Petition Preparer or Attorney, What's Better for Bankruptcy?

It makes sense that if someone needs to file bankruptcy, they probably don’t have a lot of money. So it can be tempting to seek bankruptcy help from a petition preparer or a cheap attorney from out of town. But it makes much more sense to hire someone who is actually an attorney and is familiar with the local bankruptcy rules and procedures. Bankruptcy is one of the most important decisions a consumer can make. Why not take the time to make sure that bankruptcy goes as smoothly and efficiently as possible?

Bankruptcy Petition Preparers

Sometimes Sacramento consumers go to bankruptcy petition preparers for assistance. The services, also known as “typing services,” are usually non-lawyers that charge a fee to generate the forms required to file a bankruptcy. While these services are typically less expensive on the front end, they can end up costing the consumer a great deal down the line. This is because petition preparers are unable to advise about exempt property, advise about which type of bankruptcy to file, advise which debts and assets to list, and give general legal advice.

That is why they are so cheap.

The fact is that petition preparers are not attorneys, thus they can not do what an experienced bankruptcy lawyer can. Many times, a consumer will hire a petition preparer to save money, but then be forced to hire an attorney anyway to fix the problems that arose because of the initial filing. Even the seemingly simple bankruptcies often have intricacies that require an attorney. A few years ago, a bankruptcy judge explained in a ruling that, due to the complexity of filing for bankruptcy, only members of the legal profession are presumptively competent to protect a debtor’s interests.

Hiring a Local Attorney

Bankruptcy power is derived from the US Constitution and the Bankruptcy Code was created by Congress, so it would be fair to assume that any bankruptcy attorney is a good bankruptcy attorney for any location. But bankruptcy practice and procedure varies widely from state to state and from district to district.

One of the major differences is that different states handle exempt property in different ways. That means that depending on which state’s exemptions apply to a case, the debtor may or may not be able to keep certain assets. Some states can be more friendly to Chapter 7 bankruptcies, and vice versa. Each district, and even court, often has it’s own rules and customs with regards to how the Bankruptcy Rules are used, how the Bankruptcy Code is interpreted, and the role of the trustee in the bankruptcy. There is also no uniform Chapter 13 bankruptcy plan (despite attempts to create one.)

A Local Attorney is the Best Hire

The stakes are too high. Consumers can lose cars, businesses, savings, and even their homes if a bankruptcy isn’t properly handled. Plus, hiring a local attorney will help the consumer feel more comfortable during the bankruptcy process. Since this is one of the most important decisions a consumer can make, it simply makes sense to go local and go professional. Get a local attorney.

Chapter 7

Attending Bankruptcy Court for the Trustee and Meeting of Creditors

What is the Meeting of Creditors and Why do I have to go?

One of the most central moments during a bankruptcy is the initial meeting of creditors. There are a number of procedures and requirements with which the debtor and her attorney must comply. Failure to do so will likely lead to dismissal of the case. This means that the debtor isn’t going to get their debt discharged.

There are many purposes for the meeting of creditors, but the primary focus is to obtain further information about the debtor’s case, particularly data regarding the debtor’s assets and liabilities. In a Chapter 7 bankruptcy, the trustee is interested in, among other things, determining the value of assets and whether or not they are exempt. In a Chapter 13 bankruptcy, the trustee is interested in, among other things, determining if the payment plan is feasible and that the creditors are being paid as much as possible.

Document Requirements

Depending on local practice or bankruptcy rules, the documents required may vary. In Sacramento, there are many different trustees. Whether they are Chapter 7 or Chapter 13 trustees, they require the documents identified in the bankruptcy code. In addition, they often request additional documents. The case will be over much more quickly than the debtor would like if the trustee doesn’t get the documents she requests.

In the Eastern District of California, debtors are required to produce photo identification and proof of social security at the meeting of creditors. It is important to work closely with your attorney to make sure the proper documents are provided.

What does the trustee ask?

The trustee asks many questions, which often vary depending on the facts of the case. It is important to listen closely to the trustee’s questions and answer thoughtfully and truthfully, as the debtor will be under oath and answering under penalty of perjury. Answering honestly will also make the whole process goes more smoothly. The trustee often asks if the debtor is expecting an inheritance or if they’ve won the lottery. The trustee will ask whether the debtor read and understood all the documents that they signed and filed with the bankruptcy. In a Chapter 7 in Sacramento, there is a “Bankruptcy Information Sheet” that the debtor should read before the meeting. The trustee will ask if the debtor has done so.

There are many more questions that could come up. The best way to be prepared is to talk to an attorney about the facts of the case before the meeting. A good attorney will help prepare the debtor for all aspects of the meeting of creditors.

Do creditors really show up?

Yes. But not always. Depending on the situation, creditors will be more or less likely to appear. If a creditor believes the debtor is hiding assets or not being truthful in the bankruptcy documents, the creditor may show up and ask questions to get more information. If there is a highly contested issue in the bankruptcy, creditors are more likely to appear and ask questions of the debtor. Typically, however, in consumer bankruptcy cases, it is fairly rare for creditors to make an appearance at the meeting of creditors.

That doesn’t sound so bad.

No, it doesn’t. But it is key for the debtor to be responsive to communications from her attorney so that they can work together to satisfy all the requirements and keep the trustee satisfied. Preparation and cooperation will make the meeting go smoothly and get the debtor one big step closer to discharge.

Chapter 11

How Much Does Bankruptcy Cost: A Look At Attorney Fees

In most bankruptcy cases, the fees an attorney charges are disclosed. In fact, the Court also provides guidelines covering the range of legal fees applicable to work on consumer bankruptcy cases. In chapter 11, an attorney is paid after filing a motion for compensation which lays out exactly how much the attorney is charging and how much time was spent on particular tasks.

However, it seems that in chapter 9 (municipal bankruptcies) fees do not have to be disclosed. This means that the attorneys for Detroit could charge millions in legal fees without ever disclosing to the court or to creditors how much they are charging or what they are spending their time on. The bankruptcy judge in this case decided to take a closer look at the cost of the case, and so the judge intends to appoint an examiner to make sure that the attorneys' fees are "disclosed and reasonable." Among other things, the examiner will probably review the attorneys' fees and inform the court if they fees are out of the scope of permissible legal work. While the parties could object to the appointment of an examiner, it seems unlikely at this time.

Fortunately for most individuals considering bankruptcy, most bankruptcies are handled on a flat fee basis. This means that the price is agreed upon before the bankruptcy is filed, so that a debtor knows exactly how much he or she will be paying for a bankruptcy filing and doesn't have to worry about the hourly rate of an attorney.

Source: Tom Hals, Yahoo! News," Lawyers in Detroit bankruptcy may face scrutiny on fees," August 1, 2013

Debt Relief

Benefits and Consequences of Debt in Today's World

The past few years have forced many residents of Sacramento to rely more heavily on debt to finance everyday tasks. Many have seen their debt increase in the form of credit card debt, student loan debt or mortgage debt if the house has lost value.

In some cases, debt can be beneficial to the individual. Debt can help a student make it through school. Debt can also help a business get an idea of the ground. For example, the electric car company Tesla received a loan from the government, which it was able to fully repay in 2009. Tesla would never have been able to create the electric car without incurring that debt.

Debt can be a necessary occurrence in these economic times. For example, it can be used to finance a car that will allow the debtor to get to work or school. Debt can be a great tool to reach goals. But sometimes a debtor's financial circumstances change through no fault of their own, causing these debts to become overwhelming. Fortunately, when this happens debtors have options, such as bankruptcy, to get out of debt.

Bankruptcy is an option for individuals who are facing more debt than they can afford to pay back. This debt can include debt such as medical debt, credit card debt and mortgages. Bankruptcy allows the debtor to either discharge their debt or to create a debt repayment plan. Chapter 7 bankruptcy allows the debtor to discharge their debt. Chapter 13 bankruptcy allows the individual to create a debt repayment plan that can lower interest rates and eliminate fees.

No matter how a debtor managed to fall behind on payments, there are debt relief options. Bankruptcy is just one way debtors can regain control of their financial future.

Source: USA Today, "Debt shouldn't be a four-letter word," Jeff Reeves, July 28, 2013

Debt Relief

Yreka Bankruptcy Lawyer: What is bankruptcy court?

What is bankruptcy court? To put it simply, bankruptcy courts are the courts in which all bankruptcies must be filed, including those for Yreka bankruptcy attorneys. After a person has prepared his or her petition, schedules, and other documents, that person must file those documents at the bankruptcy court for his or her district. As bankruptcy courts are federal courts, they are often found in federal buildings along with other federal courts.

Unlike most other courts, bankruptcy courts are specialized. The judges in these courts will usually only hear bankruptcy cases and matters related to bankruptcy cases, meaning that most bankruptcy judges are experts in bankruptcy law. Also, unlike most other judges, bankruptcy court judges are appointed for fourteen year terms.

While filing for bankruptcy does have its downsides, there are also many benefits. Bankruptcy allows a person to discharge almost all of his or her debts. Further, when a person files for bankruptcy a stay against almost all creditor actions is automatically put into effect. This means that lawsuits and other collection actions, as well as foreclosures, will be put on hold.


Jefferson County Files Plan to Exit Bankruptcy

It is not just individuals or businesses that can file for bankruptcy. If a municipality falls into hard times, it too can declare bankruptcy. This is what happened to Jefferson County (a county in Alabama).

Jefferson County filed for bankruptcy protection in November 2011, becoming the largest municipal bankruptcy case in the United States. However, 2011 is not when Jefferson County's financial troubles began. In the mid-2000s, Jefferson County decided to upgrade its sewer systems. Jefferson County financed this upgrade through debt, which it apparently could not afford to pay back. Unfortunately, the best interests of the county may not have been what officials had in mind when deciding to upgrade the sewer systems: it appears that political corruption was rampant in these deals (there were charges of bribery and fraud, and over 20 people were convicted).

Thus far, the case has cost Jefferson County approximately $20 million in legal fees. However, it appears that the case is almost complete (it should be finished by the end of the year). Further, it appears that Jefferson County's plan (which still needs approval from the bankruptcy judge) will provide a benefit to the taxpayers. Under the plan, many debts will be reduced. Hedge funds, which are owed approximately $872 million, will only collect about 80 cents on the dollar. Insurers, which claim to be owed approximately $315 million, will only collect about 52 cents on the dollar (although, the county is also setting up a $25 million fund to pay claims against the insurers). JPMorgan Chase, which is owed approximately $1.22 billion, will only collect about 30 cents on the dollar. Unfortunately for the taxpayers, the plan is also going to be financed by raising sewer rates.

So, bankruptcy isn't just for individuals or businesses. In some states, municipalities can file for bankruptcy, and in doing so can cut their debts significantly.

Sources: Michael Connor, Reuters, "UPDATE 1-Alabama county files exit plan to end $4.2 bln bankruptcy," June 30, 2013; Steven Church and Dawn McCarty, Bloomberg News, "Jefferson County Files to End Bankruptcy by Cutting Debt (1)," July 1, 2013.


Finding a Bankruptcy Lawyer in Sacramento, CA

Finding a Bankruptcy Lawyer in Sacramento, CA is an important process because there are hundreds of bankruptcy lawyers to choose from. Mikalah Raymond Liviakis of the Liviakis Law Firm is one of them. As a chapter 13 specialist and business and commercial bankruptcy lawyer Liviakis gives clients new insight into reducing tax debt payments, lowering interest rates on credit cards, and discharging second mortgages.

Whether an attorney makes bankruptcy law a first priority is the first question to ask. Bankruptcy law has become a trendy legal field for lawyers to jump into due to the surge in demand for debt attorneys in the last few years. Sacramento and Carmichael residents have experienced some of the most severe drops in home prices. Modifying a mortgage after a severe drop in real estate value is a common method of saving your home and preventing foreclosure often requires chapter 13 bankruptcy. For homeowners there are far greater options in chapter 13 compared to chapter 7. For example mortgages that are in default can be cured over time in chapter 13, making the modification process much simpler than in chapter 7.

Chapter 11 is yet another option for large debt holders. However most attorneys are unfamiliar with chapter 11 bankruptcy. Chapter 11 reorganization is not just for large corporations, it's also for those who don't fit neatly into the perameters of other insolvency options. Filing chapter 11 allows high debt holders to reorganize their debt with fewer court and trustee fees on average, an option that might not be available for them in chapter 13.

The Liviakis Law Firm handles chapter 13, chapter 11, and chapter 7 cases for individuals and businesses.


What Are a Homeowner's Options When Facing a Foreclosure?

Today's economy has made many basic necessities for Americans much more difficult to afford. One payment that many Americans have fallen behind on in the wake of the recent recession is their mortgage payments. Falling behind in mortgage payments can lead to foreclosure proceedings, which can lead to the homeowner losing their home. One way to stop foreclosure proceedings is to file for Chapter 13 bankruptcy.

Many homeowners who have had a foreclosure started against them do not know that they may have options. Once the proceedings have begun, it is not too late for the homeowner to do something to stop the foreclosure.

  • Some of the options for homeowners include:
  • Loan modification
  • Allowing the foreclosure to occur
  • Declaring Chapter 7 bankruptcy
  • Declaring Chapter 13 bankruptcy
  • Short sale

When a homeowner files for Chapter 13 bankruptcy, it can allow them time to restructure their loans. It also can allow the homeowner to wipe out a second mortgage completely. It also allows the homeowner to eliminate unsecured debt.

Filing for Chapter 13 allows for the individual to create a repayment plan. The plan allows for the bankruptcy filer to pay under the new repayment plan, over either a three or five year period. This repayment plan can also allow for reduced interest rates and eliminate penalties and fees.

The advantage of filing for Chapter 13 over Chapter 7 is that since it is a repayment plan instead of discharge of debt, more types of debt can be included. Student loan debt is not dischargeable under Chapter 7 but can be a part of the repayment plan in Chapter 13.

Source: Examiner, "Options for homeowners in foreclosure," Oct. 29, 2012