2013 is a Great Time to Protect Your House by Filing for Bankruptcy

New California laws in 2013 make it easier for low income homeowners to protect their homes in bankruptcy.
You can protect your homestead by filing for bankruptcy.

When you file for bankruptcy in California, you are allowed to keep certain property called exempt property. If you happen to own a home with some equity in it (not so common in California these days), you may be able to protect your home with what’s called the “homestead exemption.” On January 1, 2013, the homestead rules changed in some really great ways for California residence who are considering bankruptcy.

Under the new 2013 California exemption laws for bankruptcy, you can protect up to $175,000.00 of equity in your house if you are over the age of 55 and made less than $25,000 if you’re single or less than $35,000 together if you’re married. (There are some other changes as well, but the income issue is all I’m tackling today.) This is a big change from before 2013 when you could only use the max homestead amount if you made no more than $15,000 if you were single or $20,000 together if you were married. This means many low income California residents with equity in their homes may qualify for the largest exemption amount fully ten years earlier now than in the past. That’s a great thing for California homeowners who need to file for bankruptcy.

The homestead exemption is available in both chapter 7 and chapter 13 case. If you love reading legal language, you can read about homesteads straight from the source: When you file a bankruptcy case, it doesn’t matter if you’ve recorded a claim of exemption with the county or not. You get an “automatic homestead” in the bankruptcy as long as you claim it properly in your bankruptcy papers.

You want to be very careful, however, because bankruptcy law and homestead law are both pretty complicated. If you do things the wrong way, you run the risk of losing your home. If you’re looking to protect your house in bankruptcy, you should definitely talk to an experienced bankruptcy attorney before you file.

Image credit : By Pearson Scott Foresman [Public domain], via Wikimedia Commons

Difference Between Secured Debt and Unsecured Debt and Why It Matters in Bankruptcy

This Alameda County craftsmen cottage is probably collateral for a loanThe difference between secured debt and unsecured debt is an issue that I bring up with every single one of my bankruptcy clients here in the Oakland-East Bay area. The basic difference is this: Secured debt involves collateral as well as the obligation of the person who signed the loan documents, while unsecured debt just involves the personal obligation of the person who signed up for the loan. In the United States, the collateral we’re most familiar with in consumer (non-business) situations is either a car or a house.

If you borrow money from a bank to get a new truck, the truck will be collateral for the loan.The idea is that the collateral provides an additional assurance to the lender that it will get repaid what it is owed. For instance, while a bank might hesitate to loan Average Joe $50,000 based only on Joe’s signature, that same bank might be more willing to consider lending the money when it gets to use the new Made-In-America pickup that Average Joe is going to buy with the $50,000. The pickup acts as collateral which means that if Average Joe doesn’t make the payments, the bank can repossess the pickup, sell it and then use the proceeds (the money from the sale) to pay off or at least pay down the loan.

It’s the same with a home loan. The house itself is the collateral for the loan. If the borrower fails to make payments, the bank can begin a process of selling the house called foreclosure. When the house sells in the foreclosure, the bank uses the proceeds to pay off or at least pay down the loan.

So why does this all matter in bankruptcy? Well, bankruptcy wipes out personal liability (an individual’s legal responsibility to pay) on debts, but in most cases, it doesn’t wipe out the bank’s right to go after collateral. That right to go after collateral is called a lien, a french word that means a leash. Basically the bank holds your car or your house by a leash. If you don’t pay, they grab a hold of that leash and yank the collateral out for from underneath you.

[There are, however, times when a bankruptcy can wipe out a lien as well as personal liability. One of those times is when you have a second mortgage or a line of credit on your house and the home has lost a lot of value. If the circumstances are right, you can wipe out that lien in a chapter 13. Click here to learn more.]

So for most unsecured debt, you file bankruptcy, get your discharge and your liability is wiped out forever. You’ll never have to pay on that debt again, the lender can no longer do anything to collect on it. For secured debt, while the discharge wipes out your personal liability, you will still have to decided whether you want to keep the collateral or give it up. If you want to keep it, you will have to continue making the payments. If you don’t want to keep it, you can give the collateral back to the lender that will be the end of it. Since your personal liability has been wiped out in your bankruptcy case, giving the collateral back to the lender means that the lender no longer has any power to collect on that debt from you.

When you meet with bankruptcy attorney James Pixton, one of the things he’ll discuss with you is what you want to do with loans and collateral. If you want to keep the collateral there are a few different options. Go ahead and make an appointment today. Call (510) 451-6200 or fill out the handy form below:

Richmond Bankruptcy Attorney Explains Qualifying for Chapter 13 Bankruptcy

Qualifying for Chapter 13: A skilled lawyer can help you clear all the hurdles.Chapter 13 bankruptcy is a special kind of bankruptcy. Unlike the simple and quick chapter 7, chapter 13 has a set of different and more complicated rules to go along with it. Those who file for chapter 13 often have different goals from chapter 7 filers. A home foreclosure is often in the mix, or possibly a car repossession. Sometimes a huge tax bill is looming. Chapter 13 can protect people from these kinds of creditors and can get them up to five years to catch up or repay some or all of their debts. Again, how much gets paid depends on those complicated rules. An experienced bankruptcy attorney can run the numbers for you and give you more details.

Although chapter 13 is a very versatile tool, Congress decided that they wanted to limit who was allowed to file for chapter 13. They puts some caps on the amount of debt allowed, and set out what type of persons can file. I know those caps served a purpose at some point. The problem is that with the rising cost of living and the larger debt load carried by so many people in the recession, it’s not too difficult to find yourself over the caps and disqualified from bankruptcy.

Right now, the cap for secured debt (debt with collateral like a house or a car) is about $1.08 million. The cap for unsecured debt is about $380,000. For most “consumers” (regular folks who draw a paycheck and work for someone else, these caps are usually not a problem. For small business owners, however, these numbers can cause some problems. A good bankruptcy lawyer can help you figure out if you are bumping up against those caps and might need to consider chapter 11 instead.

There are a couple things to keep in mind about the chapter 13 caps.  First, real property that is underwater might be split into a secured part and an unsecured part if the value of the property is less than the amounts of the loans against it. For instance, if you owe $600,000 on your house, but it’s only worth $420,000, the bankruptcy court might look at the debt as $420,000 of secured debt and $180,000 of unsecured debt. If you’re a small business owner and have a couple hundred thousand dollars of unsecured business debt, you could have a problem. Again, an experienced bankruptcy attorney can help you figure this out.

Another thing to understand is that “disputed” or “unliquidated” debt is not counted in the unsecured and secured totals. A disputed debt is one that you say you don’t owe. Say you’re involved in a car accident and it’s not clear who’s at fault. Even though you may have been sued by the other driver, that debt is still disputed because you may or may not owe it. Unliquidated debt is debt that you can’t readily attach an amount to right now. Even if you were clearly responsible for that car accident, you don’t know exactly how much the damages are going to be until a judge or a jury decides. That means it’s unliquidated and doesn’t count in the total for purposes of qualifying for chapter 13.

A final thing to keep in mind about chapter 13 is that the person filing for chapter 13 must be employed or have “regular income.” “Regular income” is kind of a wishy-washy term, but it is clear that “no income” is not “regular income.” So if you have no income, you won’t be able to stay in a chapter 13. With no income, chapter 7 might be a better choice or indeed the only option.

Alameda bankruptcy attorney James Pixton careful analyzes his clients’ numbers to make sure they can file the bankruptcy case that is best for them. Call (510) 451-6200 to make an appointment or email him at james@pixlaw.com.

What Documents Are Required for Filing a Bankruptcy and Why?

During the course of a bankruptcy case, explains Oakland bankruptcy attorney James Pixton, the debtors are required to disclose certain financial information. The idea is that they need to show all of their financial affairs in exchange for the federal bankruptcy court’s protection and for that all-important discharge order that comes at the end of the case.

Here is a pretty basic list of the documents you’ll have to come up with:

Your last-filed tax return. This means that if you haven’t filed since 1965, that’s the tax return you’re going to have to come up with. If you haven’t filed a tax return in a while, you will definitely want to talk with an experienced Chapter 7 or Chapter 13 bankruptcy attorney about how that will affect your bankruptcy case. In Oakland bankruptcy court, you may find that the trustees are most interested in your returns for the past few years. They’re looking for assets and a non-yet-filed tax return might mean a tax refund for the trustees to pursue.

Your paystubs for the two-month period just prior to the filing of your bankruptcy case. You are supposed to provide these to the trustee in your case. The trustees are supposed to look them over although it’s not too clear to me just what they’re supposed to be looking for. My experience is that trustees do require them, but pay very little attention to them.

Monthly statements for all bank and financials account showing the balances of the accounts as of the date you filed your bankruptcy case. These documents are required for a much clearer purpose. In their quest for assets that they can get a hold and use to pay creditors, the trustees will want to see how much money you had when you filed. Sometimes, a careless debtor will file a case with a significant amount of money in the bank accounts that he is unable to protect completely. Again, this is where an experienced Oakland bankruptcy attorney like James Pixton is vital. You need to make sure that you can protect as much of your money as possible. An experienced bankruptcy attorney means fewer surprises.

Oakland bankruptcy attorney James Pixton’s phone number is (510) 451-6200 x101. He has a by-appointment-only office at 1300 Clay Street, Suite 600, Oakland, CA  94612. His main office is just a few minutes away in beautiful downtown Alameda, California (the East Bay’s best kept secret). Give him a call and come in for a visit.

How Does Bankruptcy Stop Foreclosure in Oakland?

Bankruptcy is a very powerful tool that can protect people who are struggling financially. In particular, bankruptcy can help drowning homeowners. What makes bankruptcy so great is really two little words: automatic stay. The automatic stay is a federal (national) law that basically says that your creditors all have to leave you alone the second you file a bankruptcy case.

When you file your bankruptcy case, the automatic stay requires all your creditors so stop doing anything to collect on debts you might owe. This means that they have to stop lawsuits, they have to stop collection phone calls and letters–and they have to stop any foreclosure proceedings. In other words, once you file, they can’t sell your house without first getting the bankruptcy judge’s permission.

Here in Oakland and the East Bay, the bankruptcy judges are pretty friendly towards debtors and try to give them all the protections they’re entitled to under the Bankruptcy Code. They’ll make sure that the foreclosure sale doesn’t happen. If you file your bankruptcy case and then the lender conducts a foreclosure sale anyway, we can get the sale nullified–a fancy way of saying that we get it unwound, as though it never happened.

Keep in mind, however, that this is only the case if you file your bankruptcy case in the Oakland bankruptcy court before the trustee’s sale (foreclosure sale) happens. Alameda bankruptcy attorney James Pixton can stop a foreclosure sale if you call quickly and get in for a consultation.

If you meet and decide to hire James (and he decides to work with you), he can file the case electronically right from his office. This means that he can file a case in the evening or on a weekend when the Oakland bankruptcy court is closed.

The sooner you call Oakland-area bankruptcy attorney James Pixton, the sooner Pixton Bankruptcy Law can help you save your home and get back on track financially. Call (510) 451-6200 today!

What Are Exemptions in Bankruptcy?

Why Are Bankruptcy Exemptions Important?

It’s an old image, but one that sticks in our heads. It’s the cartoon of the guy who has just lost everything and now he’s wearing a barrel around his middle held up by two suspender straps.

Saving My Alameda Home and Saving My Sanity with a Chapter 13 Bankruptcy

If You’re Facing a Foreclosure in Alameda, You Should Check Out Chapter 13 in Oakland Bankruptcy Court.

Welcome to Pixton Bankruptcy Law. If you’re facing foreclosure, you’re in the right place. As you’ve come to understand, foreclosure means that your bank lender can take your house and sell it out from underneath if you’ve fallen behind.

If you’re looking for a quick understanding of how the foreclosure process works in Alameda, Oakland, Hayward and the rest of the Bay Area, click here.

If you already understand that the clock is ticking, you know that you need to do something sooner rather than later or you’ll soon be an ex-homeowner. Once that foreclosure sale happens, it’s impossible–or at least nearly impossible–to get your house back.

So what can you do if you’re home is scheduled for auction?

First, you can choose to do nothing. If that’s the case, your home will be gone–either purchased by a new owner or “taken back” by the bank if no one else bids on it.

Second, you can contact the lender directly and try to work out some sort of loan modification. Oftentimes, this can at least delay a foreclosure while you complete the modification application process. You need to be careful, however, because the lender can still go forward with the foreclosure. It isn’t bound to grant a modification and it isn’t required to sit around while you apply for one. The lender may choose to cooperate, but it can take back its cooperation at any time and you’ll be out of luck.

Third, you can sell your house quickly if there’s equity, or you can short sell your house (less quickly) if there’s no equity. Read up on the realities of the short sale here. If you sell the house, your mortgage problems are over, but you also no longer own your home and will have to move elsewhere.

Fourth, you can file a bankruptcy case. Here’s where I come in as an Alameda bankruptcy attorney with tons of experience doing this kind of thing. Your options are usually chapter 7 or chapter 13, two dramatically different kinds of bankruptcy cases. If you live in Alameda and are considering bankruptcy, you need to understand both. On this page we’re going to focus on chapter 13 because that’s the one that will best help you save your home. Click here for more on chapter 7.

Filing a chapter 13 will immediately get you two things: time and peace. You need both in order to figure out how to protect your home. As long as you haven’t recently filed a previous case, the filing of your case creates what’s called the “automatic stay.” This just means all your lenders have to leave you alone and quite trying to collect from you. This applies to foreclosure sales! So your lender can’t foreclose–at least not without first asking for permission from the bankruptcy judge.

Now that you’re protected by the automatic stay, you are in good shape to do a lot. You can complete a short sale if you choose. You can complete a loan modification–or even apply for one after you file! Or, if you just needed time to catch up on your payments, you can start making the mortgage payments again and take up to five years (60 months) to catch up on the missed payments from before the case was filed.

Chapter 13 is not a magic wand that we can wave and permanently fix all your home loan problems. But it is

Bankruptcy Can Wipe Out a Second Mortgage or Line of Credit

Wiping Out a Second Mortgage in Bankruptcy

If you own a home in the Oakland area, you have seen its value decline in the past several years–most likely by hundreds of thousands of dollars. So now you’re wondering how you will ever pay that second mortgage off.

On top of that problem, you’re drowning in credit card bills, back taxes, student loans and a car payment. Welcome to the American Dream–Bay Area style!

Here’s something amazing that can change your life around: A chapter 13 bankruptcy can wipe out a second mortgage forever! That means that you can finish a chapter 13 case and be left with no debt other than a first mortgage on your home! Sweet!

It’s Called Lien Stripping

This whole wipe-out-the-second-mortgage thing is called “lien stripping” because the bankruptcy court strips away the lien on the second mortgage. Lien stripping is permanent. Once you finish the case, the second mortgage is gone forever!

There are a lot of rules that go along with lien stripping, but here are the basics:

  1. You have to file a chapter 13 case; a chapter 7 won’t work.
  2. You have to make monthly payments in a chapter 13 case for a three to five year period (usually five) in order complete the case successfully.
  3. You have to convince the Oakland bankruptcy court that the value of your home is less than the amount you owe on the first mortgage.

If you can do those things, you can wipe out your second mortgage. Pretty incredible! You can save up to $200,000 or more by filing a chapter 13 bankruptcy.

Want to know more? Call Oakland bankruptcy attorney James Pixton at (510) 451-6200 and make an appointment to come in and talk about lien stripping. You can also fill out the form below. We’re serious when we say YOUR NEW LIFE BEGINS TODAY!

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Bankruptcy Helps You Sleep Peacefully!

No More Stress or Jumping When Phone Rings!
How would it be? That is a question you could answer for yourself pretty soon. Imagine being able to buy groceries without worrying about how you’re going to make the car payment. Bankruptcy can help you! Getting school clothes for the kids and filling up the gas tank in the same trip because you now have money in your bank account at the end of the month. Bankruptcy can help you!

Paying the mortgage with a cash advance will be a thing of the past–just a bad memory after bankruptcy. Those late night arguments over the finances with your husband or wife will just end. No more ugly mess to fight about! Bankruptcy wipes it all out!

How would it be? Well, you can find out that it’s a great feeling to be back on your financial feet again. And Pixton Bankruptcy Law can help you find that feeling.

If you live in Oakland, Alameda, Hayward–or anywhere in the San Francisco Bay Area–relief is just a phone call (or email) away. (510) 451-6200 or no-debt@pixlaw.com


Oakland Bankruptcy Lawyer James Pixton Explains Lien Stripping in Chapter 13

A chance to wipe out a second mortgage permanently in chapter 13 bankruptcy.

Something that is not well known is the fact that chapter 13 bankruptcy carries with it the power to eliminate second and third mortgages. Homeowners who are underwater on their first mortgage (loan amount more than home value) can file a chapter 13 bankruptcy case in one of the bankruptcy courts in Oakland, San Francisco, San Jose or Santa Rosa, make all the necessary monthly payments and at the end, get an order from the judge saying that their second mortgage has been eliminated.

In this short video, East Bay bankruptcy attorney James Pixton explains some of the details of lien stripping.

Come in and visit us at our Oakland office right downtown (just two minutes off I-980), and ask us your questions about lien stripping–and anything else about bankruptcy. We are the Bay Area’s friendliest bankruptcy law office!

Help! My House is Going to Sale! Alameda Foreclosures!

Alameda foreclosures. We can stop a home foreclosure sale in Alameda! Even if it’s right on the eve of the sale! Call Alameda bankruptcy attorney James Pixton now at (510) 451-6200 so you can set up an appointment to meet. Be sure to let us know that a sale date is coming up.

The mere mention of the word “foreclosure” sends a shudder through Alameda homeowners as though an icicle had been dropped down the back of their shirt. In the typical Alameda mind, home ownership is a symbol of success and acceptance. When we buy that house, we have arrived. Here in Alameda, like everywhere else, we take our home ownership very seriously. When that dream is threatened, it’s scary, it’s depressing and it’s stressful.

The recession throughout the United States–and here in the San Francisco Bay Area–has done enormous damage to the dream of home ownership. In Alameda County each month, hundreds of homes go into foreclosure. What this really means is that the home owner has fallen behind on his monthly mortgage payment and the lender has grown tired of waiting for late payments to come in. The lender starts foreclosure proceedings. In another article, we’ll talk about how the foreclosure process works here in Alameda–and throughout California.

If your lender has started the foreclosure process, Alameda foreclosures attorney James Pixton may be able to help you. Even if you’re right up against a sale date, Pixton Bankruptcy Law can in many instances file a bankruptcy case to stop foreclosure and get you some time to breath. Chapter 13 was designed to help Alameda homeowners catch up on their mortgage payments.

If you’re like a lot of the residents of the City of Alameda, you have a pretty hefty mortgage. It doesn’t take much to upset the apple cart. Layoffs, divorce and devastating illness are all contributing factors to foreclosure. When the money gets tights, it’s easy to fall behind on the mortgage, especially here in the East Bay.

Sometimes a homeowner no longer wants to hang onto his house. In that case, a chapter 7 might be a good move. As the busiest bankruptcy attorney in Alameda, James Pixton has the experience to quickly help you understand your options. Chapter 7 bankruptcy can get the homeowner more time to figure out how to exit the home and get into a rented home. Often a chapter 7 is necessary if there’s a second mortgage that doesn’t get paid when the house is sold.

At the Pixton Bankruptcy Law, Alameda attorney James Pixton meets personally with all potential clients to talk over the options. If foreclosure is coming up, James will help you decide whether to keep your house or let it go. James’ job is to help you understand your options and to know what your rights are.

Give Alameda foreclosures attorney James Pixton a call at his office today. (510) 451-6200. Like every other bankruptcy in the Oakland area, he offers a free half-hour appointment. At the end of your meeting, you will have a much better idea of what will work for you and what won’t. Want James does, that other attorneys don’t, however, if provide you with no-cost books and other materials to help you make important decision.

Call the Alameda office of bankruptcy attorney James Pixton soon at (510) 451-6200. Peace of mind awaits you.