Bankruptcy during  the Coronavirus shutdown

In San Diego the Coronavirus is growing and the number is likely to grow as more people are able to be tested. While the public health threat is the priority, there are also  the economic impact it will have. Businesses around the world are shutting down to the public, and the stock market has dropped to historic lows. Uncertainty causes panic.  This in turn causes a snowball effect – or an avalanche, depending on which event we mean. As serious as it is, it is looking like it has a finite shelf life. So, does the pandemic create the needto file bankruptcy during the Coronavirus shut down? If you find yourself unemployed or with medical bills that are out of reach timing has never been more key.corono virus bankruptcy
DO MOUNTING BILLS AND A DROP IN INCOME SIGNAL THE TIME TO FILE BANKRUPTCY?
Bankruptcy in San Diego is a powerful weapon against creditors. But filers typically only get one shot at it. It’s crucial that filing bankruptcy during the Cornovirus shutdown to make it count. For some, things are inevitably going to get worse before they get better. Take care of the family and those around you . Those that consider bankruptcy during the Coronavirus shut down may be wise to wait until you have reason to believe that at least the worst is past. The hard truth is there is a limit to what creditors can do, during the next few months.  One can only file Chapter 7 (the most common chapter of bankruptcy) at eight-year intervals. (*/For the vast majority of filers, it’s a once in a lifetime experience.) 
Current income shortfalls may last months, though. That means more and more unpaid bills will pile up, for many. But consider this one brief example. Let’s say John and Jane Deer worked in a restaurant and hotel, respectively, but were laid off. They filed bankruptcy today. That’s because even though they are current on their car payments and rent, they can no longer pay their credit cards, student loans AND all their other expenses.  But if one of them became ill due to the Coronavirus  and became hospitalized, they will have big medical bills. Until we see some light that this is ending, waiting though difficult,it is to your advantage.

EVICTIONS, BANKRUPTCY AND THE CORONAVIRUS?

Governor Newsome has proclaimed that California cities may enact local their own local rules on evictions. The City of San Diego has done that by unanimous city council vote. It imposed a moratorium on evictions related to the coronavirus outbreak. An article in the San Diego Union Tribune published online March 17, 2020 reports that a renter must show “proof of loss of income or burdensome medical bill” in order to qualify for this local relief. The  city will “work to make sure” [landlords] “were financially shielded” from the effects. (Ibid.) The council apparently did not provide the SDUT any further details. Landlords have no protection from foreclosure if they cannot collect enough rent to pay their mortgaged properties. Landlords may find themselves eligible for and in need of bankruptcy services.
Not all eviction proceedings will be covered by a local exception. These will slightly complicate a bankruptcy proceeding, but landlords have a bit of an advantage in bankruptcy court.
FORECLOSURES AND THE CORONAVIRUS
Here is a bit of good news. Federally-backed mortgage lenders (that’s HUD, FHA, FREDDIE MAC and FANNIE MAE), as of March 19,2020, have declared a sixty-day moratorium on foreclosures. (Credit: articles released by the Associated Press March 19, 2020 and articles appearing in the Wall Street Journal, Politico and USA Today on March 18, 2020.)
WHO SHOULD FILE BANKRUPTCY NOW?
Those whose assets are in immediate danger of being seized by creditors probably cannot wait. They should take care, though. Some (not my clients, of course) file bankruptcy and get only a brief reprieve. All they do is set up a temporary roadblock to creditors. For example, secured creditors like auto and mortgage lenders can still repossess or foreclose even during a Chapter 7 bankruptcy. (It’s different in a Chapter 13 with an approved plan.) The lender just has to jump through an additional hoop to get it done. If you have significant cash savings and / or other non-exempt assets (not retirement accounts) AND a creditor sues you, your assets could be in jeopardy.
 

WHAT CAN I DO SHORT OF FILING BANKRUPTCY WHILE THE  PANDEMIC AFFECTS ME?

Reach out to ALL of your lenders – credit cards, mortgage, auto and student loan. When you are able to get through, explain your situation and request lender(s) defer your payments. Lenders are sensitive to the pressure to accommodate borrowers as sort of a carrot-and-stick strategy by the government. If you’re successful, you can ride out the temporary hardship with a bit less anxiety, a little more cash in your pocket and your credit score unaffected. (You will have made your payments “as agreed” if they are deferred.)
HOW TO CONSULT WITH A BANKRUPTCY ATTORNEY DURING THE “SHELTER IN PLACE” ORDER?
We can schedule for IN-PERSON MEETINGS. We’ll  just have to make sure we calendar yours on a later date than the governor lifts the “shelter in place” order. OR, we can conduct the consult via video chat / screen-sharing services like ZOOM, GO TO MEETING, FaceTime and SKYPE.

bankruptcy advice Thou Shalt Not: San Diego bankruptcy advice

*Thou Shalt Not: Delay in getting bankruptcy advice if you’re in financial trouble. Lawsuits can be filed and creditors can take advantage of how overwhelmed are most ordinary people when they’re sued. Inaction by you is good for them. Get yourself informed, pronto.

*Thou Shalt Not: Feel guilty about the predicament in which you now find yourself. It’s normal, natural to feel bad, like there is some moral defect in you that caused your economic implosion. This is more than just warm and fuzzy here: very often, debtors continued to go deeper and deeper in debt out of guilt and only making the situation worse.

Examples: Taking balance transfers on credit cards (you know the “victim”, the card to which you transfer a big balance, is not going to go quietly away);

Taking loans or outright withdrawals against retirement plan(s) to make mortgage payments, on homes which now turn out to be either losing value or at best not holding it. Those retirement loans have to be repaid. And retirement withdrawals are a double whammy: you pay taxes, and a 10% penalty right off the top. You may have just poured good money after bad money if it’s to hold onto a home. Especially if you’re already upside down in the home. Lots of people don’t realize that even in bankruptcy, you can usually keep all your retirement.

*Thou Shalt Not: Pay off personal loans to family members, close business associates, or friends.When you think you might have to file bankruptcy. These so-called “insider transactions” are “preferential transfers”, and they really irk the bankruptcy trustees. Such payments can be voided, and the relative, associate, or friend can be forced to hand over the money to the bankruptcy trustee.

*Thou Shalt Not: Take cash advances on credit cards and soon (like, within a year) expect they’ll routinely discharge in bankruptcy.

*Thou Shalt Not: Pay for elective/cosmetic surgery with a credit card, and anticipate the debt will be routinely discharged. If the creditor is paying attention, discharge of that debt could well be challenged.

*Thou Shalt Not: Travel for luxury, or buy luxury goods with a credit card, and anticipate that debt will be routinely discharged in bankruptcy.

*Thou Shalt Not: Use your credit cards for ANYTHING within ten weeks prior to filing bankruptcy (one can sometimes get away with paying for some dire necessities in reasonable amounts.)

*Thou Shalt Not: Say anything to anyone about your finances that is inconsistent with what you said, or will say, in your bankruptcy papers. Example 1: credit application overstates income, bankruptcy papers list accurate (read LESS) income. Result: if the discrepancy is discovered in the bankruptcy proceedings, big trouble. Example 2: you’re involved in litigation over something, most commonly in Family Court, regarding financial issues (support, etc.), and you list information, in writing, signed by you under penalty of perjury, that is inconsistent with the paper submitted or to be submitted to the Bankruptcy Court. People tend to be sort of casual at times, or less than thorough, about the information submitted in Bankruptcy Court. Sometimes they even…GASP! LIE!! I can’t explain why, but sloppiness and downright untruthfulness are common enough that one must be very vigilant to get the information right.

Five questions for a San Diego Bankruptcy Attorney

1.  Question: It seems like there is a lot of information and documents called for and I’m not very organized, not really a “paper person.” Canquestions for a san diego bankruptcy atttoreny someone help me?

ANSWER: Yes. Many of Paul’s clients have been inundated with demand letters, ugly phone calls, even lawsuits and it has become a nightmare to keep it all organized. Paul recognizes that it’s not just the logistics of gathering all the necessary things into one place, but it’s also the sense of being overwhelmed that makes it difficult for some clients to organize. Paul will help you streamline your “homework” so you can help him help you.

2.  Question:  Who will be with me at the meeting of creditors – Paul, or someone working for him that I may not yet know?

ANSWER: Paul always accompanies his clients to every event the client’s case involves. While many of his contemporaries hire “appearance attorneys” to show up at the meeting of creditors and keep track of what additional requests the trustee makes, Paul shows up in person. You’ll never have to wonder who will be there. This also seems to result in a much more efficient meeting since Paul is unfailingly prepared. It also means there are almost no continuances needed for Paul’s clients. As nerve-wracking as it is anticipating the meeting, Paul figures the clients deserve to only have to do it once if a continuance can be avoided.

3.  If I have a question about my case – either while we’re getting it ready or after it’s filed, will I be directed to a subordinate or will I be able to talk to Paul?

ANSWER: Paul does not use subordinates. Every client who wants to talk to Paul gets to talk to Paul, not someone else. Also, each client has Paul’s personal cell phone number. He might joke that he does sleep and take some time off. Paul believes that each client should have as much access to him as they need. Many lawyers think clients will abuse the privilege of unlimited access. That hasn’t been Paul’s experience though.

4.  What if after my case is filed it is challenged and I don’t get a discharge? Do you guarantee your work?

ANSWER: Paul does guarantee his work, and was the first San Diego Bankruptcy Attorney to do so. His promise to each client is that if the client has been truthful with me in the preparation of his / her case and yet the case fails, I have a responsibility to refund the client’s fees.  In the over twenty years in practice, Paul has never had to refund a client’s fees. He is confident he can and will maintain that track record, including your case, too.

5.  Who will be with me at the reaffirmation hearing? Will there be an additional cost?

ANSWER:  You probably know the answer to the first half: Paul will be with you at the Jacob Weinberger U.S. Bankruptcy Court at any reaffirmation hearing. Bankruptcy rules require bankruptcy lawyers to appear with the clients but, still, some don’t show, and many of those that do charge an additional fee. The additional fee is permitted, i.e. the rules allow the lawyers to charge the additional fee. Paul doesn’t charge extra for this appearance.

Bonus Question: Are you a lawyer?

A number of  San Diego bankruptcy law firms have made a lot of money by paying only one or two attorneys to handle an enormous caseload. How do they do this? They hire support staff to handle almost everything. In fact, some firms will schedule new clients to meet with support staff rather than lawyers at the first meeting. These firms can hire a charming salesperson for a lot less money. I do not object to supporting staff, but your first consultation requires legal thought and analysis, which cannot and should not be done by a salesperson.

The Law Office Of Paul Staley provides legal advice and representation for residents of San Diego County. The information on this website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.
Paul Staley
Bankruptcy Attorney
1901 1st Ave., FLR 1 San Diego, CA 92101
Phone: +619 235 40 95
Email: pstaley@paulstaley.com

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