Thomas F. Miles, Attorney and Counselor at Law
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San Diego California Bankruptcy Law Blog

Chapter 13 bankruptcy can help with foreclosure concerns

When a family faces the threat and fear of foreclosure, it can be unsettling and stressful. The harm of losing a family home can seldom be overstated. Chapter 13 bankruptcy is one resource that may be useful to help avoid the foreclosure of a family home. Chapter 13 bankruptcy can provide foreclosure assistance to a family struggling to make their mortgage payments.

Once a bankruptcy filing is made, an automatic stay goes into effect that prevents any further creditor collection actions during the bankruptcy process. The process then allows the filing party to make mortgage payments going forward and whatever they owe can be paid over a 3 to 5 year period according to the repayment plan developed as part of the bankruptcy process. Chapter 13 bankruptcy can have a number of useful purposes depending on the goals of the filing party.

How to avoid the probate process

No one, in the history of mankind, has ever used the words "fun" to describe the probate process. In fact, it can be so drawn out, complicated and expensive that most people look for a way around it at all costs. Luckily, there are ways to get around it.

During the estate planning process with an attorney, ask about these possibilities to avoid probate:

Estate planning tips for an effective estate plan

An effective estate plan is important for everyone yet is something not everybody takes the time to consider and develop. Effective estate planning is important because it can provide peace of mind for both the estate planner and the estate planner's family and loved ones, as well as setting out an effective transfer of assets and address other considerations as well. A few estate planning tips can be helpful for establishing a through and effective estate plan.

Properly executing a will is an important element of any complete estate plan. Without a will, state laws will determine how property is divided upon death which may not reflect the wishes of the estate planner. Certain assets, such as tax-deferred retirement accounts or life insurance policies, may have important designation rules to be familiar with. A comprehensive estate plan may also include setting up a trust which can provide for a college education or the care of a special needs child.

Estate plans and family owned businesses

Most people in San Diego who own and operate a family business are too busy running the company to give much thought to what will happen to the business after they die. An owner's preoccupation with the present is understandable, but continued inattention to preserving the business after the founder dies or retires is an invitation for disaster. A forward-looking estate plan can ensure that the business will pass to the founder's children, or other heirs, with a minimum of conflict and a significant savings in federal and state taxes.

The first advantage of an estate plan that specifies how the ownership of the business will be passed from one generation to another is the avoidance of intra-family conflict. A detailed estate plan can settle all questions of ownership transfer long before the founder leaves the scene. Second, the failure to arrange for the transfer of ownership via a will or trust may leave the founder's estate open to unexpected gift or estate taxes. Most businesses do not possess enough liquid capital to pay such taxes, and the imposition of such taxes could deal a fatal blow to the enterprise.

Debt Relief through Chapter 13 Bankruptcy

Filing for bankruptcy is a sure way of getting out of massive debts. It also helps creditors to recover their dues from properties that you do not require to live. In California, there are four types of bankruptcy.

  • Chapter 7 bankruptcy is common to individuals. The court trades your assets for cash and pays your creditors.
  • Chapter 12 bankruptcy is a reorganization for small farmers. You keep your property and pay your creditors through a repayment plan agreed in the bankruptcy court.
  • Chapter 13 bankruptcy caters for people who earn a regular income. Under these proceedings, you keep your property and pay your debts over a period of 3 to 5 years. There are some types of debts that Chapter 13 covers and there is a given amount of money that it cannot go beyond. An attorney can advise whether you qualify for consideration.

Conditions that can render a person ineligible for Chapter 7

Chapter 7 like other forms of bankruptcy has its own unique requirements, and these requirements must be fulfilled if a person is to be illegible for filing bankruptcy under Chapter 7. These are the circumstances in which the person will be considered ineligible for Chapter 7:

The debtor's income is above the limit: An income level is set, and if the income of the debtor is above this limit then it will be considered too high for the requirements of Chapter 7 unless it passes the second phase of the mean test. The mean test is used to determine whether the filer falls under the income level standards of Chapter 7. In the first phase of the test it compares the recent monthly income of the debtor with that of the median income of the state, if the monthly income is below or equal to the median income of the state then it falls under the standards of Chapter, but if the monthly income is above this then the filer must pass the second phase of the mean test. If the filer's monthly income is too high, then the disposable income after allowed expenses will be examined. If it is determined that the disposable income after the deductions of allowed expenses is significant enough to allow repayment to any of the creditors, then the filer will be considered ineligible for Chapter 7.

What are common forms of foreclosure scams?

There are several foreclosure scams out there that can take advantage of any naivety or any bad decisions. Thus it is very important to keep informed about common foreclosure scams. These are some common forms of the said scams:

Equity skimming: In this scam, the owner is approached by a prospective buyer who claims that they will take care of the mortgage and loans on the property for you or will make a payment of an amount of money after the property has been sold off. The buyer will attempt to make the owner leave the premises quickly and rush them into signing over the deed to the property; they will then collect the rent while making no effort to pay off the mortgage biding his time till the owner has to foreclose. The balloon payment:  This is another scam that singles out owners who have fallen behind on their mortgage payments and thus are desperate, the lender appears and offers to provide another form of financing that will allow the owner to make the mortgage payments while lowering the monthly payments, this is due to the fact that you will be asked to pay only the interest payments initially but at the end of the period you will be asked to repay the principal amount at once without any time to pay it off leaving the owner without many options but to foreclose.

Some factors that can make a person ineligible for Chapter 13

Chapter 13 bankruptcy has a set of requirements that must be met for a person to be eligible to file for bankruptcy under it, if these requirements are not met then the person will be considered ineligible and will not be allowed to do so. These are the factors that can make a person ineligible:

Filing for Chapter 7 bankruptcy

The word bankruptcy alone has a way of making people feel apprehensive and uneasy. Nobody ever thinks that they will one day find themselves in the position of filing for bankruptcy. Unfortunately, for many Americans, hard financial times leave them with no other choice than to file for what is known as Chapter 7 bankruptcy.

One of the most difficult aspects of filing for bankruptcy is recognizing when it is time to do it. As bills and debts continue to pile up, interest rates accrue, and debt collectors become more aggressive, it becomes more and more evident that you may have sunken into a financial hole. Many people ignore the issue and wait too long to file.

Common myths about filing for bankruptcy

No matter how hard you work to save and prepare for the future, life is sometimes out of your hands. You may lose your job, have an unexpected illness or injury or deal with medical bills that you cannot keep up with. Those who struggle with overwhelming debt can also suffer from physical and emotional distress that affects relationships and overall health. While many feel there is a negative connotation associated with bankruptcy, it can be an ideal way to make a fresh start when you cannot seem to get ahead.


Thomas F. Miles, Attorney and Counselor at Law
152 West Park Ave
El Cajon, CA 92020

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