagement.  Here are some examples of acceptable reasons:

  • Death of primary wage earner
  • Long-term illness or disability not covered by health insurance
  • Prolonged unemployment for reasons outside of employees control
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Top 10 Misconceptions about Bankruptcy

By Kelly M. Resnick, Managing Attorney, Resnick Law Offices, Bay Area

TOP 10 MISCONCEPTIONS ABOUT BANKRUPTCY

  1. Bankruptcy means the end of your financial life and never getting credit again.
    • Not true!  Before long you will get credit card offers again.  You may have to pay higher interest rates and have lower limits.
  2. You can not eliminate tax debt in a bankruptcy.
    • It depends on when you incurred the debt and what efforts the IRS has taken to collect.  It is difficult to wipe out taxes, but not impossible!
  3. You lose everything you own when you file bankruptcy, including my retirement.
    • The whole idea of bankruptcy is to give you a fresh start.  If you lose everything, that’s not giving you anything to start with.  The “exemption” system helps protect certain assets from your creditors, including your car, your home and in most cases, 100% of retirement accounts!
  4. I can keep the credit cards with zero balances open even after I file bankruptcy.
    • It depends.  Today, creditors have electronic links to your credit report and receive alerts when anything major happens, including bankruptcy.
  5. I’m married, so both spouses must file.
    • Not necessarily.  If one spouse has significant debt in his or her name only, he or she may file without the other spouse; however, this is risky in a community property state such as CA.
  6. Only “deadbeats” file for bankruptcy.
    • Most people file bankruptcy after a life-changing experience, i.e. loss of job, serious illness, or divorce.
  7. I should not include certain creditors in my filing because it’s important to me to pay them back.
    • Although commendable, Bankruptcy law is “all or nothing,” so you must include all your creditors in your case.
  8. I should pay my friends and family members back before filing bankruptcy so they are not wiped out in the bankruptcy.
    • Doing this could prevent you from filing bankruptcy for 1 year! All creditors, no matter family or Visa, are seen as equals in the Court’s eyes.
  9. I can max out all my credit cards, then file for bankruptcy and never have to pay for the things I bought.
    • Not a good idea.  It’s called fraud and bankruptcy judges frown upon this conduct.
  10. Everyone will know I’ve filed for bankruptcy, even my employer.
    • Yes, all bankruptcy filings are public record.  But, unless you are a famous or prominent person and the media has an interest in your filing, probably the only people who will know are your creditors.

Don’t let incorrect information deprive you of your fresh start!  If you are struggling with any type of debt, we can help!  Call 510-860-3688 for a free consultation and get back on the road to financial success today!!

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“I Got a Tax Refund This Year–What Can I Do With It?”

By Kelly M. Resnick, Resnick Law Offices, Bay Area

This is a common question this time of year (tax season) from clients needing to file bankruptcy.  Depending on how much refund you receive, it may not impact your case at all.  However, if you have a lot of other assets and this amount would not be protected in your bank account if you filed your case, you want to be strategic about how you spend this money.

The best, and most common, use in this scenario is to pay your bankruptcy attorney fees with the refund.  This will help you move forward with your case and provide you relief from your creditors and debts sooner!

There are many other ways to spend down funds within the confines of the Bankruptcy Code, and I plan to address those in a future post.  However, there is one thing that is the ABSOLUTE WORST thing you could do with this money, and that is: repay debts to friends and/or family members.

The court and the U.S. Trustee know that you’re human, and that you would much rather pay off mom, brother, aunt, and/or best friend before you pay your Visa bill.   Therefore, when  you choose to pay an “insider” within the year prior to your filing, this is what is called a “preference payment.”  The Trustee has the right to contact your friend or family member directly and demand that the amount you paid to him/her be given back to the Trustee.  This generally results in a bigger issue between you and your friend/family member than delaying repayment until after your case is finished (because you can pay them back then!).

Many clients say “but how will anyone know?” There is a specific question on your bankruptcy documents that you sign under penalty of perjury that asks whether you have made such a payment.  And again, many clients ask “but how will anyone know if I just leave it off my paperwork?”  First, if you say this to any attorney and they agree to leave it off your paperwork, RUN!  You must tell the truth 100% throughout your entire case.  Second, ask any Debtor found guilty of bankruptcy fraud that question and they will verify how the U.S. Trustee has ways of finding information.  Your ultimate goal when filing bankruptcy is to have your case pass through without issue.  There are always issues when you pay friends/family and/or fail to disclose these payments.  Don’t put your fresh start in jeopardy, and contact an honest, reputable attorney to discuss your options!

If you anticipate a tax refund this year and need advice on how to best utilize these funds, call Resnick Law Offices for a free consultation today!  510-860-3688

Disclaimer:* This post and all others made on the Internet by Resnick Law Offices attorneys and staff are for informational purposes only. Internet posts that describe the outcome of a case are not a guarantee of a similar outcome in all cases. None of the information or materials posted are legal advice. Nothing posted as blogs, comments, answers, or other communications should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing of this information does not create or constitute, an attorney-client relationship. While Resnick Law Offices’ attorneys and staff try to be accurate, we do not guarantee accuracy.

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Do I Still Owe A Debt Even If It Is “Charged Off”? Yes!!

Written by:  Kelly M. Resnick, Resnick Law Offices, Serving the Bay Area

This question is a common one during this time of year-tax season-because sometimes a creditor will issue a 1099-C, which reflects “cancelled debt”, and the creditor says that the debt is “charged off.”  Usually, when a debtor hears that their debt has been charged off, he/she assumes that they no longer have to pay this debt and the debt has been eliminated.  Wrong!

A debt is owed until paid it is paid, or discharged in a bankruptcy.  The term “charge off” makes it sound like the debt went away, and it did–just not from you.  Charge off is an accounting term used by creditors when they remove the debt from their balance sheet and take it as a loss on the creditor’s taxes.  Typically, a debt is charged off after approximately 180 days  of nonpayment.  If no payment has been made in that amount of time, the accounting rule is that the debt can’t be carried on the books as a current asset since it is unlikely it will be paid in the future.  But the accounting move by the creditor to charge off the balance due in no way affects your responsibility to pay what is owed, and the creditor will continue to report your non-payment of this debt on your credit!

Even though a debt is charged off, the original creditor may still pursue you for payment or the creditor may sell your debt to a collection agency and thus, the collection agency may still pursue you for payment.

Another aspect of this situation you should be aware of is that when a creditor charges off a debt, that debt is now counted as income on your personal taxes.  Depending on the amount of debt, it may push you into a higher income tax bracket and/or result in owing additional taxes to the IRS.  I am not a tax professional, so you should speak to a tax professional about this scenario.  However, filing a bankruptcy will eliminate your personal obligation to repay the debt and may eliminate the necessity for you to pay taxes on that cancelled debt.

Bottom line:  do not ignore any of your debts, especially if any are charged off, and speak to a reputable bankruptcy attorney about your options.

If you or anyone you know have received a 1099-C this year and are unsure what to do, call us at 510-860-3688 for a free consultation today!

Disclaimer:* This post and all others made on the Internet by Resnick Law Offices attorneys and staff are for informational purposes only. Internet posts that describe the outcome of a case are not a guarantee of a similar outcome in all cases. None of the information or materials posted are legal advice. Nothing posted as blogs, comments, answers, or other communications should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing of this information does not create or constitute, an attorney-client relationship. While Resnick Law Offices’ attorneys and staff try to be accurate, we do not guarantee accuracy.

 

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