LIEN AVOIDANCE IN A CHAPTER 7 BANKRUPTCY

There is a judgment lien on my home; can I get rid of it?

If certain requirements are met, yes.  Lien avoidance is a powerful and important tool available in Chapter 7 bankruptcy. If you are enduring financial difficulties, you may have ended up having a judgment lien applied to your personal or real property. A judgment lien arises after another party wins a judgment against you in court. For example, a credit card company may sue you for non-payment of your credit card balance. If the other party wins on the merits of the case or you fail to respond to the lawsuit, the other party can obtain a judgment against you.  In California, the judgment can become a lien against any real estate located in the county where the judgment was recorded. In many states the creditor can also place a lien against your personal property by filing the notice of judgment lien with the Secretary of State.  If a judgment lien has been recorded against your real or personal property, bankruptcy can help avoid the lien.  It is best to remove such lien as quickly as possible.

If you file a Chapter 7 bankruptcy and you have judgment liens that you would like to avoid from your property, you have authority to do so under bankruptcy code11 U.S.C §522, which allows a lien to be removed to the extent that it impairs an exemption to which the debtor would have been entitled in the absence of the lien. Exemptions are what protect your property that has value from becoming part of the bankruptcy estate.

What is the difference between a consensual lien and a judgment lien? A consensual lien is a bargained for lien - this is normally referring to liens like your mortgages or equity line of credit. You agreed to have a lien recorded against your property in exchange for financial benefit (money loaned to you). A judgment lien is not consensual. This type of lien is normally recorded against your property after your creditor obtains a judgment against you. Thus, the rule in a Chapter 7 bankruptcy is that you can avoid a judgment lien since it was involuntarily placed on your property and you cannot avoid a consensual lien since you agreed to have it recorded against your property. The courts do not want to interfere with any contracts that you voluntarily entered into.

 The good news is that bankruptcy can essentially eliminate the judgment lien on your home. If you own a home and a creditor has obtained a judgment against you, ask your bankruptcy attorney about filing a Motion to Avoid a Judicial Lien. In the appropriate situations, your attorney can file a motion with the bankruptcy court requesting that the judicial lien be removed from your home upon completion of your bankruptcy. If the bankruptcy court grants the motion, then the judgment creditor will no longer have a lien on your house. You also need to ensure that the judgment debt is listed on your actual bankruptcy petition in order for the debt to be eliminated. This can also be done after your bankruptcy case is over, but there are limits and it requires additional legal fees to reopen your bankruptcy case. Although your bankruptcy attorney will charge an additional fee to file the Motion to Avoid a Judicial Lien, it is well worth the attorney fee to eliminate thousands of dollars in additional liens on your home. For further information on whether a Motion to Avoid a Judicial Lien will be best in your situation, contact the Leventhal Law Group, P.C., committed to providing personal service for a reasonable fee.at (818) 347-5800 or send an email to schedule a free initial consultation and to speak directly with attorney Jonathan Leventhal, serving all of Los Angeles, Ventura and. the San Fernando Valley.

Can Filing Bankruptcy Stop a Foreclosure Sale and Save My Home?

Can filing bankruptcy stop a foreclosure sale and save my home?

Yes, it can stop the foreclosure process and allow you time to catch up on the past due amounts, as well as deal with your other debts.  There are many reasons why our clients face foreclosure, such as job loss, sudden illness, divorce and excessive debt obligations.  If you, like many other Americans have suffered some tough times recently and you have fallen behind on your mortgage payments and now the lender is making noises about instituting foreclosure proceedings against you.

Foreclosures in California generally do not involve the court system.  The deed to your home is held by a Trustee, hence the term "Trustee Sale".   The process generally works like this, however keep in mind that the specific terms of your loan may change when the Notice of Default is filed:

Step One: After missing three consecutive payments, the bank files a "Notice of Default" (also called an "NOD").  The NOD is filed with the County Recorder and a certified copy is sent to you. 

Step Two: Notice of Trustee Sale.  The Notice of Trustee sale may be recorded three months after the NOD is filed.  This notice will set a date of the Trustee auction.

Step Three: Trustee Auction, this date can be twenty days after the Notice of Trustee Sale was recorded.  This is the final step in the foreclosure process.  If the property was not sold at auction it will revert back to the bank.  

The first thing a bankruptcy filing accomplishes is to stop the foreclosure process.  Lenders cannot foreclose or even try to collect debt until permitted to do so by the court.

But first, you have to decide what type of bankruptcy to file for.  There are, basically, two types to choose from: Chapter 7 and Chapter 13.

A Chthe bank can seek permission from the court to continue the foreclosure process, or the bank just waits until your bankruptcy is concluded.

Chapter 13 is usually more effective at helping people keep their homes.  It gives them time to repair their finances, usually three to five years, during which the court agrees to an income-based budget with monthly payments made to the bankruptcy trustee.

What does a Chapter 13 bankruptcy trustee do?

The trustees pay the bills, first paying off the arrears on the mortgage.  After that, the trustee pays off unsecured debt, starting with back income taxes.   Next in line comes unsecured debt like credit cards and medical bills.  By then, there's usually little cash left and these bills are paid at less than the full rate, often as little as five cents on the dollar.

If your head is beginning to spin, do not be alarmed.  An attorney at the Leventhal Law Group is available for a free consultation to help determine if bankruptcy is the correct thing to do.  And if so, what chapter you should file.  Call 818-347-5800 or send an email to schedule a free initial consultation.

Borrowers, if they kept up on their payments, can emerge from bankruptcy with their homes still in their possession.

In addition to stopping foreclosure sale on your home, Chapter 13 also allows you to remove certain judgment liens against your home in some instances, as well as under secured mortgages or deeds of trust. (Chapter 7 can remove judgement liens too).

Bankruptcy is not; however, going to help every troubled homeowner. If, for example, the homeowner's biggest problem is not enough money, bankruptcy is not going to solve that.

Bankruptcy  is one of the best tool there for people behind in payments but who have ongoing income.

THE BIGGEST MISTAKE that people make is waiting until a few days prior to the foreclosure sale date to look into bankruptcy as an option.

You can look back years from now and say, “That’s the day I got my life back.”  We are here to help you do just that!

Call 818-347-5800 or send an email to schedule a free initial consultation and to speak directly with attorney Jonathan Leventhal, a Woodland Hills, California, Bankruptcy Attorney.

The Leventhal Law Group, P.C. serves all of the Los Angeles, Ventura and .the San Fernando Valley.

What are the differences between the various chapters of bankruptcy?

One of the most common questions I am asked is “What type of bankruptcy should I file for?”  The answer to this is not cut and dry and depends largely on your specific financial circumstances.

In Title 11 of the United States Code (the Federal Bankruptcy Code), there are four bankruptcy filings:

• Chapter 7 - Liquidation
• Chapter 11 - Reorganization
• Chapter 12 - Adjustment of Debts of a Family Farmer with Regular Annual Income
• Chapter 13 - Adjustment of Debts of an Individual with Regular Income

Eligibility for Chapter 7 is contingent upon a means test, which determines whether you are financially able to repay the debts rather than discharge them.  It is a debt liquidation option that typically gives people a much quicker route to the discharge of their debts.  It is the most common form of bankruptcy because it offers a fresh start for individuals or businesses with no hope of repairing their current financial situation.

It is important to note that there are certain debts for which the debtor will not receive forgiveness.  Alimony, child support and some taxes are not discharged under any bankruptcy filing, and student loans are seldom discharged.

Chapter 11 bankruptcy is a debt reorganization plan used predominantly by businesses that are struggling to meet payroll, taxes and other expenses.  Filing for this type of bankruptcy allows your business to continue operating with legal protection against creditors.  This is done through the restructuring of debt and the creation of a payment plan.

Chapter 12 and Chapter 13 are basically the same filing, except that Chapter 12 is for family farmers and Chapter 13 is for other individuals.  It is a debt repayment or reorganization plan.  It is designed for individuals with regular incomes who cannot meet their creditor’s demands.  It is especially helpful if you have significant equity or large assets that you wish to keep.  Once the filing is made, the debtor is assigned a trustee.  The debtor and trustee develop a proposal for a repayment plan.  The court decides whether to accept or alter the plan or dictate another repayment plan altogether.  Once the plan is decided upon, it can last anywhere from three to five years.

You may be wondering why someone would file for Chapter 12 or 13 instead of Chapter 7.  There are a couple of reasons for this:

• Under Chapter 12 and 13 filings, debtors do not have to liquidate their assets -- they actually are able to keep everything, not just the items that meet the legal exemption.
• In most Chapter 12 and 13 cases, the debtor is repaying only a percentage of what he or she actually owes -- sometimes as little as 30 cents to 50 cents on the dollar!

I have the skill and experience to help you draft a plan that is both effective and reasonable. When you are in dire financial straits, you need a bankruptcy attorney who knows the law, knows the system and knows you. Contact me to schedule a free consultation, or call 818-347-5800.

 

 

 

 

How to Pick a Bankruptcy Attorney

I am always asked by people.  "How do I select a Bankruptcy Attorney?"

My answer is always ask allot of questions to the prospective Attorney prior to signing any retainer agreement and paying any fee. For example:

1. Do you file electronically?
         Most Bankruptcy Courts require Bankruptcy Attorneys who are regular filers of bankruptcies to file  electronically.  In other words, if the Attorney does not file your bankruptcy petition electronically, likely he/she does NOT a regularly file bankruptcy.
My firm is required by Local Court Rules to file electronically.  I am a regular bankruptcy Attorney who legal practice is primarily Bankruptcy, I simply file too many bankruptcies!

2.  Are you (the Attorney) preparing my petition or is a paralegal doing it.
         In my opinion you are hiring an Attorney NOT his or her paralegal.
 I am of the opinion that if the Attorney does not personally prepare your bankruptcy petition, move on!

3.  What is your policy for returning phone calls and or emails.  Is the policy in writing?
        The number Attorney complaint in California is Attorneys do not return clients phone calls.
Every one of my retainer agreements contains a guarantee that I will return my Client's phone call or emails within 48 business hours or I will pay the Client $100.


4.  Can you guarantee that I will not have any problems?
        If the Attorney guarantees an outcome....RUN AWAY!
Besides being unethical, it is impossible for any Attorney to guarantee an outcome one way or another.  Most Attorneys, including myself will give an opinion as to the outcome of a particular case based upon past experience.


These are just a few example questions that you should ask an Attorney you are considering hiring to handle your Bankruptcy case.  


Please check back soon for more helpful interview questions.


Jonathan Leventhal, Esq.
Leventhal Law Group, P.C.
www.WrapUpDebt.com
818-347-5800