As a bankruptcy attorney in Sacramento California, we see the same initial questions asked time and time again. It's quite normal for individuals who are struggling with debt and considering a California bankruptcy to be concerned about obtaining a mortgage or credit cards in the future, losing all their possessions, or hurting their credit. By consulting an experienced bankruptcy lawyer, you'll have access to expert legal counsel that will be able to absolve these fears and other myths, as well as, answer questions that emerge that are unique to your financial and personal situation.
Will I Be Forced to Sell All My Possessions?
No, you will not be forced to sell all your possessions, however, you may have to sell some depending on how much property you actually own. There are two sets of "exemptions" which allow you to safeguard certain property from the "bankruptcy estate". Your bankruptcy estate is comprised of your property. If it is not covered under exemptions it could be sold by the bankruptcy trustee to raise money to pay down your debt. Bankruptcy exemptions can cover all or part of the value of your home, your vehicle, certain wages, and retirement, tools of the trade, and miscellaneous assets from entering into the bankruptcy estate, depending on the value of the item that you are seeking to exempt.
Can I Use Federal Bankruptcy Exemptions in California?
California is known in bankruptcy law terms as an "opt-out" state which means you cannot use federal bankruptcy exemptions. Instead, you must choose from one of two sets of bankruptcy exemptions, commonly referred to as section 703 or section 704.
Will Bankruptcy Stop Collection Attempts?
Yes, from the time you file your Chapter 7 or Chapter 13 bankruptcy, the automatic stay goes into effect, which prevents any creditors from conducting any collection attempts. All creditors that you include in your bankruptcy will be notified of your petition for bankruptcy protection. The automatic stay generally lasts until your bankruptcy is completed, but creditors may file a motion to lift the stay. If a California bankruptcy judge grants the motion then your creditor will be able to resume collection attempts including foreclosure proceedings on your home or repossession of property.
Can Filing bankruptcy in California Stop a Lawsuit?
If you've been served with a summons to court as part of a lawsuit, you can halt the proceedings, eliminate the debt, and have the lawsuit dropped in some occasions. Once you file for a bankruptcy, the judge will most likely postpone the trial until after your bankruptcy case has been resolved. Because there are consequences that can arise from waiting too long after a lawsuit or judgment, you should consult a bankruptcy attorney as soon as possible to help decrease the chances of having a lien placed on your property. Criminal trials, on the other hand, will not be affected by your bankruptcy case.
Both Solano County and Sacramento County fall under the jurisdiction of the US Bankruptcy Courts in the Eastern District of California, so bankruptcy proceedings there will proceed the same. While some bankruptcy court districts handle certain issues differently, all California bankruptcy exemptions apply across the state. You must file bankruptcy in the district in which you reside. A strong case for hiring a bankruptcy attorney in Sacramento California is that your bankruptcy lawyer will have an intimate knowledge of local rules and procedures in your district.
Should I Hire a California Bankruptcy Lawyer?
The personal and financial effects of bankruptcy can be long-lasting. If you're considering bankruptcy, contact a bankruptcy attorney. Sacramento is home to many great bankruptcy firms that will allow you to ensure your bankruptcy is handled in your best interest.
Verity Health Systems, a nonprofit healthcare system which operates four San Francisco Bay Area hospitals, filed for bankruptcy protection last week, as it explores strategic options to eliminate burdensome debt. The organization has been weighing the possibility of selling its Santa Clara County hospitals to relieve the financial pressure of $500 million in long-term debt, combined with aging facilities that need some $66 million in improvements. The organization filed for Chapter 11 bankruptcy with the US Bankruptcy Court in the Central District of California to keep all six of its hospitals operating while it organizes an orderly and efficient sale of its assets.
Verity Health Systems Bankruptcy
The bankruptcy filing included no less than seventeen separate medical facilities. The CEO of Verity Heath, Rich Adcock, states that the company decided to declare Chapter 11 bankruptcy, "after a diligent process of assessing all possible options alongside our financial and legal advisors, Verity Health has made the best strategic decision for all of our patients, employees and other stakeholders." The company has secured a $185 million loan in order to continue operating throughout the bankruptcy process.
Employee Union Challenges Bankruptcy
Not everyone involved with Verity Health Systems believes that the California bankruptcy is for the best, however. The union of healthcare workers that make up roughly 2,000 of Verity Health Hospital workers, the SEIU-UHW, is challenging the bankruptcy. The SEIU-UHW is challenging the bankruptcy in an effort to ensure that the communities served by the hospitals continue to receive access to care. Additionally, the California union wants to ensure that its hospitals stay open and continue to meet employee pension obligations. The challenge signifies that Verity will have a tough time attempting to nullify any collective bargaining agreements.
Hunt for Buyers Continues
It's no secret that Verity Health has been searching for buyers for some time, and will continue to find a suitable offer that it can accept. Struggling businesses often use California Chapter 11 bankruptcy in order to sell all or a great number of their assets. Chapter 11 can offer many unique advantages for both the buyer of a business, as well as, the seller.
One of the highest “worry factors” surrounding filing for Chapter 7 bankruptcy in California is wondering if you will pass the "means test" required of all consumers filing for bankruptcy protection. As a Sacramento Bankruptcy Attorney firm, it's one of the most common concerns we hear. Many individuals are surprised to hear that you are not required to be flat broke and penniless in order to pass the means test and qualify for Chapter 7 bankruptcy protection, however, knowing more about the qualifications will help you resolve some of the fears associated with the bankruptcy process.
Median Income in California
The Chapter 7 means test was instituted by Congress in order to make it more difficult for individuals to discharge their debts without paying back the majority of their creditors. The test is designed to ensure that those that do successfully file Chapter 7 bankruptcy can't pay back their debts. To begin, the means test average income over the previous 6 months before filing a Chapter 7 bankruptcy petition in California is compared with the median income of the state, considering your household size.
These numbers are constantly evolving, therefore, you should ask your Sacramento Bankruptcy Lawyer about what figures the US Bankruptcy Court in your district is using. If your income is less than the median income of California, then you automatically pass the means test and you aren't required to fill out the remaining information.
Chapter 7 Means Test
If your income is higher than the median income in your state, you may still qualify. The income calculation takes into account all payments from not only your wage or personal business income, but also income from investments. The means test works by considering monthly expenses such as mortgage or rent, car payments and insurance, food, electricity, internet, and cell phone bills, and deducting these from your average income over the 6 months prior to bankruptcy. Once your current monthly income is established and subtracted from your eligible expenses you are left with your disposable income, and the bankruptcy court will decide if you have enough money left over to pay back your creditors. If you do, then you may be required to convert your Chapter 7 to a Chapter 13 bankruptcy case.
If You Do Not Pass the Means Test
If you do not pass the means test in California, it's not the end of the world, but you will have a few decisions to make. Consult your bankruptcy attorney as to whether it is sensible to convert your bankruptcy case to a Chapter 13 bankruptcy. This alternative form of bankruptcy lasts longer and will require you to live on a fairly strict budget for up to 5 years in order to pay back your creditors, but should leave debt free at the conclusion. Additionally, if you do pass the means test, it may not be in your best interest to actually move forward with your Chapter 7 bankruptcy. Only a California bankruptcy attorney is qualified to give you advice on how to fill out your bankruptcy forms and whether you should move forward with filing or not.
Debt collectors licensed in the state of California have new requirements that will go into effect starting January 1st, 2019. California Governor Jerry Brown signed Assembly Bill No. 1526 into law on September 5th, 2018, which will amend the Rosenthal Fair Debt Collection Practices Act. This Act regulates debt collection practices among the debt collectors in the state. The new California Debt Collection law will affect how collections agencies attempt to collect time-barred debts.
What Are Time-Barred Debts?
Time-barred debt is money that has been owed so long that it has passed the statute of limitations. Time-barred debt is usually no longer legally collectible due to the amount of time that has passed. States have different laws with respect to how much time must pass before a debt becomes time-barred. Some states limit the amount of time that has lapsed as short as three years and as long as ten.
California Statue of Limitations on Debt
In California, a creditor has four years to file an action based on a written debt. The new bill prohibits any debt collector from attempting to collect a debt via written communication if the debt is considered a time-barred debt without informing the consumer that they can no longer be sued for the debt in question. Depending on the age of the debt, however, California debt collectors may still be able to report the debt to the credit reporting agencies.
California Bankruptcy Can Discharge Old Debt
If you are experiencing an undue burden as a result of unsecured debt, filing for bankruptcy protection using Chapter 7 or Chapter 13 debt can discharge, or wipe out, your obligation to pay the debt. Contact a bankruptcy lawyer in Sacramento if you live in the Eastern District of California, to find out if you have enough debt or a low enough income to file for bankruptcy. Bankruptcy can also be used to stop collection activities and avoid lawsuits from creditors.
The hardware supplier, Orchard Supply Hardware, started 87 years ago in 1931, will be serving its last customers in California, Florida, and other states in 2018. Orchard Supply began as Orchard Supply Farmer Co-op, a modest co-op formed by 30 farmers based in the San Jose, California area. Orchard was started and thrived in the midst of the Great Depression, but after struggling through rocky financial health over the last eight years it could no longer compete with larger stores.
White Knight: Lowe's
Orchard Supply was in deep financial trouble at the start of 2013 and mid-year filed for Chapter 11 bankruptcy protection with the US Bankruptcy Courts in California. At the time of the announcement, the company also announced that it would sell its highest valued assets, including around 95 of the highest profit generating stores to Lowe's Home Improvement Stores. The company remained a separate brand within the home improvement store's portfolio.
Shutting down California Chain
On August, 21st 2018, Orchard Supply Hardware employees were notified that the company will begin closing all its stores nationwide beginning this week with the store closure plan expected to be completed by the end of the fiscal year. Lowe's CEO, Marvin Ellison mentioned that the impact of the store closures makes the decision a difficult one, but a decision necessary for the company to focus on its home improvement business. At the end of the day, the Orchard's $600 million sales contributions last year, amounted to less than 1% of Lowe's overall sales.
For customers looking for good deals on hardware supplies, Orchard Supply will begin store closing sales starting immediately with everything in Bay Area Stores being heavily discounted in order to liquidate store inventory. In typical liquidation sales, the 99 Orchard Supply Hardware stores will likely increase the percentage of discounts as time goes on.
Sacramento Business Bankruptcy
There comes a time in the life of a business where it must overcome financial adversity and Chapter 11 was enacted in order to deal with these issues and save the business. It's often true that the economy, business owners, and customers are all better off when companies are able to reorganize debt and stay in business. However, this isn't always the case and, in some cases, it is more sensible to close down the business to focus on new ventures. Contact a bankruptcy lawyer in Sacramento if restructuring your debt would benefit your company, as well as, your customers.