Sacramento Bankruptcy Lawyer Blog

Do you know what the Bankruptcy Trustee does ?

A typical Chapter 7 and Chapter 13 bankruptcy case involves three entities: the debtor (and his or her attorney), the creditors, and the trustee. This article will examine the pivotal role that the trustee plays in bankruptcy proceedings.

As a bankruptcy lawyer in Walnut Creek, I am knowledgeable about the filing process. When people file for bankruptcy, they must turn over all their non-exempt property to the bankruptcy court. That's the bad news. The good news is that this transaction includes turning over all dischargeable debts as well. When this happens the trustee then becomes the legal custodian of the debtor's property until the petition is approved or denied and the case is settled.

As custodian, the trustee's main job is to look for assets amongst the debtor's property to sell for the benefit of the creditors. Thus, contrary to the role of a judge in a civil action or criminal case, the trustee is not really an impartial arbiter. He or she will be eager to squeeze all possible value out the debtor's non-exempt property. The reason for this is two-fold. First, basic fairness requires that, in exchange for releasing debtors from the obligations they incurred, they turn over all their non-exempt property to the creditors. Second, the trustee receives a certain percentage of all assets sold for the benefit of the creditors. Because of this potential commission, the trustee will undoubtedly keep a keen eye out for salable property in the debtor's estate.

The Importance of Having a Bankruptcy Lawyer on Your Side

However, the trustee can only lay his or her hands on non-exempt property. Therefore, it is highly recommended that debtors consult a qualified attorney in order to maximize the amount of property they are able to retain by taking full advantage of the exemption provisions in the bankruptcy code. As a bankruptcy attorney I am familiar with the ways in which with debtors can free themselves from oppressive debt while still holding on to cherished possessions and essential goods. I have offices in Sacramento, Fairfield, and Walnut Creek and offer free consultations to those considering filing for bankruptcy.

Once a petition for bankruptcy is filed, the debtor must attend a meeting of the creditors. This is referred to as a 341 meeting. The trustee is in charge of this meeting and will typically ask the debtor questions pertaining to how his or her bankruptcy came about. In addition, the trustee might inquire about the methodology by which the debtor assigned a value to a particular piece of property. I'll talk more about the 341 Meeting in an article later this week.

Bankruptcy lawyers in Contra Costa explain it this way;

For a debtor, one of the biggest benefits in filing for bankruptcy is the Automatic Stay. This is an order (called an Order for Relief) made by the bankruptcy court that puts a stop to all collection efforts by creditors once a petition is filed.

The Automatic Stay

The Order for Relief is referred to as an "Automatic Stay" because once a petition is filed the debtor need not take any further action to prevent creditors from actions intended to collect a debt. The stay applies to both Chapter 7 and Chapter 13 petitions and prevents actions such as home foreclosures, repossessions of vehicles, and garnishment of wages.

As a bankruptcy lawyer in Walnut Creek, Sacramento, and Fairfield I see the immense amount of stress that continuous harassment from creditors creates in the lives of debtors. In crafting the bankruptcy laws, the legislature recognized the need to create a safe-haven for debtors while their petition winds its way through the court. The Automatic Stay thus preserves the status quo upon the filing of a petition and puts in end to the harassing calls, letters, and lawsuits made by over-zealous creditors. Once the petition is filed, any further collection actions will be made by the bankruptcy court - not the creditors.

The time-out in sports provides a useful analogy for understanding the Automatic Stay. When an opposing team has taken control of a game and is running up the score, an intelligent coach will call a time-out. It serves to calm things down, stop the momentum of the other team, and to put the game back on an even keel. Similarly, the intense pressure facing debtors can feel like a full-court press. The Automatic Stay serves as a legal time-out and prevents consumer debts from cascading out of control.

The Automatic Stay does not apply, however, to every kind of debt. It does not apply, for example, to child support and alimony payments. These obligations will continue for a debtor even after a petition for bankruptcy is filed. In addition, the Automatic Stay will not prevent certain actions by the IRS. A debtor will often remain on the hook for tax-related debts.

Saving Your Home

Another exception to the Automatic Stay has to due with foreclosure actions. Debtors should be aware that while a petition for bankruptcy can prevent a foreclosure sale from occurring, it won't stop the notice period from running. And a mortgage company might try and get the stay removed. I am an experienced foreclosure prevention and loan modification lawyer in Contra Costa County, Sacramento and Solano counties and I'll examine how the Automatic Stay specifically relates to foreclosure actions and other eviction proceedings in an upcoming article later this week.

In the meantime, should you have any questions pertaining to the Automatic Stay or bankruptcy issues in general, please don't hesitate to call us for a free consultation at 1-800-303-2964. We are located at 1990 North California Blvd. in Walnut Creek, 1104 Corporate Way in Sacramento, and at 1652 West Texas St. in Fairfield, California.

Remember, once a debtor files for bankruptcy, creditors are not allowed to engage in further collection efforts. If they do, they are in violation of the Automatic Stay rules. Debtors who file a petition must be aware of this safe-haven rule and immediately report a violation of it to their attorney.

What assets are protected in Bankruptcy ?

Dear Reader.
My name is Michael Rinne. I am a bankruptcy lawyer in Sacramento and in Walnut Creek and Fairfield. One of the most important questions to ask a bankruptcy attorney is what and how much of your assets are protected if you file for Chapter 7 or for Chapter 13 bankruptcy.

Most of my clients can keep all their assets in bankruptcy

California has a two prong exemption system. You can find the exemption in California Code of Civil Procedure. You must choose one exemption system, the one that will benefit you the most.

What is a Homestead Exemption ?

If you own a house and have significant equity in the home you should use the 704 exemptions. Under this section you can protect up to $50,000.00 of equity in your home if you are single or up to $75,000.00 if you are married. You will be able to protect up to $150,000.00 if you or your spouse who is residing in the residence is 65 years or older. In today's market most of my clients are able to protect all their equity in their homes. In addition to the homestead exemption you can add approximately 6% of the value of the home that will be protected. That is the amount of money it would cost the bankruptcy trustee to sell your home.

Retirement Plans

Retirement accounts are exempt in bankruptcy. The following list shows examples of exempt retirement plans.
Traditional and Roth IRAs up to $1,095,000 per person
Public retirement benefits.
Private retirements benefits, including IRA and Keogh.

Do you need more detail ?
Read about exemptions in bankruptcy in detail here...!

Contra Costa County Chapter 7 filers

You can keep your house in a Chapter 7 bankruptcy.
Many people come to my free bankruptcy consultations thinking they cannot keep their home in a Chapter 7 bankruptcy. You can keep your home in either a Chapter 7 or a Chapter 13 bankruptcy.
As a Walnut Creek Bankruptcy lawyer I get more and more calls from the cities of Antioch, Pitsburgh, Oakley, Brentwood and Concord. Most of the callers got into financial troubles because of their mortgages. Some had adjustable rate mortgages that hiked upwards and most of my client's houses went down in value dramatically.

Walnut Creek Bankruptcy Lawyer

It does not always make sense to file Chapter 13 to save your home. If your first mortgage is less than the present market value and you have a fairly small second mortgage compared to the first mortgage the advantage you get from lean stripping the second mortgage by be outweighed by the three to five year payment plan you have to do. You may end up paying the same amount through the bankruptcy you would pay to the second mortgage. However if the second mortgage is significant, you have priority debts and your first mortgage is close to the fair market value of your home it may very well make sense to file for Chapter 13.

Filing Chapter 7 Bankruptcy in Contra Costa County

If your credit card debts, personal loans or medical bills are significant discharging all of this debt immediately is often a greater advantage then removing a second mortgage. You can find out what chapter saves you the most money by doing the "Means Test". The means test was introduced by the BABCPA in 2005 the bankruptcy reform act. Have a bankruptcy lawyer in Walnut Creek or close to you do the means test for you. This will give you clarity what Chapter will benefit you the most.