Law Offices of David A. Tilem

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Los Angeles Bankruptcy Law Blog

Find out about your debt relief options, including bankruptcy

Grinning and bearing it is not your only option when you are facing a debt crisis. In fact, it's very rarely even your best option. Working with a bankruptcy professional, you can find out both about bankruptcy options as well as other legal and financial remedies that could help you create a more stable financial future.

For individuals who are dealing with serious debt issues, numerous options exist. You might seek credit counseling through a court-approved program. Unlike programs that charge you a large commission to manage debt payments, this type of credit counseling walks you through solid financial management information and helps you identify income and expenses. Usually, you make a budget that might be able to help you resolve some debt issues.

Chapter 11 bankruptcy for restaurant owners

When restaurants enter the Chapter 11 bankruptcy process due to a need to reorganize debts for a more stable financial future, things can move quickly. While 120 days seems like a long time -- it's approximately four months, after all -- that's all the time you have to finalize a reorganization plan.

A common mistake many restaurant owners make is letting emotions interfere with business decisions. Franchise owners might want to hold on to locations that simply aren't performing because they are emotionally tied to the concept of owning more stores. Those who operate a family-owned dining establishment that's been part of the community for years might find it hard to make any decisions that involve a big change. Emotional ties are a good reason for working with a bankruptcy professional during a Chapter 11 process; a third-party can help you look at the facts and bottom line when you are caught up in other perspectives.

How are contractor liens impacted by bankruptcy?

Contractors that perform work on your home can often have what is known as a mechanics' lien on the property. Imagine a contractor who does substantial work to renovate a homeowner's kitchen. This contractor might require some payment up front and take the rest of the payment later. But if the homeowner never pays, the contractor simply can't repossess the goods he or she sold. They have been customized and installed in the home.

The solution in the construction industry is that the contractor can take a lien against the home. The lien is in place on the title until the full payment is made on the work or other legal action is taken to remove the lien from the property. If, for example, you can prove that the contractor did not properly or fully complete the work, you might be able to have the lien revoked.

Increased lending trends cause of concern

The Financial Times recently reported a rising trend in credit card and revolving account lending in the United States, something that experts say is concerning because of the current economic and political environment in the country. Some economic experts believe that the increased lending could create future issues for banks, and borrowing repeatedly in a questionable economy can certainly create stability issues for individuals and families.

According to the report, lenders provided $18 billion in revolving credit funds to borrowers in just a three month period earlier this year. Most of the major banks also saw an increase in the number of credit card accounts they are dealing with, with the rate of increase ranging from 10 to 26 percent. Four of the nation's banks alone hold $216 billion in consumer debt currently.

What is the automatic stay?

The automatic stay is something that occurs when you file bankruptcy of any type. While it isn't fully comprehensive, the automatic stay is a powerful tool for those who are facing immediate debt crisis because it puts a stop to a number of collection activities while the bankruptcy proceeding takes place.

One of the top benefits of the automatic stay for many individuals who file bankruptcy is that it stops foreclosure. Even if you are already in foreclosure and your home is scheduled to be sold at auction, filing a bankruptcy petition in time causes the automatic stay to go into effect, which means your home cannot be sold. The mortgage company also has to stop certain collections actions against you while the bankruptcy case is active.

Increasing Chapter 13 Plan Payments

The Problem:

You filed a Chapter 13 bankruptcy case several months or even years ago. You have made all the payments but the Chapter 13 Trustee is now demanding that you increase the payment amount. The Trustee is threatening to dismiss your case or perhaps change it to a Chapter 7 case. Your lawyer is telling you to agree to save the case. What's going on? What should you do?

Filing Chapter 11 as a business entity

Chapter 11 bankruptcy can offer financial relief to a beleaguered business, but before you decide on any legal route regarding your professional finances, you do need to understand the requirements and the consequences of filing bankruptcy as a business. One of the most important considerations is how the bankruptcy might impact you personally.

Whether or not your personal debts and assets are involved in a business bankruptcy case depends heavily on which type of business formation you chose. If your company is a sole proprietorship, you likely have the most potential personal liability at stake. For purposes of a bankruptcy, your business and personal assets are often treated the same, which means they will both be included in the bankruptcy. On the one hand, this can be alarming because your personal assets, such as cars and homes, could be at risk. On the other hand, if you are struggling with both types of debts, a Chapter 11 filing takes care of the entire problem and there are ways to keep certain assets such as a home.

What is the meeting of creditors?

After you file a petition for bankruptcy, you'll receive notice that a 341 meeting is scheduled and that you must attend it. These meetings routinely take place approximately 30 days from the day you filed your petition, and they are also referred to as the meeting of creditors.

The name "meeting of creditors" causes stress for some people who file bankruptcy. It sounds like all your creditors will be in the room, and for most people, that is daunting. The good news is that it's unlikely that any creditor will be in the room. In most cases, the 341 meeting only involves you, your lawyer, and the bankruptcy trustee.

Tax debts and bankruptcy

Most California residents automatically assume that their tax debts are not dischargeable in bankruptcy. However, in certain circumstances, tax debts can actually be discharged. Usually, though, it is only in Chapter 7 proceedings that federal tax debt is included in the bankruptcy.

In Chapter 13 bankruptcy proceedings, debtors create a repayment plan that is approved by the court. During the course of that payment plan, the debtor makes regular monthly payments lasting for a three- to five-year period and tax debts (among other debts) are brought together to be paid off in the Chapter 13 process. Conversely, with Chapter 7, debtors are able to dissolve specific kinds of debt -- usually medical bills, credit cards and more -- and sometimes that debt can include federal tax-related bills.

Reality TV star's bankruptcy to be reopened

One of the stars of Real Housewives of New Jersey, Teresa Guidice, recently went through bankruptcy proceedings, but the bankruptcy process ended in her going to prison on a year-long fraud sentence. This week, it was announced that the woman's bankruptcy case would be reopened.

By reopening the bankruptcy proceedings, the reality TV star's creditors could have the ability to make claims against the proceeds that she could receive from a malpractice lawsuit she has filed against her former bankruptcy attorney. According to her representative, Guidice currently has a payment plan set up with the IRS to pay off her $551,563 tax lien. Furthermore, she has established agreements to pay off 27 of her 29 creditors referenced in her bankruptcy filing from 2009. As for the other two creditors, Guidice is negotiating plans to pay off one of them, an infertility clinic. However, she is contesting the other creditor, a construction company.