San Francisco Bankruptcy Lawyer Blog

When determining whether to file bankruptcy, it helps to have background on bankruptcy terms:

AUTOMATIC STAY: injunction that automatically stops lawsuits, foreclosure, garnishments, and collection activity against the debtor the moment a bankruptcy petition is filed.

BANKRUPTCY: legal procedure for dealing with debt.

BANKRUPTCY CODE: Title 11 of the United States Code (11 U.S.C. §§ 101- 1330), the federal bankruptcy law.

BANKRUPTCY ESTATE: legal or equitable interests of the debtor in property at the time of the bankruptcy filing. The estate includes all property in which the debtor ownership even when property is used by another.

BANKRUPTCY JUDGE: judicial officer who is the court official with decision-making power over federal bankruptcy cases.

BANKRUPTCY PETITION: formal request for the protection of federal bankruptcy laws.

BANKRUPTCY TRUSTEE: private individual or corporation appointed in Chapter 7, Chapter 12, and Chapter 13 cases to represent the interests of the bankruptcy estate and the debtor's creditors.

CHAPTER 12: bankruptcy designed for family farmers or family fishermen with regular annual income to propose and carry out a plan to repay debts.

CHAPTER 7: chapter of the Bankruptcy Code providing for "liquidation," i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors.

CHAPTER 11: reorganization bankruptcy, usually involving a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.

CHAPTER 13: chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts in 3-5 years.

REAFFIRMATION AGREEMENT: agreement by Chapter 7 debtor to continue paying a dischargeable debt after the bankruptcy, usually for the purpose of keeping collateral or mortgaged property subject to repossession.

Continue reading "Glossary of Bankruptcy Terms - San Francisco" »

Most mortgage agreements give the lender the right to collect fees incurred to protect its rights in property, including fees for property inspections, broker's price opinions, foreclosures, bankruptcy.

When the borrower files a bankruptcy petition, pending foreclosure or collection efforts depend on the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. If the lender intends to collect foreclosure or bankruptcy-related fees from a Chapter 13 debtor, the lender may include the fees in its Proof of Claim. If the lender does not include fees in its Proof of Claim, some bankruptcy courts require the lender to demonstrate the reasonableness of the fees and seek the bankruptcy court's approval before collecting fees.

The Bankruptcy Code prevents bankruptcy plans from modifying a mortgage lender's rights under a mortgage agreement, subject to the debtor's ability to satisfy a mortgage arrearage through the plan.

If lender fees are allowed, they will be included in the debtor's bankruptcy plan as part of the lender's secured claim and collected through the plan. The lender should file an application with the bankruptcy court to have the fees approved when the debtor falls behind paying, and the lender files a motion for relief from the bankruptcy stay and seeks the court's permission to foreclose. The court may deny the motion for relief, but allow the lender to add its attorney fees to the arrearage the debtor must pay during Chapter 13.

When a Chapter 13 debtor's bankruptcy case is dismissed, bankruptcy law no longer applies to fees collection. Collection of fees after dismissal of the bankruptcy case depends on the terms of the mortgage agreement and state law. Bankruptcy courts retain jurisdiction to enforce their orders after dismissal so it is not clear if lenders may collect fees when a Chapter 13 debtor's case is dismissed if the bankruptcy court did not previously approve the fees.

When the debtor receives a Chapter 13 discharge, the court enjoins a lender from collecting discharged fees. The lender should audit the borrower's account and to remove all attorneys' fees that have not been disclosed and approved. Attempts to collect the fees may subject the lender to sanctions for violating the discharge injunction.

Continue reading "Lender Fees in Chapter 13" »

When a business has dealings with a party that is in bankruptcy, it should be aware of executory contracts. It's a contract between a debtor and another party under which both sides have material performance remaining. If either side stopped performing, the non-performance would be a breach.

Real property and equipment leases are examples of executory contracts. In these agreements, the lessor has a duty to provide future possession of the property and the lessee has a duty to make the payments.

Executory contracts matter in bankruptcy because the debtor or a bankruptcy trustee decides whether to agree to perform or refuse to perform its obligations under an executory contract. The entire contract must be assumed or rejected. The debtor or trustee may not assume part of the contract and reject or modify the rest. In a Chapter 7 liquidation case, executory contracts must be assumed or rejected within 60 days of the filing of the bankruptcy petition. In Chapter 13 executory contracts must be assumed or rejected before confirmation of a plan unless the court provides another date.

Agreeing to perform translates to assumption of the contract and refusing to perform translates to rejection of the contract. Rejection is automatic if the contract is not assumed within a proscribed time. Rejection of an executory contract is treated as a pre-petition breach of the contract, with damages treated as an unsecured claim.

If a debtor assumes the executory contract, it has to cure any defaults, and show that it can actually perform in the future. Assumption requires court approval. If a debtor assumes and assigns the executory contract to someone else, commonly a buyer of its assets, at a minimum the debtor has to cure any defaults and the buyer has to show that it can actually perform under the contract in the future. An executory contract may generally be assigned even when it has an anti-assignment clause in the contract. This means that a debtor may assign its agreement to a third party to take over the performance even when the non-debtor party negotiated a requirement that its consent must be obtained prior to assignment.

On December 7, 2009, the United States Bankruptcy Court, Northern District of California, San Francisco Division made an order regarding reporting income in Chapter 13 cases. For Chapter 13 debtors, they are now excused from filing with the court, payment advices or evidence of payment received by the debtor from any employer within 60 days before the filing date of a Chapter 13 petition.

The Chapter 13 debtors are instead to file declarations on income in the forms available on the court's or Chapter 13 trustee's web site at least 7 days prior to the first date set for the meeting of creditors under 11 USC Section 341. The debtor is to serve copies of the declarations to the Chapter 13 Trustee.

If the debtor does not file the declarations on time, the debtor needs to request an extension from the court. If the debtor does not comply to file the declarations, the case may be dismissed by the Chapter 13 Trustee, US Trustee, or any party in interest.

The declarations include declarations on lack of income, employment income, self employment income describing gross income and business expenses, rental income, other monthly income such as dividends and royalties, unemployment compensation, pension and retirement, support.

Continue reading "Reporting Income in Chapter 13 Cases" »

Not the nicest news to receive on Thanksgiving Weekend, perhaps, but new data released this week indicates that bankruptcies nationwide spiked 33 percent in the third quarter of this year. California bankruptcies remain a significant part of the problem, as the state remains one of the nation's leaders in this area, an unhappy reality for anyone facing a Bay Area foreclosure.

According to media reports, the American Bankruptcy Institute released data yesterday indicating that 388,485 there were bankruptcy filings between July 1 and September 30, up from 292,291 in the same period last year. "The spike in bankruptcy filings for both consumers and businesses reflect the continuing effects of today's weak economy," said ABI executive director Samuel Gerdano, according to CNN.

According to an analysis by the Reuter News Agency, approximately 71 percent of the third-quarter filings were made under Chapter 7 of the US bankruptcy code and 28 percent under chapter 13. Most of the remainder of the filings used chapter 11. Nevada led the nation in filings per capita with California ranked 13th.

In troubled and unsettled times such as these it is more important than ever to develop a relationship with a full-service Oakland, Walnut Creek and San Francisco bankruptcy law firm. Early consultation with a Bay Area bankruptcy attorney can help avoid worse problems in the future. If the attorney can help arrange a California loan modification it may be possible to avoid bankruptcy entirely.

Reuters: U.S. bankruptcies rise 33 percent in third quarter

CNNMoney: Bankruptcies spike 33%

Newly released data from the American Bankruptcy Institute confirms the anecdotal evidence: Chapter 13 bankruptcies continue to rise here in California and nationwide. The California Chapter 13 bankruptcy trend is part of a broader nationwide rise in Chapter 13 bankruptcy filings over the last year. The lesson from all this? Bay Area Chapter 13 Bankruptcy lawyers will continue to be busy in the weeks and months ahead as they work to help clients manage these difficult economic times.

If, as ABI forecasts, bankruptcies nationwide exceed 1.4 million this year that would make 2009 the worst year for bankruptcy filings since 2005. The Institute's newly released data for October indicate that there were 135,913 filings last month - a 8.9% increase compared with September and up a full 27.9% over October of 2008. The report notes that Chapter 13 filings made up 28.5% of the October total, which it describes as "a slight increase" on the September rate.

An analysis at Credit.com points out that much of this increase can be linked to the unemployment rate, which has slowed its rise in recent months but remains at levels not seen since the Reagan administration.

As I've noted in previous posts, Northern California Bankruptcies represent a significant share of the overall California Chapter 13 bankruptcy trend. An experienced Northern California Chapter 13 bankruptcy law firm can be a key ally in managing this particularly complicated legal territory. Contra Costa County Chapter 13 bankruptcy can affect credit ratings and many other aspects of your life. Experience, sensitivity and attention to detail are all key factors you should consider in selecting a San Francisco area Chapter 13 bankruptcy lawyer.

Credit.com: Bankruptcy state raise questions about recovery

American Bankruptcy Institute Press Release on new data

New data released this week by Equifax shows that Northern California remains particularly vulnerable to small business bankruptcies. Three Northern California areas made the top 15 among the country's hardest hit small business bankruptcy regions during September: Sacramento, Oakland-Fremont-Hayward and the San Jose-Sunnyvale area of Silicon Valley.

Overall, California cities or regions occupy seven of those top 15 slots, spotlighting the degree to which California small business bankruptcy remains a difficult problem. Sacramento small business bankruptcy activity earned the state capital the number three spot on the list. Oakland was 10th and San Jose-Sunnyvale 14th.

A press release from Atlanta-based Equifax, which compiled the data, noted that, nationwide, the September 2009 numbers represent a 27% increase in small business bankruptcy filings from the same month a year ago: 9361 filings, versus 7386 in September 2008. Equifax analyzed Chapter 7 bankruptcy filings, Chapter 13 bankruptcy filings and Chapter 11 bankruptcy filings.

These unpleasant economic numbers are a reminder of the important role a Northern California bankruptcy attorney should have in your financial planning. Consulting an experienced Oakland bankruptcy lawyer, Contra Costa County bankruptcy lawyer or San Francisco bankruptcy lawyer is a key step not only in initiating the bankruptcy process, but in managing it with the goal of making the process run as smoothly as possible.

Equifax Press Release

New San Francisco bankruptcy data and Northern California bankruptcy data released by the government last week details just how bad the Bay Area bankruptcy situation remains. The data set paints a grim economic picture, and reinforces the need for an experienced San Francisco bankruptcy lawyer to help guide clients through the process at a time when Northern California bankruptcy courts are experiencing unprecedented case volume.

The figures released last week by the United States Bankruptcy Court for the Northern District of California look at overall Northern California bankruptcies over a 24 month period (October 2007 through September 2009) and also break them down by bankruptcy type.

Northern California bankruptcy filings in September were up 46.8% overall compared to September 2008. Specifically, Northern California Chapter 7 bankruptcy filings increased by 45%, Northern California Chapter 13 bankruptcy filings were up 46% and Northern California Chapter 11 bankruptcy filings more than doubled (from 23 cases to 50 - Chapter 11 filings represent by far the smallest number of cases across the two year data period).

A year-to-year comparison (October 2008 - September 2009 vs October 2007 - September 2008) is even more sobering. This indicates a 62% jump in Northern California Chapter 7 bankruptcy filings, 66% for Northern California Chapter 13 bankruptcy filings and 63% overall. Northern California Chapter 11 bankruptcy filings increased by 72.8%.

A full-service Bay Area bankruptcy law firm can help you navigate the complexities of the bankruptcy process, including explaining the crucial differences between different sorts of filings and designing a personalized San Francisco bankruptcy legal strategy for each individual client.

US Bankruptcy Court (Northern District of California) - Statistics Page

California chapter 7 bankruptcy and California chapter 13 bankruptcy will continue to be problems throughout the coming year according to data cited in the annual Fulbright & Jaworski LLP Litigation Trends Survey. The survey results reinforce our belief that the assistance of an experienced San Francisco bankruptcy lawyer will be essential for companies forced to make their way through the bankruptcy system.

As reported by BusinessWire, the Fulbright & Jaworski Survey, now in its sixth year, tries to predict litigation trends on both sides of the Atlantic by polling corporate law departments at US and UK companies. Organizers claim the survey "is the largest such canvas of corporate counsel on litigation issues and trends."

The survey highlights an expected increase in bankruptcy issues as a result of the global economic downturn, noting that this trend can be seen across every sector save one: health care. Fifteen percent of corporate counsel surveyed said they planned to increase their budgets for bankruptcy-related litigation in the coming year, a figure second only to the number planning budget increases for labor and employment litigation (18%). The change is particularly dramatic since, the report notes, bankruptcy is "a practice area that had remained relatively dormant over the previous three years."

This is particularly worrisome for smaller companies as it may mean larger corporations are budgeting more for bankruptcy litigation precisely because they fear turmoil among smaller suppliers and other business partners. Companies unable to deploy the resources of a major corporate legal department can be especially well-served by a skilled Bay Area bankruptcy attorney who can handle the litigation that San Francisco bankruptcies often generate.

Government data reinforce the trends highlighted by the Fulbright & Jaworski Survey . California chapter 7 bankruptcy statistics compiled by the US Justice Department show that California chapter 7 bankruptcy filings nearly doubled between 2007 and 2008.

BusinessWire: Fulbright & Jaworski Litigation Trends Survey

Justice Department US Trustee Program - Bankruptcy Statistics

As a San Francisco Bankruptcy Attorney I often encounter the legal complications of same sex marriages and state and federal law.

Bankruptcy Attorneys in San Francisco on Same Sex Marriages

In today's post we'll take a look at whether a same-sex couple can file for bankruptcy together. Same-sex couples file for chapter 7 and for chapter 13 bankruptcy.

Same-sex marriages and domestic partnerships have become increasingly common as a result of legislative efforts to provide equal protection under the law for all. But so far the legislative action in this area has been on the state level. Bankruptcy is governed by federal law, however, which means that states must bow to the federal system in this area of law.

San Francisco Bankruptcy lawyer on DOMA

A recently enacted federal law greatly reduces the chances of a same-sex couple to be able to file jointly for bankruptcy. This law is the Defense of Marriage act (or DOMA). It defines marriage as a union between a man and a woman. This definition of marriage applies to all federal legal actions. The upshot is that federal law does not currently acknowledge same-sex marriages. And it permits states to disregard same-sex marriage ceremonies performed in other states.

As a result of the federal position on same-sex marriages, couples that wish to file jointly will unfortunately have to file separately. However, the law in this area is still in flux due to the newness of the issue and changes may occur in the near future.

Continue reading " Same-Sex marriages in San Francisco Bankruptcy Proceedings" »

As a loan modification lawyer in the Bay Area we deal with many banks to modify our client's loans on a daily baisis.

We do Loan Modificaitons, Short Sales and Bankruptcy Law

In today's post we'll continue to examine the concept of the bankruptcy estate and the kinds of property that are included in your bankruptcy estate (the property which is subject to the court's control once you file for bankruptcy).

With a few exceptions, all personal property you acquired before filing for bankruptcy becomes part of your bankruptcy estate. Unless a property exemption covers these assets the trustee assigned to your case is within his or her rights to sell these assets and give the proceeds to your creditors.

In general, however, the property which you acquire after filing for bankruptcy is yours to keep. But there are a few exceptions to this rule. Here are three types of property that will be considered part of your bankruptcy estate if you acquire them within 180 days of filing:

1) Property gained through an inheritance
2) Proceeds from a life insurance policy
3) Property gained through a divorce settlement

If you acquire property that falls into one of these categories within 180 days of filing for bankruptcy you'll have to file a supplemental form with the bankruptcy court. This holds true regardless of whether your case has already been decided.

Continue reading "Loan Modification Law Firm in San Francisco" »