If I file Bankruptcy can I lose my job 

Clients often ask whether their job may be in danger if they file bankruptcy and / or whether the employer will know if I file bankruptcy. The short answer is generally no. In fact, usually the fact that you have filed bankruptcy is not even known to your employer. The bankruptcy court doesn’t routinely send notices to an employer when her employee files bankruptcy.  There are very rare exceptions. One occurs if you owe your employer money. If you do, you’re required to list him or her as a creditor and s/he DOES get a notice from the Court. Another exception occurs where one’s professional license is directly connected to his / her credit profile. I know of one client whose license as a professional certified financial planner was revoked after he filed bankruptcy, a risk he knew of prior to filing, but in the face of which needed to file anyhow. 

Will employer know If I file bankruptcy and fire me?

Thankfully, these exceptions are extraordinary. Now to the question of whether you can be fired for filing bankruptcy. I cover this in greater detail in my article about security clearance and bankruptcy. Generally an employer is not permitted to fire an employee just because the employee files bankruptcy. As a practical matter, for most employers the occurrence of an employee filing for bankruptcy would be much more information than he/ she wants. For the vast majority of employees, filing bankruptcy is not even relevant to their occupational responsibilities. 

I don’t want to minimize the invasion of privacy one would feel IF one’s employer learned of his employee’s bankruptcy filing. There is a very good reason I qualify this with a big “IF.” That reason is that in my twenty-one years in practice the only time I know of a client’s employer learning of the bankruptcy was when a client informed his boss that he needed to file. That employer so highly valued his employee that he paid the client’s fee in order to expedite the bankruptcy and free his employee of the distraction of creditors calling. We should all have a boss so generous;)

Military employment  and Security clearances 

Military service members especially and also many other government employees have unique risks when it comes to finances. The folks up the chain of command expect their subordinates to have their finances in good order. Otherwise – and this is the conventional, but proven wisdom – the employee may be tempted to do something unethical, illegal or downright treasonous in order to avoid the worst consequences of being in debt. Many military service members and those in the intelligence services risk losing their security clearance if their finances aren’t sound enough for the commander’s / supervisor’s criteria. Often as not, the employee’s work requires that security clearance so losing the clearance = losing the job. Please also read my article on “Security Clearance and Bankruptcy.”  

It may seem ironic, but I’ve represented clients whose security clearance came up for review and their supervisor’s advice was to consider bankruptcy. In one such case, the supervisor actually gave the employee – who was working for a defense contractor – an ultimatum: file bankruptcy or you’ll lose your clearance and, therefore, your job. All is well with her now, having gotten her bankruptcy discharge (which, by the way, the supervisor also demanded to see.)

 Will my creditors come to the court if I file bankruptcy ?

What many of my bankruptcy clients worry about is that their bankruptcy creditors  will be at the creditors meeting if they file bankruptcy in San Diego  and it will be embarrassing for them.The good news is, bankruptcy creditors rarely attend bankruptcy meetings of creditors (also called 341 hearings).  However, this does not mean that your creditors are giving up their right to object to your bankruptcy discharge.

Bankruptcy Creditors are not required to go to the  meeting of creditors

When you file for bankruptcy in San Diego, your creditors receive notice of the date and time of your meeting of creditors. But this does not mean that they will show up. Your creditors are invited, but not required, to attend your hearing. In 98 percent off all  bankruptcy cases, no creditors will appear at the meeting of creditors. If a creditor does show up , your attorney will usually know about it and so will you.

Most Bankruptcy Creditors will not appear at the meeting of creditors

Creditors are not allowed to conduct an extensive examination of you and your situation  at the meeting of creditors. Mostly creditor questions are limited to the nature and location of the debtor’s assets. In San Diego most creditor meetings are very short over in 5 to 10 minutes  so, the  bankruptcy trustee only has a few minutes to devote to each case.

As a result, unless a creditor believes that you are committing fraud or hiding assets, it will not benefit from taking the time to come to your hearing. However, even if a creditor does not attend your meeting of creditors, it can still object to your discharge

 

Can I Stop My Bankruptcy Once I Have Started It?

 
There are debtors who change their minds after filing bankruptcy . They will ask their bankruptcy attorney   if they can cancel or stop their bankruptcy filings. Particularly, after whatever emergency that precipitated the bankruptcy has been averted like foreclousre or a lawsuit .
In a Chapter 13, the borrower, the person who has filed for bankruptcy, can actually file a voluntary a request for voluntary dismissal. In a Chapter 7 there isn’t any such process. So, if you’re in a Chapter 7 bankruptcy and um, you just won the lottery, or you know, for some reason, uh, whatever reason, you change your mind um, you’re kind of locked in. However, there’s a there’s a sort of unofficial way to maybe get your Chapter 7 dismissed. And that is to just simply not show up for the Meeting of Creditors. Um, now this is not something that I could ever actually, um, advise someone to do um, but the fact of the matter is that if someone fails to appear for their Meeting of Creditors the great likelyhood is that the Trustee is going to dismiss the case. So, it’s sort of a back door way of doing it and uh, something that I couldn’t really recommend.
 
 

“Bankruptcy represents a long-standing commitment in this country to helping people get a fresh start. This principle has never been giving only certain people a fresh start.”– Tim Johnson

For the person having financial trouble, there’s a constant loss of money. As each month passes, they tend to fall farther and farther behind. Have you ever been in a situation where you don’t have any money, but the rent has to be paid? The cell phone payment is due and you’ve just received notice that your car is about to be repossessed? How will you have enough money to pay for your child’s daycare while you’re at work? How will you get to work without a car? Sometimes the same creditors will call multiple times in one day. You can’t have peace in your own home because the phone keeps ringing. If you answer the phone, the bill collector is rude and demanding. If you ignore the phone, your children ask why you won’t pick it up. If this is how you’re living right now, don’t despair. Bankruptcy can “stop the bleeding.” As soon as a bankruptcy petition is filed, the court enters what is called an “automatic stay.”

WHAT IS AN AUTOMATIC STAY?

An automatic stay puts all the actions of creditors (people you owe money) on hold while the  bankruptcy court determines what type of  debt relief is appropriate for you. When the automatic stay is in place,
creditors can’t harass you, and they can’t proceed to sue you for debts listed in your bankruptcy petition. If a creditor already has a judgment against you and is about to garnish your wages, the automatic stay will protect your wages from this as well. Here’s how that works: once your bankruptcy case if file, the Court generates a Notice of “Filing of Bankruptcy Case and of Meeting of Creditors.” The Court EMAILS this notice to your attorney so he or she gets it right away. Armed with this document, your attorney can then file in the court case where the judgement against you was entered  a “Notice of Stay of Proceedings.”  I typically serve that notice on the judgement creditor, his / her attorney, the court clerk and the Sheriff’s office (since they usually enforce the wage garnishments). That’s the end of all my client’s troubles from that case. Once a bankruptcy petition is filed and the automatic stay is in place, you and your bankruptcy attorney are free to devise a plan to put you back on the path to financial freedom. You no longer have to worry about financial bleeding.

 

If we can help you change financial direction call us at 619-235-4095 

What is  bankruptcy means testing?

 

Bankruptcy means testing  is a mathematical formula used by bankruptcy attorneys to determine what  type of bankruptcy relief a debtor can receive. Means testing was created by congress with the help of the credit card lobby to prevent bankruptcy abuse. The most likely mistake potential bankruptcy clients make is to first go online , late at night when they can’t sleep and try to do means testing online . 95 percent of all San Diego residents who file bankruptcy wouldn’t fit the means test requirements online, but still qualify for bankruptcy. 0The bankruptcy means test is all about the math and how you put it together.

Means testing will determine if you can  first even be considered as a candidate for a Chapter 7 bankruptcy, or if instead, you may be required to use a Chapter 13 case.This is an income-based means testing , and debtors who have income above the median income of  their state are subject to the unpleasant limitations imposed by the Means Test. However, the analysis doesn’t end there; from the income on the Means Test, one gets to take certain deductions.

  • Taxes : You can deduct your tax obligations from your income on the means test as well.
  • Involuntary deductions :Deductions required for employment such as mandatory retirement plans, union dues, or uniforms.
  • Health, disability, or term life insurance
  • Secured debt payments These include payments on secured debts such as your mortgage or car loan. Even if your mortgage or car payment is above the national or local living standards, you can normally deduct it in full on the means test.
  • Court ordered payments :If you are required to pay domestic support obligations such as alimony or child support, you can deduct these expenses on the means test.
  • Child care: Expenses for child care such as babysitting, daycare, or preschool .
  • Health care :If you incur more out-of-pocket health care costs (other than insurance) for  you or your dependents than the allowed national standard, you may be able to deduct the actual amount you pay.
  • Education for employment or disabled child :You can deduct your education expenses if those expenses are required for your employment or for your mentally or physically disabled child.
  • Charitable contributions :If you regularly made charitable contributions prior to bankruptcy and expect to continue making those contributions, you can deduct them on the means test.
  • Care of elderly, chronically ill, or disabled :You can deduct the amount you contribute towards the care of an elderlyor disabled family member or person in your household.

The Means Test determines if a bankruptcy petition must be assigned a “Presumption of Abuse” by the court. If your petition is assigned a presumption of abuse status, you must prove that your bankruptcy petition is not “abusive” or fraudulent. The rule of thumb so far, in practice, is that if the Means Test result is that “The Presumption of Abuse Arises,” it is extremely unwise to try and file the case as a Chapter 7 . A bankruptcy attorney can properly do the Means Test for you and let you know what your options are. It’s a bad idea for you to rely on so-called “Online Means Test Calculators” because the test is highly complex. The key to a thorough, accurate Means Test is not just  getting in all the required income; it’s knowing how to apply bankruptcy law in figuring out how to maximize the allowable deductions. That is why just having a calculator isn’t going to do the trick.

  Bankruptcy exemptions or What do you keep if you file bankruptcy ?

“Exemptions” are laws that define what property you can keep when you file bankruptcy. All assets will fall into one of the two categories: exempt or unexempt. You want all – or as much as possible – of your assets to be defined as “exempt” because those are the assets you are allowed to keep. Careful and creative exemption planning is one the most valuable skills an excellent  bankruptcy attorney offers. Sometimes, you can change the character of an asset from nonexempt to exempt. Such a strategy is allowed, even encouraged by bankruptcy laws. 

Which assets can you keep in Bankruptcy 

Some assets more than others are likely to nearly always be exempt.  As a general rule, retirement assets such as 401(k) plans, IRA accounts, Social Security Disability, SSA and SSI can’t be garnished by creditors. However, there are exceptions to this rule if the person filing owes student loans. The Department of Education, which guarantees virtually all student loans, has the power to garnish Social Security payments up to 15%.

For many other assets, exemptions can be skillfully applied by your bankruptcy attorney to protect often everything you own. 

Understanding what you have and what exemptions can be applied is a very important part of  your attorney’s preparation of your case. Most people I interview are inherently honest about these things. Rarely, though, someone will figure that if he/she doesn’t mention an asset she wants to keep, no one will be the wiser. Concealing an asset or concealing income can land you in federal prison for up to five years and can result in a fine of up to $500,000. The smarter plan is to get your attorney to help you plan around the challenge of “excess property.”

What are the different bankruptcy exemptions 

There are several different kinds of exemptions. Your first step is to find out which ones may apply to you. Believe it or not, each state has the power to set its own exemptions and those are used in both bankruptcy and nonbankruptcy cases where those exemptions apply. That may seem counterintuitive seeing as how bankruptcy is a federal proceeding, but it’s true. Before October 17, 2005 some people would move from one state to another in order to “exemption shop”, i.e. file their bankruptcy case in the state most generous with its exemptions. All that changed in late 2005. 

Chances are that the exemptions of the state where you now live are going to apply to you when you file your case – unless you moved into that state within two years prior to your filing bankruptcy. Then other – and sometimes confusing – rules apply.  Since I can’t possibly cover the exemptions of all fifty states and the federal exemptions, I’m going to focus on the California exemptions.

California adds another level of confusion to the mix in that it has TWO different sets of exemptions, and you can only opt for one of them. Usually, it’s pretty obvious to me which set works best for a client. One set – the 703’s – maximizes your ability to keep cash and personal property. Personal property is anything that isn’t “real property”, so it’s a pretty broad definition. It includes but isn’t limited to bank accounts, cars, art, jewelry, guns, intellectual property like copyrights, trademarks, patents, and the list goes on and on. California is famous for its generous “wild card” exemption, which you can apply to anything.

The 704’s maximize your ability to keep the equity in your home – the one you live in as contrasted with rental or investment real estate. They don’t leave much room for cash or for the many other categories of personal property, although retirement vehicles are exempt in much the same manner as under the 703’s. 

It’s a sort of common sense thing that people filing bankruptcy aren’t rich and bankruptcy isn’t designed to help the wealthy escape paying debts which they could pay by selling nonexempt assets. The exemption laws define clearly for us just how “rich” one can be and still qualify for bankruptcy relief. Many clients are pleasantly surprised at how generous the exemptions are, especially in California and also under the federal exemptions. 

 

 

 

What Is A Discharge? When Does It Happen In Bankruptcy?

Bankruptcy discharge basically is the vanishing of all the dischargeable debt that someone brings into the bankruptcy case. It is as if that debt and all the emotional baggage  had never happened.  The creditor then cannot call, send demand letters, report nonpayment of the debt to credit reporting agencies. The creditors can not  file a lawsuit against you, or take any other action against you personally in an attempt to collect the debt.When the bankruptcy discharge happens for example in a Chapter 7 bankruptcy case, the process is just over 3 months from the date the case is file . 

Can Creditors Object To The Discharge?

 Creditors can object to the discharge and there are several ways that they can do that. A creditor can object to any of your debt being discharged. They usually don’t  When the do they file a motion or an adversary proceeding. This is usually something the bankruptcy clients are aware might be a possibility . These proceedings can be objected to by your bankruptcy attorney. The purpose of the adversarial proceeding  is to have your whole case thrown out. They will claim ,your creditors that this debt that is owed to us should be treated differently than the rest of the debts owed to other creditors. That’s one thing that creditors can do, but it doesn’t happen often or unexpectedly.

What Type of Debt Cannot Be Discharged?

There’s some kind of debts that cannot be discharged in bankruptcy. The most common ones are, spousal support, child support, those are the big ones some tax can not be discharged some tax can.Student loans can be but,  that’s a very complex path that needs planning and your options are limited  You basically have to be on life support you get bankruptcy help. But the federal government does have some options recently to help with student loans.

The Court can deny your Discharge

If you fail to cooperate with the court or the trustee, are not truthful on the paperwork or in your testimony, fail to turn over assets,the court can deny your discharge. Likewise, if the court learns after the discharge was entered that you committed some act that would have caused the court to deny your discharge during the case, the court can revoke the discharge that it already entered