When is Bankruptcy the right option?

October 19, 2013

Many people are haunted by the stigma of Bankruptcy.  In today’s economy, you are not alone.  This webinar will explain the basics of bankruptcy and how a fresh start can benefit you and your family.

Crystle Lindsey is the founder of The Lindsey Law Group—a dynamic law firm that specializes in providing effective and aggressive legal services for individuals and businesses.  Based out of southern California, she believes in providing quality legal services at prices that individuals facing financial hardship can afford.  She believes that, given the financial climate of today, individuals and businesses need legal protection more than ever. Crystle Lindsey earned a Bachelor of Arts Degree in Political Science from the University of South Carolina in 2008.  She went on to earn her Juris Doctorate Degree from the University of the District of Columbia in 2011.  She is admitted to practice law before all courts in California, U.S. District Court, Central District of California, and U.S. Bankruptcy Court for the Central District of California.  Wealth Management Financial Advisors is honored to have her as a guest speaker for our webinar series.

 

Webinar Overview:  Bankruptcy Basics for Homeowners 9/12/2013

Bankruptcy Basics for Homeowners covered an informative description of the chapters that individuals could file in order to relieve themselves of their debt under the federal bankruptcy code (which falls under the US Chapter 11.)  In this webinar, guest speaker Ms. Crystle Lindsey described how a home owner could benefit from filing either chapter 7 or chapter 13 bankruptcies. Under chapter 7, bankruptcy is referred to as “liquidation” because unsecured debts i.e.; credit cards and medical bills will be wiped out through bankruptcy. Also available to individuals are chapter 13 bankruptcies or “wage earner bankruptcy” which can be used to re-pay some of your debt.   It is usually reserved for homeowners that make too much income to have their debts wiped out through chapter 7.  Through a chapter 13 bankruptcy, a re-payment plan is set up with the court system in order to satisfy the debts that one has accrued.

 

Ms. Lindsey went into detail as to how a bankruptcy can protect a home from foreclosure if there is a pending sale date on the property through an automatic stay.  As soon as the homeowner files a bankruptcy, the sale date must be removed and the foreclosure must come to a stop.  The income to debt ratio is also very important in deciding which type of Bankruptcy to file.  It improves the chances for an individual to modify or refinance their homes, since their debt to income ratio is strongly affected. California homestead exemption act entails that through system 1: a single homeowner can exempt up to $75K for a single person or $200K in their homes if there is more than one person.  The amount of equity in a property is very important for this purpose.  Some debts that cannot be discharged through a bankruptcy include: tax debt (both IRS and property tax debts), student loans, and other liens against a property that are placed for specific reasons.

 

Ms. Lindsey’s information regarding stripping liens within a bankruptcy was also very useful for clients who were interested in the details of filing for bankruptcy. If a person has no available equity in their property, the second and/or equity line could be stripped from the property through bankruptcy.  A home-owner will pay little to nothing at all within a repayment plan in this case.  HOA, homeowner’s association, fees are also a factor in California.  Since it is possible for an HOA to file a lien against a property when they reach a certain amount, it may or not be possible to strip the HOA lean during a bankruptcy.  If this debt is secured (meaning that the association has placed a lien on the property because of the arrears accrued) then it is not possible to strip the past due amount through bankruptcy.  If the HOA dues are not recorded, then it is possible to strip the balance from the property through a bankruptcy.

 

She also stressed that bankruptcy is a negative event in a person’s credit profile.  Ms. Lindsey suggested credit restoration services in order to help a person recover from the bankruptcy in terms of their credit report.    Since many people are concerned with their credit scores now, it was advantageous to include bankruptcy’s impact on credit within the webinar.

The questions that were submitted were concise and Ms. Lindsey did a good job of answering the questions.  Here are a few of the questions that were asked.

  • Can I receive my salary if I file or can I look for a job if I am unemployed?

  • Can Bankruptcy eliminate back taxes?

  • There are very specialized rules in order to qualify and you should consult an attorney.

  • I have a pension. Can I keep it even though I am filing Bankruptcy?

  • I owe my relatives money. I don’t want to file on the debt. What can I do?

  • Will bankruptcy show on my credit report?

  • Will I ever be able to buy a house if I file?

  • Can I keep a credit card, even though I am filing?

  • Do I have to go to court?

  • I’ve heard there’s a new law that will make filing bankruptcy more difficult. Is that true?

  • What’s the difference between chapter 7 and chapter 13?

  • Is Chapter 7 Bankruptcy Right for Me?

  • When does chapter 13 make sense?

  • Can I choose the type of Bankruptcy I file?

  • Under Chapter 7, are there any restrictions on the kind of debts that can be discharged?

  • Can I choose not to discharge certain debts in Chapter 7?

  • What happens to my credit after bankruptcy?

  • How do I rebuild my credit?

  • How soon can I consider larger loans—like a mortgage?

If any of these situations applies to you, we’re here to help.   Reach out before your situation gets worse.

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