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  • Avoid a Second Bankruptcy

    Avoid a Second Bankruptcy

    There is no second opinion to the fact that it is easy to fall back into debts even if you have had a good financial restart using a Chapter 7 bankruptcy process. Same is the case with debtors who have successfully paid off their creditors using an effective Chapter 13 reorganization plan. Statistics reveal that 16% of the bankruptcy filings are repeat ones and 8% of the filers are the ones who have declared bankruptcy earlier. Imagine the ordeal that one goes through in the bankruptcy process! Hence it is advised that a second time declaring / filing of bankruptcy has to be avoided. One of the other key aspects to keep in mind is that a Chapter 13 bankruptcy remains on your credit report till about seven years from the date of filing and it is ten years in the case of Chapter 7 bankruptcy. We can give you some guidance on how a second-time bankruptcy situation can be avoided. Additional clarifications may be sought from an experienced attorney.

    Limit on dischargeable debts

    There are no limits associated with filing bankruptcies but there are limits around the discharge of debts that you seek through them. The period shown below indicates the date from the previous bankruptcy:

    • Chapter 7 followed by Chapter 7 – Eight years
    • Chapter 13 followed by Chapter 13 – Two years
    • Chapter 13 followed by Chapter 7 – Ideally Six years, it can be sooner if you have paid the unsecured creditors their full amount or the at least 70% of the claims. The repayment plan should have been proposed and executed in good faith
    • Chapter 7 followed by Chapter 13 – Four years

    Despite the limit on the time period for dischargeable debts, the debtors are always advised to stay away from situations that can lead them to a second-time bankruptcy filing.

    Read through some of the below pointers that can aid you on the same –

    1. Don’t purchase homes/properties beyond your capabilities – Most bankruptcies arise due to the fact that home mortgages cannot be paid. So if you have already been through a bankruptcy ordeal, then be wise when making judgments about buying a home that is beyond your payment capacity. If Los Angeles is becoming a costly affair with regards to buying a home, then expand and move to other regions of the California state where your affordability is good.
    1. Do not keep credit card dues–The revolving debts of credit cards are a common problem that debtors face after they get a discharge of these dues in bankruptcy. They get flooded with new credit card offers but availing them to the debtor’s benefit will be tricky for the debtor. He needs to show his ability to repay the dues as well as not get too immersed in debts. So if you are having any credit card payments, then get them cleaned regularly (every month)
    1. Plan your expenses with a budget–Being in control of your expenditure will be the wisest method to adopt after your bankruptcy situation. Reducing high-cost expenses (around living and food) and loan consolidation of your existing loans like the credit cards/ student loans can be some measures that can be put to use. Also, plan with a budget at hand (one may use any of the available budgeting apps) or seek expert help for managing your post-bankruptcy situation.
    1. Save for emergencies–A situation of sudden unemployment or a medical emergency can lead a person to get immersed in further debts. Statistics reveal that 40% of the U.S. population cannot handle an emergency need of $400. So, create an emergency fund and grow it to a value that is enough to cover three months of your expenses. An emergency fund to cover six months or more would be the best case situation for the debtors
    1. Co-work with creditors – Though it may sound annoying for a debtor, it is one of the recommended practices to reach out to his creditor. A proper payment plan can be drafted and executed with the help of your creditor when you have successfully explained your situation to them. They can concede on co-working with you and eventually it is benefiting too.
    1. Increasing your income source – Another job or a second job option opens up avenues for a higher income. It is a trend in Los Angeles that people are turning towards Uber and Etsy in order to earn a few dollars in addition to their regular pay. It certainly does help to explore the micro-gigs options for you if you are falling short of income
    1. Revisiting Chapter 13 plan – If you have earlier raised a Chapter 13 bankruptcy and in the midst of your repayment plan, it is advised to revisit and make amendments based on the current financial condition of yours. This can put you in a better position with clearing your debts and at times of crisis, you can become eligible for a Chapter 7 bankruptcy.
    1. Purposeful spending – Be vigilant of the income every month and especially the expenses that you manage. Better tracking can save your financial condition and in adverse conditions, reach out to expert assistance from bankruptcy attorneys. They will work with you well ahead of your bankruptcy conditions.

    Recovery Law Group is a law firm in Los Angeles, California. They also handle clients in Dallas, Texas. Call them at 888-297-6203 to know their services around the chapters of bankruptcy.


      *Are you more than 60 days past due on your mortgage?

      *Do you own a home?

      Are you currently working?

      By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

    • Possibility of Bankruptcy Relief – Marijuana Businesses?

      Possibility of Bankruptcy Relief – Marijuana Businesses?

      It is widely known that California has expanded its legitimacy to the California Marijuana business. Hence the question pops up whether the Marijuana or other licensed cannabis businesses will enjoy equal/ same rights under federal law as in the case of other California businesses. That’s is the not case and reading through the below will explain in detail the background of these businesses and how they are restricted from declaring bankruptcy in their businesses.

      Cannabis businesses and the California Law

      Since 1996, possession of a small amount of marijuana has been decriminalized. Also, medical marijuana has been legalized from the same year. By making recreational marijuana legal in California, the state has become the largest legal market in the country since last year. The Office of Administrative Law (OAL) in the state of California recently approves of certain regulations with regards to the Cannabis businesses. Even though these laws now make the operation clearer and are able to impart stability to the operating vendors, the cost of operating marijuana businesses has shot up significantly. Hence the California Cannabis businesses face several challenges economically and they include regulations related to packaging, high state and local taxes, supply chain issues and loss of the business due to illegal sellers in the market.

      Because of the aforementioned challenges, the marijuana market is struggling and running a business is turning tougher than expected. Irrespective of being part of the community that grows marijuana, or distribute or have any role to contribute to the Cannabis sector, it is tough to declare bankruptcy due to operating constraints and start afresh.

      Marijuana businesses and the Federal Law

      Possessing or selling marijuana is still a violation under the Federal Law, Controlled Substances Act 21, U.S.C. 801 and this is notwithstanding additional state licenses. So in the eyes of federal law, this is still a crime (if you are in accordance with your California state rules and are operating state-licensed marijuana business). The body of Federal court is yet to pursue these businesses that run with the support of state rules and are still violating their law.

      A memo released in the last year January by Jeff Sessions indicates that there could be a change in this too. But as of now, the marijuana businesses cannot seek bankruptcy relief since they violate the Controlled Substances Act (CSA) and this has been approved by the Office of the United States Trustee (the OUST). In addition, the OUST also takes the position that if anyone who is renting to a seller or a grower of marijuana is also violating the CSA. So take caution, if you are operating cannabis businesses under the state law or if you are renting to the dealers/ suppliers/ growers of marijuana – you cannot seek bankruptcy relief.

      Further to Cannabis related Bankruptcy Restrictions

      As per the Section 843(a)(7) of the CSA, “it is a federal crime to “manufacture” or “distribute” any “equipment, chemical, product or material which may be used to manufacture a controlled substance . . . knowing, intending, or having reasonable cause to believe, that it will be used to manufacture a controlled substance.” This was recently seen in the case of Way to Grow, Inc. who sought bankruptcy relief. The bankruptcy court in Colorado declined their petition even though, they were provisioning horticultural supplies to legalized marijuana businesses – this proved that the filers were also violating the CSA.

      The court dismissed the case of Way to Grow, Inc. quoting that the filers cannot also make any further changes to amend the violations to the CSA as that would have adverse effects on the income that they are generating. This was a unique situation since the filing business was neither a grower/ supplier of marijuana directly nor were they renting the premises where the marijuana businesses ran. They were just merely supplying the equipment, that will help similar customers also grow other crops.

      A different angle – where do the limits stop?

      Another queer angle is seen with the Garvin v. Cook Investments case, where the bankruptcy trustee is not favoring a bankruptcy filing of a landlord who has leased the property to a tenant in the marijuana industry. This is a topic of debate where the power of the OUST and the court is questioned with regards to extending the restrictions of bankruptcy relief to beyond the distributors and sellers in the cannabis industry.

      Working with bankruptcy attorneys from renowned firms such as Recovery Law Group will aid the process of seeking relief. They have the experience of dealing with clients of the varied portfolio in Los Angeles and Dallas.


        *Are you more than 60 days past due on your mortgage?

        *Do you own a home?

        Are you currently working?

        By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

      • Health Coverage – California

        Health Coverage – California

        The number of Americans who want the appropriate Health coverage and costs connected with health care in the U.S have only grown exponentially. This is a disturbing phenomenon on the affordability of the health-care system and nevertheless, This had been a plan for Barack Obama, When He ran for the president in 2008. To reform health care to make it affordable and to have basic health insurance coverage for the citizens had the foremost action points for the president.

        As critical was this priority, The president threw the above within 14 months of his presidency stature. The enactment of the Patient Protection and Affordable Care Act, or known as ACA or better referred to as Obama care, focused on reducing costs and widening the coverage. This made significant differences in the health insurance industry and in America’s overall health care. The key accomplishment of the ACA had been that it brought about the establishment of online health insurance marketplaces in several states in the U.S. In the state of California, it is Covered California.

        We will delve in detail about the Covered California marketplace and the advantage that the residents of Los Angeles will get from it for their health insurance.

        Covered California

        The health care marketplaces had termed exchanges under the ACA and if any state could not establish one, the federal government would establish one for that state and encompass it within the Federal Healthcare. These ACA exchanges will be the online storefronts for the citizens to compare and purchase coverages from the health insurance providers. The exchanges are not insurers. These ACA exchanges route the request to the related states health insurance agency for people who have low-income ranges. Eg, Routing of the application for health coverage to Medi-Cal in the state of California will be taken care of by the ACA agency in California.

        Covered California is the online health coverage marketplace that is ACA-compliant and took satisfaction in being the first state marketplace established. Just after six months from the enactment of the ACA, Governor Schwarzenegger and the California Legislature passed the law to set up Protected California which originally started as California Health Benefit Exchange.

        Saving Money on Health Insurance – Covered California

        There are three independent reforms of the ACA that was accomplished by the law passed with the goal of minimizing health care costs and maximizing the coverage via the health insurance.

        Let’s review those three reforms here:

        1. Pre-existing conditions coverage – Prior to the ACA, the insurance companies could deny health care coverage for pre-existing medical conditions. This forced the people who could not buy the insurance as they paid directly for their healthcare
        1. Individual’s mandatory coverage – The ACA mandates that every individual in the U.S. be covered through individual health insurance or through the employer or under a government program. Those who fail this should pay a penalty to the IRS at the end of the year.
        1. Health Insurance Exchanges Subsidy – In order that many people buy health insurance through these exchanges, subsidies had assured to families who earned four times the federal poverty level. With these subsidies, The original cost of obtaining health insurance had reduced.

        Of these reforms, Penalty to the IRS had reduced to $0 through the Tax Cuts and Jobs Act in 2019. But through Covered California, You can still enjoy the subsidy and also get coverage if there is a pre-existing medical condition.

        The Metal Tiers System of Covered California

        The different plans in Covered California was termed as different metal tiers and it made the comparison easier for the consumers. The four different tiers of the ACA, viz. bronze, silver, gold, and platinum classifies the plans depending on the percentage of the health care costs of the insured that will be paid by the insurer.

        Bronze – 60% of the covered medical bills will be paid by the insurance company. The other 40% will be borne by the consumer through co-pays or through deductibles.

        Silver – 70% of the medical costs are covered by the insurer and the remaining 30% has to be paid by the insured.

        Gold – 80% of the healthcare costs are required to be paid by the insurance company leaving 20% to be paid by the individual.

        Platinum– 90% of the medical costs are taken care of by the insurance company and the specific needs to arrange the remaining 10%

        It is very important to note that the premium for a higher-tier plan is usually costly compared to a medium-low tier. But, The ACA assures subsidies which are required to reduce the financial strain with high premium amounts

        Medi-Cal for Low-Income citizens

        It can be a surprise to know that even low-income individuals qualify for an insurance policy through Covered California. Though the ACA limits the subsidies for a specific income range of its citizens, the folks who earn lesser than that threshold can now avail free or reduced health insurance coverage through Medical, Medicaid Implementation in the state of California.

        As referred earlier, The application for MediCal coverage is well integrated into Covered California. This makes the application for Medi-Cal coverage quite simple and similar to how private insurances are sought through Covered California. The Medi-Cal can also be availed via mail or in person.

        The necessity of health insurance

        In the U.S. health insurance is more of a mandate than just a necessity. The amount of money that one tends to spend on health care has at times landed individuals in situations of bankruptcy. Recovery Law Group has seen many individuals who have reached this condition because of their inability to take care of the medical bills or have surplus debts because of inappropriate planning for health care. In Los Angeles, California and in Dallas, Texas, consult with a bank attorney from the Recovery Law Group to understand the importance of health insurance. Explore Covered California and purchase the tier plan that is best suited for your income range and for your family needs.


          *Are you more than 60 days past due on your mortgage?

          *Do you own a home?

          Are you currently working?

          By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

        • Business Debts

          Business Debts

          The interest in launching something innovative often leads to venturing into business initiatives. In the U.S. the individuals find great platforms and get good support to start their own business and this spirit of entrepreneurship is much appreciated by society. However, there are ample things to reckon before one decides to take the big plunge into the business world of U.S. – the business venture could either be big or small, the invention of the new or expansion of the old.

          The foremost factor to consider in starting a business venture is the availability of a proper business plan. Unless you have the roadmap, there is no vision in your venture. Alongside this plan, the crucial aspect is the availability of stable investors. Without these aforementioned resources, it is easy for an individual to quickly land into a financial crisis with the business that he starts. The outcome is business debts and it could keep mounting with each day. It is quite normal for an individual to start their business in debt but with time the progress with business should save them from getting into financial crisis.

          Bankruptcy filing for business debts

          Surplus debts that turn out to be unmanageable for the business owners force them to file for business bankruptcy. It isn’t a negative move for your business to file for bankruptcy and there is nothing to worry or be shameful about it. The businesses see it as an opportunity to reconstruct their debts and formulate a plan to build their financial stability. At any cost, the filing of business bankruptcy shouldn’t be used for protecting your assets or your business fraudulently.

          You will definitely admit that the procedure of filing for business bankruptcy and the related tasks are very stressful. Unless the debtor has a backing through an efficient bankruptcy firm, it is always advised to stay away from business debts. Recovery Law Group, operates from Dallas, Texas and from Los Angeles, California have expert attorneys who can offer the support and guidance to handle situations of business bankruptcy. Dial 888-297-6203 to avail their services and get speedy solutions.


            *Are you more than 60 days past due on your mortgage?

            *Do you own a home?

            Are you currently working?

            By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

          • Bankruptcy Preparations in California

            Bankruptcy Preparations in California

            Many honest and upright taxpayers are having a tough time making ends meet. This is because of the overwhelming debts accumulated thanks to numerous credit card bills, medical bills, etc. Though undesirable, bankruptcy provides you with a clean slate to get a fresh start as far as unpaid dues are concerned, it is not a child’s play to declare bankruptcy, especially in California. With unforeseen expenditures like huge medical bills or divorce causing you to spend double the amount of money, there is a serious requirement for debt relief among people. It is important to be prepared for bankruptcy, says, Los Angeles bankruptcy lawyers Recovery Law Group.

            The very first step to prepare yourself for bankruptcy is to decide which chapter of bankruptcy would work best for you since each has a specific requirement and offers different protections. Choosing the correct chapter is important as they will affect your finances. It is also important to consult an experienced bankruptcy attorney, who will suggest the proper bankruptcy chapter depending on your financial circumstances.

            The Workings of Chapter 7 Bankruptcy

            This is also known as liquidation bankruptcy through which debtors can eliminate all debts eligible for discharge. Some debts like government taxes, student loan, spousal or child support, debts owed for injury caused to another due to DUI and restitution as a result of a criminal conviction are discharged only under specific conditions. Mostly, all eligible debts are discharged, however, sometimes some assets of the debtor might be sold off by bankruptcy trustee to pay off the creditors. The assets which are protected from going under the hammer include –

            • The “homestead” or primary residence up to a specified equity limit
            • The primary vehicle used for transportation (especially if you live in an area where public transport is limited)
            • Your retirement accounts including IRAs, stock bonus plans, profit sharing, pension and deferred compensation plans like the 401(k) account
            • A single household item with worth less than $675 which may include jewelry, valuable antiques, etc.

            The state of California has 2 systems of exemptions wherein most debtors do not require to surrender any of their assets during bankruptcy. To qualify for chapter 7 bankruptcy, you need to pass a means test as this provision is primarily for those who are in dire need of debt relief.

            Details of Chapter 13 Bankruptcy

            The 2nd option available to individuals who fail to qualify for chapter 7 includes chapter 13 bankruptcy. This is commonly known as the repayment plan option, wherein the debtor has to repay a certain amount of the dues owed within a 3-5 year time frame. In chapter 7, the eligible debts are discharged within a few months of the bankruptcy filing, however, chapter 13 requires a lot more time to get discharged. The repayment plan is devised in consultation with the bankruptcy trustee wherein the entire debt or a percentage of it (depending on the debt accumulated and your assets) is paid. Monthly payments are made to the trustee who then distributes the amount amongst the various creditors.

            This chapter provides you time to catch up on car payments, mortgages while making continuous payments towards your debts. The unsecured creditors like credit card companies are given the remaining amount every month. Post the duration of the repayment plan, the remaining debts are discharged.

            How to file for Bankruptcy in California?

            Once the chapter for bankruptcy is decided, it is important to prepare properly for a bankruptcy filing. Missing out on any step can prove to be quite a costly mistake as you might not get a discharge for bankruptcy.

            Here are the steps required for filing of bankruptcy:

            1. Accumulate essential documents

            The court proceedings require you to have all documents containing pertinent information. Some of the necessary documents include valid ID card (birth certificate, driver’s license, birth certificate etc.); a list of all of your bank accounts and insurance policies which could result in a claim for or against you; all tax returns filed for the past 2 years; proof of income for the previous 6 months as well as proof of ownership of assets like property; as well as circumstances of your situation (divorce, expensive medical care etc.)

            1. Credit counseling

            The court approved credit counseling sessions are mandatory for people who wish to file for bankruptcy. During such sessions, your finances are seen by experts to conclude whether bankruptcy is the best way to get out of the financial mess. The counseling sessions are mandatory and inability to attend them might get your bankruptcy case dismissed.

            1. Consult bankruptcy attorney

            Though having an attorney isn’t a requirement for a bankruptcy filing, having one by your side definitely helps the case. Compared to pro se filings, the success rate of attorney handled cases are much better. The entire paperwork, communication with creditors and all other requirements are taken care of by the attorneys since they are familiar with the rules. Consult expert bankruptcy attorneys at 888-297-6023 to find out more about your case.

            Things to avoid while declaring bankruptcy in California

            For all those people who wish to get rid of their financial problems and are contemplating filing for bankruptcy, it would be beneficial to avoid making some common mistakes, like specific transactions in a particular timeframe, which could cost them dearly. The court does not look kindly on unnecessary expensive purchases and transferring huge sums of money within a few months prior to a bankruptcy filing. This is construed as hiding of assets. Such a practice may be considered illegal, resulting in dismissal of a bankruptcy petition or worse, filing of criminal charges.

            Many people think that transferring assets to other people will result in those assets not becoming a part of the bankruptcy estate and therefore are not liable to be sold off to pay creditors. However, such transaction, even in your spouse or children’s name can be viewed as a fraudulent action by the court. Generally, transactions made 90 days prior to the filing of bankruptcy come under the scanner of the court. If any such aforementioned transactions are spotted, the court can and does reverse them to make the said assets part of your bankruptcy estate. Other transactions that can be interpreted as fraud include –

            • Selling your interest in your business
            • Taking your name off as an owner
            • Taking your name off joint bank accounts
            • Transferring money from your account to someone else’s
            • Selling off real estate despite not getting a fair market price for the same

            While filing for bankruptcy, people should keep certain things in mind, like:

            • Treat all creditors equally

            Despite your desire to pay off a creditor full amount due to them since they have patiently waited for you to get a hand on some money while your payments were due, is not looked upon kindly by the courts. Such kind of transfers come under “preferential transfers” which can have a negative impact on your bankruptcy proceedings and result in clawback. The bankruptcy trustee can assume that such a payment is made to exclude the particular creditor from bankruptcy plan. In this case, they can sue the creditors and obtain the amount paid back to the bankruptcy estate. Thus the situation can prove to be detrimental for both the debtor and the creditor in this case.

            • Don’t make unnecessary expenses on credit cards

            If possible, avoid using your credit cards completely; if not, then you definitely need to curtail spending on unnecessary stuff like any expensive items, etc. The court is likely to accept the usage of credit cards for payment of utilities, gas, groceries, etc. but not of any item worth over $650 within 90 days of the bankruptcy filing. Thus if you don’t want your bankruptcy case to be dismissed, dodge making avoidable expenses through credit cards.

            • Avoid filing a lawsuit

            In case there are people who owe you money or a business dispute that needs resolving and you wish to take the legal recourse of filing a lawsuit; avoid it if you are considering filing for bankruptcy. This is because any recovery you make through the lawsuit will become the property of the bankruptcy estate, thus leaving you with next to nothing.

            • Avoid making any business deal resulting in payments being made to you

            Any business deal you make which results in you acquiring some money might not be what you desire especially when you are about to file for bankruptcy. This is so because any money you receive ends up becoming a part of the bankruptcy estate which is used to pay off your debts. In case you are expecting an inheritance, bonus, tax refund or similar monetary transactions, you should avoid or delay filing for bankruptcy. The court inspects all transactions 90 days prior to the bankruptcy filing to check for any transactions it considers prohibited.

            If you are amongst the various people who are struggling with unsurmountable debts bankruptcy is an ideal choice for you. Whatever your way of getting a bankruptcy discharge, whether a wiped clean slate via chapter 7 or a new financial path via debts management as per repayment plan under chapter 13; you are in for a fresh lease of life. To get a better idea about your case, get a consultation with an expert bankruptcy attorney.


              *Are you more than 60 days past due on your mortgage?

              *Do you own a home?

              Are you currently working?

              By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

            • Bankruptcy and Bitcoin

              Bankruptcy and Bitcoin

              The value of Bitcoin that had been launched in 2009 by Satoshi Nakamoto, has shot up in its value over the years. Gone are the days that close to 10,000 bitcoins were needed to buy a Papa John’s pizza. It now trades at $6,500 and the price of each bitcoin increased to $20,000. Notwithstanding the changes in its trading value, The percentage of buyers or investors in bitcoin money has not declined. That is why we see many people all around the world, own bitcoins or other types of cryptocurrencies. Have you queried what happens to them or the bitcoins that they own when such folks encounter a financial crisis or when they file for bankruptcy?

              Though we do not have a direct answer as to how this is managed by bankruptcy courts, The law firms have a good idea as to how cryptocurrencies are treated in bankruptcy in line with bankruptcy principles. They are assets too and forward need to be disclosed while a debtor files for bankruptcy. It is also likely that Bitcoin can be exempted by bankruptcy principles and hence the borrower may get to retain them too.

              Before we delve into further details of the same, let’s first understand about Bitcoin.

              Bitcoin

              Bitcoin is one type of cryptocurrency that exists on a blockchain. Blockchain may be interpreted as a digital ledger that is shared between several computers. Since bitcoin exists anonymously and due to the design of the blockchain technology, It becomes difficult to steal the value of this cryptocurrency. Bitcoin is also known as a medium of exchange in digital transactions.

              Bitcoin in Bankruptcy

              Declaration: The foremost question of a debtor who possesses bitcoin is whether he has to list the possession while he records for bankruptcy. The answer to his question is a firm, YES and it is irrespective of whether under Chapter 7 or Chapter 13, You have to provide the court with certain information about your property and finances. Just as the other assets that are disclosed along with other financial information, Immaterial of whether there is a probability of exemption or not. Cryptocurrencies are like Bitcoin and also need to be declared.

              Anonymous existence does not entitle the cryptocurrencies to remain anonymous during a bankruptcy process. The bankruptcy trustee in the case can exercise any mechanism (inclusive of reviewing tax returns, looking through financial statements and researching public records) to discover the assets of the debtor. Do not purposely neglect the possession of bitcoin or another cryptocurrency as it is a bankruptcy fraud to do so. If convicted of this fraud, The debtor can be punished up to $250,000 and held for 20 years. A debtor can also miss the discharge in the bankruptcy process.

              State of bitcoin in bankruptcy: Since bitcoin is also the property, It becomes part of the bankruptcy estate when a debtor files for bankruptcy. The liquidation impacts can incorporate both excluded and non-absolved property. The Chapter of filing decides the property that can be treated as exempted or non-exempt. In Chapter 7 bankruptcy, Typically a “no-asset” bankruptcy, The debtor’s assets are exempted and they do not lose any section in this ordeal. If any non-exempt property is classified in Chapter 7, Later it is sold off to pay the unsecured debts.

              Chapter 13 bankruptcy works through a repayment plan that factors in the value of the non-exempt properties of the debtor. The plan is targeted to pay back creditors in a three or five-year period.

              Exemption Criteria: To further understand the exemption criteria for bitcoins that is one must know the state law and federal law exemption in the bankruptcy filing process. In states like California, There are two types of state exemptions known as 703 or 704 exemption. Bitcoin would best fit under 703 exemptions which are also the wildcard exemption and it exempts under the clause of debtor’s aggregate interest in any property. The limit is changing and depends on the other releases used in the bankruptcy.

              Miscellaneous complexities

              We only discussed the complexities linking to the legal status and the type of exceptions that bitcoins would best fit into. These are quiet areas that the bankruptcy courts are trying to address and have no definite rules until now. There are also many unknown complexities that can arise depending on the value of bitcoin controlled and related financial implications. A good bankruptcy lawyer from a renowned firm like Recovery Law Group would be able to guide a debtor with needed clarity. Stand out to this team in Los Angeles, California or Dallas, Texas for managing of cryptocurrencies in the bankruptcy processes.


                *Are you more than 60 days past due on your mortgage?

                *Do you own a home?

                Are you currently working?

                By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.