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Tag: chapter 13 bankruptcy California

  • 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.


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    • Hire Bankruptcy Lawyers to Defend You against Creditor Action

      Hire Bankruptcy Lawyers to Defend You against Creditor Action

      Filing for bankruptcy is one of the last resort people opt for, though it is the best legal option available to get rid of genuine monetary issues plaguing people. Many times people who have filed for bankruptcy might end up getting sued by the creditors for failure to make payments. In case, you have chosen to file without a lawyer (pro se) you might not be adequately prepared to handle such a scenario.

      In a case concerning Chapter 7 bankruptcy, the debtor prior to filing for bankruptcy had opened a home equity line with a local financial institution. When the news of the filing reached the creditor, the institution filed a lawsuit against the debtor.

      The financial institution (Parkway Bank & Trust) based their lawsuit on the fact that the debtor (Casali) had knowingly sought to misdirect the bank when he decided to ask for relief from the loan. As per the bank, one of the debts should be considered non-dischargeable as per U.S. code 523(a)(2)(A). According to Dallas based law firm Recovery Law Group, the code states that bankruptcy cannot provide respite to the filer from any debt (in form of finance, property, or any other service) obtained due to lies or false depiction. According to the complaint filed by Parkway Bank & Trust, Casali had not accurately provided statements of the financial situation while borrowing money from them.

      Thankfully, expert bankruptcy lawyers by the defendant’s side argued that Parkway Bank & Trust could not provide relevant evidence to prove the charges against their client. Inability to prove without any doubt that Casali had knowingly and with dubious intent hidden the financial condition while obtaining the mortgage loan from Parkway Bank & Trust resulted in relief for the client. The case was reviewed by the bankruptcy court and the client got respite by having the loan discharged under Chapter 7 bankruptcy.

      In case you are going through a tough phase and are looking for bankruptcy as an option to get relief from the huge debts it is important to consult an adept bankruptcy lawyer. Call at 888-297-6023 to talk to expert bankruptcy lawyers to get a better grasp on your financial and legal matters. With an experienced team by your side, any complicated legal matter can be easily resolved.


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

        *Do you own a home?

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        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.

        • Can Filing for Bankruptcy Help Protect Your California Contractor License

          Can Filing for Bankruptcy Help Protect Your California Contractor License

          Can Filing for Bankruptcy Help Protect Your California Contractor License

          A lawsuit and a judgment against you can result in the suspension of your contractor’s license in the state of California. Bankruptcy is a great way to get over financial issues and get a fresh start for many people. It is also one of the best ways to prevent license suspension and discharge the judgment debt. As per Los Angeles bankruptcy lawyers, Recovery Law Group, California and Federal Bankruptcy statutes state that Contractors State License Board (CSLB) cannot suspend a contractor’s license for non-payment for a judgment when that particular debt has been discharged in bankruptcy.

          Is it essential to wait for the discharge of a debt in bankruptcy?

          According to experts, you are not required to wait for debt discharge. There are two benefits associated with bankruptcy filing with respect to the license:

          • Your license suspension is protected post-discharge of the concerned debt after bankruptcy. However, it is important to note that during Chapter 7 bankruptcy, debts are not discharged until 3-4 months of filing and in case of Chapter 13, the time frame is 3-5 years after the filing of papers.
          • The benefit of an automatic stay is one of the biggest advantages of filing for bankruptcy. It protects you from all types of collections attempts including repossession and foreclosure.

          Can automatic stay help protect a contractor license?

          One of the biggest advantages of filing for bankruptcy is the provision for the automatic stay which legally stops the creditors from taking any collection actions. They simply cannot start or continue with “a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before” post filing of the bankruptcy case as per Section 362(a)(1) of the bankruptcy code.

          Another advantage is that creditors cannot file a lawsuit against you. In case one is already filed, but has not yet resulted in judgment; the automatic stay can put a hold to the creditor getting a judgment. Without the judgment, the CSLB cannot begin the procedure to suspend the contractor’s license.

          Options available if creditor’s judgment is entered before you file for bankruptcy

          In the situation where your license is not yet suspended (though a judgment has been awarded), filing for bankruptcy initiates the automatic stay which helps stop the execution of the judgment. Thus, per Section 362(a)(2) of Bankruptcy Code, a creditor cannot enforce “against the debtor or against the property of the estate, . . . a judgment obtained before” the filing of your bankruptcy case.

          So, despite having a judgment, once the creditor receives notification of your bankruptcy filing, they cannot inform the CSLB about the recent judgment obtained, if the sole purpose of relaying the information is to get payment for the debts.

          Can the automatic stay be applied on CSLB too?

          Even the CSLB has to put its proceedings regarding the suspension of contractor license on hold to avoid any violation of the automatic stay. However, the guidelines about these are not as clear for the creditors, though many relevant appellate court rulings state that automatic stay applies to CSLB under these conditions:

          1. The automatic stay enforces a confirmation against any collection actions. As per the Ninth Circuit Court of Appeals (the highest appellate court in California) ruling, “consistent with the plain, and unambiguous meaning of the statute and consonant with Congressional intent, we hold that the automatic stay imposes an affirmative duty to discontinue post-petition collection actions.” Eskanos& Adler, PC v. Leetien, 309 F. 3d 1210, 1215 (9th Cir. 2002). As per this ruling, both the creditor and their law firm were found guilty of a willful violation of the automatic stay as they did not dismiss a pending lawsuit against the debtor despite the latter filing for a Chapter 7 bankruptcy case. They had to pay damages to the debtor for the same.
          2. California CSLB was found guilty of violating the automatic stay since they didn’t restore the license of a contractor, which they had previously suspended, before debtor’s Chapter 13 filing. Despite the CSLB reinstating the license 24 days post-bankruptcy filing, the appellate court found it a violation of the automatic stay. The court found CSLB’s refusal to restore the debtor’s suspended license despite being aware of the Chapter 13 petition of the latter, a willful action for collecting dues.

          As per the automatic stay provision § 362(a)(1), “the commencement or continuation . . . of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the [bankruptcy] case” falls under the automatic stay. Additionally, the acknowledgment was made that suspension of contractor’s license, prior to the bankruptcy petition filing, was due to the non-payment of employment taxes. The Bankruptcy Court also approves the prompt reinstatement of the license after the taxes owed by the debtor are paid. In case the CSLB continued its action of recovering the claim by denying the reinstatement of the debtor’s license, it will be found to be in violation of the automatic stay. (California Contractors State License Board v. Bertuccio)

          The CSLB failing to restore a prior suspended license is in violation of the automatic stay; if they suspend a license after the bankruptcy filing, they will worsen their case. The automatic stay has to be respected by California CSLB. Any collection procedure going on against a debtor including license suspension, need to stop immediately when a notification of bankruptcy filing of the contractor is provided to them, especially if the said actions are due to any creditor’s judgment.

          Exceptions to the rule

          There are some exceptions where CSLB can get relief from the automatic stay and suspend any contractor’s license. After a bankruptcy case is filed, a “party in interest” can file a motion in bankruptcy court to get “relief from stay” and pursue the debtor for dues. For this to take place, the creditor (including CSLB) should show an appropriate cause which justifies the “terminating, annulling, modifying, or conditioning [the automatic] stay” as per Section 362(d) of Bankruptcy Code.

          There are as many as 13 major reasons when CSLB can suspend a contractor’s license, including two civil judgment cases. The appropriate causes which justify CSLB’s motion for “relief from stay” motion include –

          • Legal grounds apart from non-payment of any debts (business or license related) or a judgment for license suspension.
          • Issues like workers’ compensation insurance, bonding, and changes made in company people.
          • Many potential reasons for the suspension of the stay are included in the list of Contractor’s State License Law (chapter 9 of Division 3 of the California Business and Professions Code). There are 15 articles here with many statutory sections telling ways, how California state license law is being violated.

          Role of the automatic stay in license suspension

          The automatic stay protection provided by bankruptcy filing ceases all debt collection and judgment enforcing actions. However, police power exception is a governmental action through which any government unit like CSLB can start or continue an action to enforce a judgment. As per the 9th Circuit Bankruptcy Appellate Panel, police power exceptions allow government units to sue a debtor “to prevent or stop the violation of fraud, environmental protection, consumer protection, safety, or similar police or regulatory laws, or attempting to fix damages for violation of such a law….” In re Dunbar, 235 B.R. 465, 471 (9th Cir. BAP 1999), aff’d, 245 F.3d 1058 (9th Cir.2001), quoting, House and Senate Reports (Reform Act of 1978) [H. Rep. No. 595, 95th Cong., 1st Sess. 343 (1977); S. Rep. No. 989, 95th Cong., 2d Sess. 52 (1978)]

          CSLB can also suspend the license of a contractor stating consumer protection, public safety, etc. as these falls under “police power” exceptions. Thus, if there are grounds other than the non-payment of dues available to the CSLB, they can easily continue to suspend your license despite filing for bankruptcy. If you wish to protect yourself, you need to make sure there are no other grounds for license suspension available to the CSLB.

          Since police power justification overrules any relief available through the automatic stay provision of bankruptcy, it is not necessary that CSLB might opt to file a motion for relief. It is important that if you wish to protect your license from being suspended, your lawyer will bail you out by proving that CSLB has no other basis for license suspension other than the non-payment of debts. For any advice related to contractor’s license protection consult expert bankruptcy attorneys at 888-297-6023.


            *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?

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              • 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.


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