Be aware of the bankruptcy warning signs in your own life!

warningThere are many warning signs that can appear in person’s financial life that can signal that a person is insolvent and in need of warning 4declaring bankruptcy.  If you can recognize these signs then it is possible for you to prepare to file for bankruptcy.  A timely bankruptcy filing can avoid the pitfalls of irreversible financial mistakes.  I often discover that my clients have made these mistakes prior to coming to see me.

I wanted to warn people in this blog so they could consider bankruptcy when the financial danger first appears so they can avoid the mistakes that come with the failure to recognize the warning signs of an impending bankruptcy.  If these signs appear you may be in a situation where bankruptcy makes more sense than continuing with a charade or outright lie that you are “someday” going to pay your debts.

Many people continue with this denial for years and years and some make many financial mistakes because of it.  Some will cash in their retirement funds or sell other property to raise cash in an attempt to pay down their debts.   Retirement funds and many other types of property are exempt in bankruptcy.  It is always a mistake to cash in retirement funds or many other types of property that are exempt in a bankruptcy.   You can keep these assets in a bankruptcy and still get rid of your debts.

Some people will struggle along for long periods paying partial payments to creditors which will often cover only interest on their debts.   This only results in them their spending endless amounts of money which could have been saved had they only admitted to themselves that bankruptcy made sense.  Some will even borrow some money from friends and relatives in an attempt to pay down the debt.  This money is completely wasted and probably lost forever if these people eventually do file a bankruptcy.

1) The first warning sign is when you are paying interest only on credit card or other debts.  If you cannot pay down the debt itself but you are paying interest only then that is a sign of trouble ahead.  Interest rates will rise and just like our government you will eventually reach a point where your interest on your debts takes up a huge share of your income so that you cannot cover your basic monthly expenses for living.   This is an unsustainable situation and one which signals that bankruptcy make s a lot of sense for you.

2) Unemployment or underemployment.  If you have debts that you could afford to pay on when you high paying job but then you lose that job (or you get a job which pays far less) then you may be headed for bankruptcy.  Some will believe that they can magically still pay these debts even though they now need their now reduced income to continue to pay their monthly expenses.

3) When your expenses exceed your income each month before you pay your debts.  If you have no money left over after you pay your current monthly bills to pay past debt payments then it is probably time to consider bankruptcy.

4)  If you have had a vehicle repossessed and you have been hit with a large deficiency balance because of it then you may need a bankruptcy.  Some of my clients have multiple cars repossessed and they thus have multiple deficiency balances that can add up to tens of thousands of dollars.  If they cannot afford to keep up with payments on the vehicles prior to repossession then they will probably not have enough income to pay off the deficiency balance on the old car and somehow secure a new car to drive.

5) Another sign is if you suffered some outrageously high medical debt that is unpayable.  Many of my clients are uninsured or underinsured.  This works for some unless there is a need for an expensive medical procedure.  It is not long before the collectors are calling you to pay tens or even hundreds of thousands of dollars in medical bills.  They will demand that you repay just like any collector and you may not have the income to do it.

6) Then there is the constant steady unabated calls from creditors that you cannot pay so you do not answer your phone.  And this leads me to the all important  psychological  effects of long-term debt upon people.  The constant harassing calls and the knowledge that there is a debt out there that you have no way of paying is a tremendous psychological burden to people.  Bankruptcy lifts this burden, eliminates the debt and the terrible unending stress that goes with it.

7) Some people have multiple court judgments against them for unpaid bills.  These judgments could be for credit cards, deficiency judgments, unpaid medical bills, or debts of any kind for which a creditor has sued you and obtained a court judgment against you.  That creditor can now garnish your wages, seize your property, or demand you come into court for a debtor’s exam.  These “exams” will allow creditors to pry into your finances no matter how much you wish to keep them private.  These are to be avoided at all costs.

8) You may already have garnishments taking 25% of your income.  You now are operating with a reduced income and each creditor is standing in line to get his 25%.  You could pay this virtually forever if you owe enough money to creditors.  Bankruptcy will stop the garnishments, return your income level to what it should be, and banish the debts forever.

All of these are signs that bankruptcy probably would make sense for you and you should get some advice from a bankruptcy attorney.  If you have several of these warning signs (and even if you have only one) then bankruptcy is an option to consider.  There is a little bit of a miracle in bankruptcy.  It can wipe out your debts and free you from your debt burdens.  It is the only way I know of but we don’t need another because it works so well.  So think about if you have any of these signs and if you do then consider bankruptcy.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at or  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015. Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at

Warning sign courtesy of Free Grunge Textures.  Danger sign courtesy of Atomicjeep.


Are gambling debts a problem in bankruptcy?

gambling 3The short answer is that they can be.  In general the bankruptcy trustees who oversee your case seem have the opinion that gambling 4gambling debts are somehow frivolous, shady, or just not respectable and thus possibly not eligible for a bankruptcy discharge.  The same trustees don’t blink an eye at credit card debts as long as they are aged (more than one year old) but they do seem to have something against gambling debts.

I believe that it is a belief that somehow gambling is not the type of debt that the bankruptcy system was designed to discharge.  You are somehow acting irresponsibly in the eyes of a bankruptcy trustee if you engage in gambling and you borrow money to do so.

But wait a minute that is not the end of the story!  The judges don’t always agree with them.  Bankruptcy was designed to give debtors a fresh start and a relief from debts the cannot pay.  Those debts come in many types and gambling is just another type of debt.  They too should be dischargeable in bankruptcy.

I had a case years ago where a client had gambling debts and the trustees raised an objection to their discharge so I looked up what the judges at that time had ruled.  To my surprise they seemed far more understanding than the trustees.  The judges pointed out in a series of cases that gambling is a legal activity.  Not just in Las Vegas but in casinos around the country.  Here in San Diego we have many Native American casinos that are fully legal.  Millions go each year to these casinos and legally gamble.  There simply is no illegality about it.

If a debtor engages in an entirely legal undertaking then we can’t deny a debtor’s right to engage in it as well as borrow money to finance it like he would a car or clothes that he was buying.  So if the debtor accumulates debt related to the gambling then that really is no different from him running up his credit cards for some other item.  This is what I understood from reading a number of cases on gambling a few years ago.

There were a few caveats though.  The debtor with gambling debts could not have run up his credit cards in anticipation of filing bankruptcy.  One judge referred to this as a credit card “bust out” scheme.  If this was the case then that could be seen as credit card fraud.

Credit card fraud occurs when a person borrows (charges) on a credit card with no intention to repay.  That is why if you run up credit cards and then immediately file bankruptcy you probably will have a credit card fraud problem.

When you sign your card you signed that you will borrow money on the card but you have an intention to pay it back.  That intention can change later though and you can find yourself in a position where you cannot pay.  At that point you stop paying and possibly file bankruptcy.

The gambler then is just like the guy who charges consumer goods on his card except he gambles.  As long as he believes he will eventually win and then pay the car back then there is no fraud because fraud is subjective.  We may look form the outside and say that he will never win at gambling.  His chances are great that he will lose.  But if the gambler believes honestly (but unreasonably) that he will win then there is no subjective fraud.

So it is best to wait for some time after a debtor borrows money on a credit card to gamble.  It will then look less like the debtor had any fraudulent intent.  Any questions about gambling debts and bankruptcy should be directed to a knowledgable attorney.

Don’t forget that there is the gambling addiction problem too.  It is possible that a debtor has an addiction to gambling.  If the debtor is in treatment for this addiction and has ceased all gambling there is a possible argument there to counter any fraud charges.  A good bankruptcy attorney can help you with these arguments.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at or  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015.  Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at


Risk Free photo courtesy of Sean MacEntee.  Roulette wheel photo courtesy of Zdenko Zivkovic.

What is a chapter 20 bankruptcy?

twentyIt is really just one bankruptcy followed by another.  It is a chapter 7 followed by a chapter 13 which added together equals 20 so it is called a “chapter 20”.  Most people have heard of bankruptcy chapters 7, 11, and 13 but a chapter 20 is really just a combination of a 7 and a 13 and there is no official chapter 20 that you can file.

In a chapter 20 bankruptcy someone will first file a chapter 7 and get a discharge.  They then decide some time later to file a chapter 13 bankruptcy.  A chapter 20 is sometimes referred to as a “no discharge chapter 20” because the debtor is not entitled to a discharge in the chapter 13 if he filed it within 4 years of his chapter 7 according to section 1328(f) of the bankruptcy code.

One reason why people file a chapter 20 is because of the debt limits of a chapter 13.  Some want to file a chapter 7 to discharge the unsecured debt they owe to bring that debt within the limits of chapter 13.  Chapter 13s have specific debt limits and if you exceed them you could be forced into a chapter 11 which is far more complicated.  One strategy to avoid a chapter 11 is to file a chapter 7 to lessen the debt through the chapter 7 discharge and then do a chapter 13.  This would be an example of a “good faith” reason to file a chapter 20.

Another common reason why they would want to file a chapter 20 is because of the chapter 13 lien strip capability not offered in a chapter 7.  In a chapter 13 homeowners can strip (eliminate) second mortgages if they are completely unsecured.  Second mortgages are completely unsecured if you owe more on your first mortgage than the entire home is worth.  This leaves nothing (no equity in the home) to secure the second mortgage so it is in effect an unsecured debt.

But of course it is a lien that exists and will continue to exist on your house if you do nothing or even if you file a chapter 7 bankruptcy.  The lien will remain on you home virtually forever and the only way to get rid of an unsecured second mortgage it is to strip it off in a chapter 13 bankruptcy.

So some people try to get rid of their credit cards in a chapter 7 bankruptcy and then file a chapter 13 to strip the second mortgage.  If they just filed a chapter 13 without the prior chapter 7 they would have to pay some of the credit cards back in the chapter 13.  So it seems that filing a chapter 7 followed by filing an immediate 13 makes sense right?  After all you save all of those credit card payments you would have to make for 5 years in a chapter 13 right?

Wrong!  You cannot be seen to be manipulating the system just to get rid of your credit cards and then strip a mortgage.  This would be an example of a “bad faith” bankruptcy filing and this would be challenged by the bankruptcy trustees in an adversary proceeding.  If you file one chapter and then another to create a benefit for yourself that would not exist in either chapter then that could be considered bad faith.  So you must not attempt to merely get a credit card discharge and then apply for a lien strip.

This tactic would be considered bad faith because if you filed a chapter 7 you would not be allowed the lien strip.  If you filed just a chapter 13 you would have to make payments to the credit cards for the length of the chapter 13 plan.  The courts will want you to pick one or the other but no both chapter in succession merely to seek maximum benefits.

One way to avoid a possible bad faith challenge to your chapter 20 is to show that there has been a subsequent change in your situation since the filing of the chapter 7.  If for instance you intended to surrender your house at the time of filing the chapter 7 but your situation substantially changes after your chapter 7 discharge then you may have a valid new reason to keep your home.  You could get a divorce or suffer a lessening of income for instance.  Then you could possibly do a chapter 13 to strip the second mortgage and this could prevent a bad faith challenge.  Courts examine chapter 20s carefully though so you should be aware of this increased scrutiny over your case when you attempt one.

It is also possible that housing values change and your second mortgage might become unsecured sometime after your chapter 7 discharges.  If you are in a period where housing values are declining then the value of your house may drop below the value of your first mortgage sometime after your chapter 7 is complete.  Now you can strip the lien in a chapter 13 whereas before you filed the chapter 7 you could not.  This would be a valid circumstance that could defeat a bad faith claim.   There are many other possible good faith circumstances in addition to these mentioned above.

Chapter 20s used to be more common.  Doing a chapter 20 became a problem after the 2005 bankruptcy law was passed.  This law can be interpreted to not allow a chapter 13 discharge unless 4 years have passed since the filing of a chapter 7.  (A second chapter 7 cannot be filed until 8 years have passed since a first chapter 7).  This prohibition is contained in section 1328(f) of the bankruptcy code which relates to discharge.

With this code section in mind the question then becomes how can you receive a discharge from your second mortgage after the chapter 13 plan is completed if section 1328 disallows such a discharge?  This can create problems for you as you proceed with the chapter 20 bankruptcy.

Most courts have maneuvered around this by turning to other sections of the code and they have allowed you to do a chapter 20 anyway.  Remember though that the possibility is still there that you will get a challenge if you attempt to do a chapter 20.  It appears that at this time the law is not completely settled and the courts are not in complete agreement on this issue of allowing a chapter 13 within four years of filing a chapter 7.

It also appears to help if new debt exists.  If some sort of new debt has been acquired post chapter 7 judges apparently like that.  It seems as if there needs to be something to make payments on in the chapter 13 and not just a lien to strip.

Bt I still believe that the safest thing to do though is to not run afoul of section 1328(f) at all.  Just wait the required 4 years after your chapter 7 to file a chapter 13 and strip your lien.  You then won’t be in violation of 1328 and there should be no argument to stop you from filing.  Nobody wants to buy a court challenge or court case when filing bankruptcy.

The additional advantage of waiting the full four years to comply with section 1328 is that it is a longer period in which to argue changed circumstances.  It is harder for anyone to argue bad faith if you waited a full four years after your chapter 7 to file a chapter 13.  This is because people don’t generally plan that long in advance and circumstances do naturally do change considerably in four years.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at or  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015.  Call now for free credit report and analysis!  For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at


Twenty photo courtesy of takomabibelot.

What do I do after bankruptcy?

After your bankruptcy is over you can certainly begin enjoying your new life with your debts discharged and you don’t really have much that you need to do.  Your debts are now in the past and your future should be debt free.  There are just a few things that you can attend to:

1) Re-establish credit–  You will want to begin re-establishing credit right away after your bankruptcy.  There is no need to wait and you can certainly begin immediately.  You will want to get new sources of credit.  Loans, either secured or unsecured, that will appear on your credit report are a good way to begin to re-build your credit.  You can buy a car or furniture or anything that you pay off monthly and if you make your payments on time you will get positive points on your credit score.

You can and should also get 3 new credit cards after your discharge.  You should get solicitations from credit card companies right away after your bankruptcy is completed.   You can use these new cards to re-establish credit.  If you do not get solicitations then visit your credit union or bank where you have a deposit account.  They will probably give you credit there.

You can always apply for secured cards too.  These are cards where you give the creditor money and the creditor gives you credit based upon how much money you deposited with them.  These secured cards will report on you credit report just like regular cards so make your payments on time.  Remember also to keep your balances low.

 2) Check your credit report-  You will want to check your credit report after your discharge to see if all of your debts are properly reported as “discharged in bankruptcy”.   Challenge any debt not properly listed.  You can get your credit report for free at

 3) Stay out of debt- Be sure to be careful to stay out of debt.  You do not want to fall back into debt after your bankruptcy is over.  This is a good time to develop new habits with credit.  Use your cards to improve your score but pay the balances each month.  It is a good time to live debt free.  Remember too that you cannot file bankruptcy again for 8 years and you don’t want a second bankruptcy unless it is necessary due to some calamity.

 4) Move on with your life- You can now move on and get a new job or buy and sell property or travel and do anything you wish after your discharge.  You are required to report any large amounts of money you receive after your discharge but only for 6 months.  After that you can do anything you want and you are free of the system (as long as there was no fraud involved in your original bankruptcy).

5) Enjoy your new-found freedom Rmember that you are debt free.  Enjoy your new life!

I am bankruptcy attorney in San Diego.  Please visit my websites at or for more info. about any of these topics or call me for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to:

Can I file bankruptcy a second time? Yes, and with stubbornly high inflation, unemployment rates, and the housing crisis you might well need to!

economy 2If you want to file for bankruptcy a second time you just have to wait the required eight years since the last time you filed.  Don’t Guess Againworry it goes by quickly!  Many people find that they get into the same situation as they were in before after eight years have gone by.  The country’s unemployment situation does not appear to have improved, the price of everything is going up as inflation worsens, and the nation’s housing crisis continues. (See here for additional reasons for why you should file for bankruptcy).

I read an article yesterday that gas prices have increased by over 80% in the last three years.  Many food prices have increased by 20% in the same period but the government uses an inflation measure that excludes food and energy prices so their statistics do not reflect real inflation.  This seems ridiculous because food and gas are the items that people buy the most.

With our astronomical 15 trillion deficit many of us believe that massive inflation is coming for America which will render our currency increasingly worthless.   I heard a story the other day about inflation in the Wiemar Republic in Germany in the 1920s.  There the cash was so worthless in 1920s Germany that crooks stole only the wheelbarrows that people carried the cash in and dumped the cash in the street.

Unemployment is also staying high and is also under counted by the government. We are told that unemployment is declining but we also find out that increasing numbers of people are leaving the job market altogether and are thus not being counted in government statistics.  We apparently have the lower number of adults working in America that we have ever had before in our history. (See here for my blog on the unemployment is rising because people are leaving the labor force).

As we have known all along many people are giving up on finding a job and are either living off the government or are living on money earned under the table and off the radar.  These people usually are surviving on such little money that they should be counted as at least underemployed if not as unemployed.  This many unemployed people not being counted makes the unemployment situation look far better than it really is.  I hate to say it but it appears that the government has an agenda to advance in these statistics on inflation and unemployment and these government supplied numbers should therefore be questioned or ignored.

The housing crisis also seems to have no bottom.  Houses are still being foreclosed in in great numbers and thus housing prices are not rising in some areas and still falling in others.  Many are facing an iminent foreclosre of their home due to this crisis in real estate and the realtors I talk to say they don’t see any end in sight for this.  With the glut of foreclosed homes on the market the prices of homes will not increase again for some time.  Many who are unemployed cannot afford to pay their mortgages now.

unemployment 4Many people believe that with our massive debt at the federal, state, and local levels we are headed for financial collapse.  I don’t know if a massive collapse is coming but it’s clear that massive inflation and continued high unemployment are a distinct possibility.  Collapse has happened before in history with the Wiemar Republic and with other societies that failed to get their debts in order.  If we are headed for these increasingly difficult economic times then it would certainly be easier to enter them without a tremendous debt load.  Bankruptcy can accomplish that.

If massive inflation comes will help pay down the government’s debt but it will devastate individuals and families financially as it dramatically increases the prices we pay for everything.  If unemployment remains high too then many people will continue to have medical, credit card, auto repossesssion, and other personal debts they  pay.  Many will continue to borrow on their credit cards as they have in the past out of necessity and not irresponsibility.

If any of this sounds familiar then you might want to consider filing bankruptcy.  Don’t be like the government and put you head in the sand.  Deal with your debt in a responsible, legal, and ethical way which is what you get with a bankruptcy discharge.  You can also significantly slow down or stop your home being sold at foreclosure with a bankruptcy.

All of this debt, unemployment, and foreclosure will lead many individuals and couples right back into a situation where they cannot pay their debts.  Once they stop paying these creditors the phone will start ringing again 24 hour a day from collection agents who ceaselessly try to collect these debts.  The result of this will be more people will need second time bankruptcies.  So don’t despair if you have accumulated debt in the last number of years because you can file bankrupty again.

If you filed in 2005 like millions did to avoid the bankruptcy law changes then you will be able to file next year in 2013.  You only have to wait eight years.  If you filed in October of 2005 like many did the you should look to file again around October of 2013.  Remember that millions of individuals are in the same position as you are so don’t despair.  Just call a good bankruptcy lawyer now and he will help you survive financially until the eight years has elapsed.

There are many strategies for managing these debts in the mean time including paying them something to get them off your back.  A good lawyer will help you manage you finances until the date arrives that you can file for bankruptcy again.  For an update on filing bankruptcy a second time see here.

I am a San Diego bankruptcy attorney.  For further information please visit my website at or  Or call my office for a free consultation at (619) 702-5015.  Call now for a free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to:

The economy is so bad photo courtesy of Mark Holloway.  Guess again photo courtesy of Damian Gadal.  Unemployment photo courtesy of Sean MacEntee.

“Occupy Chicago” wants to forgive student loans. Your student loan bailout should be through bankruptcy!

The “Occupy Wall Street” movement has created many spinoff movements all over the country like the one here in San Diego.  After hearing criticism for their lack of coherent demands, the “Occupy Chicago” chapter came out with a list of demands on Monday.  Among other things, like taxing the wealthy and attacking Wall Street, they want student loans forgiven.  I argued in a blog that I posted Sunday on the Occupy San Diego movement that student loans should be dischargeable in bankruptcy.

In the face of the bailouts that Wall Street firms and banks received more and more people are asking “where is our bailout”?  Regular people have a tremendous amount of debt which they cannot afford and they believe that justice demands that they need some consideration from government.  It is true that almost 50% of people pay no income taxes but should we bailout the 99% with massive wealth transfers?

I say no.   Most people in this country will not go for that.  I have argued for years on my blog that a bailout plan already exists for the 99% of us that are neither rich nor giant corporations.  It’s called bankruptcy and bankruptcy allows you to legally walk away from your debts and have them discharged so you no longer owe them.  You can then get a fresh start debt free and keep what money you earn from employment.  Everyone can avail themselves of bankruptcy.  You don’t have to be a privileged person or corporation to get it.  In fact if you make too much money you will be means tested out of a chapter 7.

So bankruptcy is available for regular people but there is a problem.  Student loans cannot be included in bankruptcy.  Student loans currently are not dischargeable in bankruptcy.   They do therefore indeed last forever or until you allege “undue hardship” which is very hard to prove.  If these student loans were to be included in the lists of debts that people could discharge in bankruptcy then regular people would not be saddled with them forever.  They could escape them and move on in life with their student loans forgiven.

This could be done so much more easily and fairly in the context of bankruptcy than through some government blanket forgiveness.  Bankruptcy has been around for hundreds of years and the systems are in place to handle forgiveness of debt through the filing of bankruptcy.  There are trustees and judges to oversee each individual to make sure that the people asking for forgiveness really can’t afford to pay these debts back because the have neither the income or assets to do so.

In bankruptcy there are even proscribed exemptions that allow each person to keep a certain amount of property.  For most of the 99% this would amount to people keeping all of their property because most people don’t have more than these allowed exemption amounts.

This solution will also be so much more palatable to the American public.  It allows the forgiveness of the student loan debt but within the confines of the bankruptcy system.  Each individual would have to file for bankruptcy to get his student loan debt forgiveness.  He would then be examined by a Trustee and he would face a judge if fraud or other problems came up.   His income and expenses would be looked at to determine that he could not pay his debts with his current income and thus he is formally bankrupt. Those who could afford to pay the loans would then have to do so in some form but many many student loan debtors would be able to escape these loans if they were dischargeable in bankruptcy.  Bankruptcy is no blanket gift.

And it would be fair.  Many people with student loans cannot afford to pay these loans and they have very little hope of paying them back.  They are under employed or more likely unemployed and they cannot afford their living expenses let alone these student loans that have not even landed them a job.  It is simply not fair that a person who used their credit cards to excess can discharge those debts but the person trying to get an education and a job can never escape them even if they have no money and no job.

But many people will say that if we make student loans dischargeable in bankruptcy then student loans will be harder to get.   Maybe that is a good thing and people won’t borrow money for degrees that won’t lead to a job.  But I also believe that as credit cards are still obtainable by most people today and they are dischargeable in bankruptcy.  Bankruptcy has not stopped that industry and dischargeable student loans will not stop lenders from lending money for these loans either.

It also should not matter whether the loans are government or private.  If  they are private then the loans should be treated like credit cards and if government loans are owed then forgiveness of these loans is only fair in light of the bailouts given by the government to the financial industry.  Whether government or private though the effect is the same on people.  They can’t afford to pay them back in many cases.  (Remember also that IRS tax debt is dischargeable after only 3 years and the IRS still continues to operate).

And for further fairness you could make student loans dischargeable after a period of time say 10 or even 20 years.  If the student has not paid them back by that time then they are certainly having a problem and they probably can’t pay them back.  It is only fair to allow people to escape them in time.

I am a bankruptcy attorney practicing bankruptcy law in San Diego, CA.   For further information please visit my website at or   Or call my office for a free consultation at (619) 702-5015.  If you or someone you know are considering bankruptcy then get my Free e-book “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPCTY FILING” by e-mailing me at

“Occupy San Diego” has begun! But if you want a bailout like the banks then try bankruptcy. (But let’s add student loans to the list of dischargeable debts)

The “Occupy San Diego” movement is currently in full swing in our city.  Protestors have marched through San Diego and occupied a park in downtown.  It remains unclear just what they are protesting though.  Some in the movement say it’s “corporate greed”.  According to an article in Sign on San Diego the protestors are not just angry about corporate greed but they also object to the money flowing into the political system from the financial industry and the banks.  According to the “Occupy San Diego” website those in the movement say they are for “social and economic justice” and they are protesting “global financial corruption” and the financial influence that has infiltrated everything and led to the current economic crisis.

On the “Occupy San Diego” website they also have a list of items they recommend people bring to the protest, along with their tents, much like the lists for camping trips.  They tell you where the bathrooms are and whether the are 24 hour or not.  They talk about first aid, entertainment, as well as security.  Mostly they seem to be ready to stay and occupy these parks in San Diego for a long time as they prepare their list of demands.

Apparently the movement is being advertised and spread rapidly by social media and it is gaining steam.  Where it goes and when it ends is anyone’s guess.  I must admit that this thing is somewhat fascinating as I can’t remember another movement like this even though I don’t necessarily agree with some of the premises like the anti-capitalist, pro-government emphasis.  I personally prefer small government libertarian ideas that emphasize personal freedom.  But the movement is certainly interesting and I intend to drive by and maybe mingle as I work downtown.

We who practice bankruptcy law though do believe in our cause too.  We believe that we bring freedom from the terrible burdens of debt to average people who are 99%ers.  We regulary help free people from this debt but we also bring equality too.  We bankruptcy attorneys can take you down the same road as one of these corporations that regularly file for bankruptcy and shed their debt.  Any one individual person (or couple) can file and be just like a corporation.

We in bankruptcy believe he average person’s bailout is a bankruptcy.  What is a bailout after all except a forgiveness of your debt?  You don’t have to wait for the government to give you something that only big financial institutions have.  The 99% already have the power to get their debts forgiven.  You can get your debts forgiven tomorrow.  The legal framework already has been in place for hundreds of years. Average people just have to avail themselves of the bankruptcy process.

And if you are unemployed and have no income to pay those debts then bankruptcy makes even more sense.  Imagine waking up tomorrow debt free.  How would that feel?  You could get your bailout just like big financial corporations did if you file for bankruptcy.  It’s a wonderful thing for sure.

It is also true that many people around the country have massive student loans left over from their education. Many people had to borrow heavily to originally fund their education so they could get a job.  Many of those people cannot get a job now in this economy and they have no money to pay those loans back.

It is also true that these debts are not currently dischargeable in bankruptcy.  In fact Obama’s latest spending bill would allow private collectors for these loans robocall your cell phone to harass you into paying these loans.  He is making the situation therefore worse by allowing these companies to go after you for debts which you probably cannot pay.

If this movement wants to put in a demand that these debts should be dischargeable in bankruptcy then the movement would gain the support of mostly all those who work in bankruptcy because we believe that these debts should be dischargeable.  There is no reason why students should be saddled with these debts forever but someone who over-used their credit cards can get rid of those debts.

A stipulation could be put in the new law that the student loan debt would not be dischargeable until they are 10 or even 20 years old.  This would give collectors time to collect these debts and if they can’t collect in this time then they would have to forgo collection if the person filed bankruptcy.  I believe that it’s fair to say that f the collectors can’t collect within 10 or 20 years then the debtor probably will not ever be able to pay.  Those debts are probably uncollectable and debtors should be freed from having to pay them the way financial institutions have been given infusions of cash so they can continue to operate their businesses.

How about including that demand that in this protest?  If this happens then more people will obtain financial freedom and greater parity with corporations.  Student loans can be onerous for people who have no way to pay them in this economy.  How about a student loan bailout?  Make these loans dischargeable in bankruptcy and that is all you would have to do.

As for the protest I will continue to watch with great interest as I want to see where it goes and how it ends up.  Will these people ever go home?  Will hey set up tent cities?  Will violence occur or will they be peaceful?  Will police make arrests?  How many will join those already there?  Then where will they all go?  Will they shut down operations in this city?  What will happen nationwide?

I will continue to follow and blog about this movement.

I am a bankruptcy attorney practicing bankruptcy law in San Diego, CA.  For more information please visit my website at or  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis! 

If you or someone you know is considering bankruptcy then get my FREE E-BOOK; “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” by e-mailing me at

How to re-build your credit score after bankruptcy! New strategy!

I heard a program on the radio the other day that was talking about how to improve your credit score in general so I listened.  The announcer said some of the things that I have been telling my clients with some differences.

First of all he said that you must have credit cards.  Many of my clients say that they will never use credit cards again after the bankruptcy and that is absolutely wrong.  You must have credit and use credit if you are ever to improve your credit score.  Your credit score is determined by the three credit scoring agencies who look at your financial activities for the month to determine if your score should go up or down.  These three reporting/scoring agencies are Equifax, Transunion, and Experian.

It is important to remember that you must get over the aversion you have to credit cards after a bankruptcy.  You must begin to use them wisely so they can help you and build your credit score instead of tear it down. Don’t be afraid to use them and use them wisely.  They will help you rebuild your credit score.  Don’t allow emotion to enter the equation.  You can use them to your advantage if your smart and diligent.

I was telling people to have two credit cards and this announcer said to use at least three credit cards to improve your score but we both agreed that having both credit cards and using them regularly were essential to get a maximum credit score.

He said that he paid bills with his cards and that he had around five cards each used to pay a different bill.  One was for the cable bill, one for the utility bill, one for the water bill, and others for other bills.  He would pay the bills with the cards and then pay the credit card balance in full each month.  I believe that this is a good idea.  You will therefore carry no balances and pay no interest on your credit cards.  You will though be using the credit cards to rebuild your credit score.

This kind of activity is apparently what the credit reporting agencies are looking for.  It does you no good to have cards sitting there unused.  You need to show activity and a payoff each month to slowly but steadily build your score.  And remember that multiple cards (excess of three) will build the score the fastest.

The last thing is to keep your balances low.  Never exceed 30% of the available credit on your card.  So if you have a $500 limit only charge$150 and if it’s a $1000 limit then only use $300.  Traditionally people have advised not to exceed 50% of your available credit but now 30% seems to be the better number so I’m sticking with that.

After a bankruptcy you will be deluged with credit card offers so if you file one then be prepared to use these to build your credit score.

I am a bankruptcy lawyer practicing bankruptcy law in San Diego CA.  For more information please visit my websites at or  Or call may office to speak to an attorney for free about bankruptcy or any other debt related issue at (619) 702-5015.  If you or someone you know are considering bankruptcy then get my Free e-book; “13 Things You Should Do To Prepare For Your Bankruptcy Filing” by e-mailing me at

Is the economy improving? Will I be “means tested” out of bankruptcy if I get a good paying job?

I don’t know if the economy is improving but if you are going to be starting a new job soon it could mean that it’s a good time to file bankruptcy.  If you have been unemployed and you have a lot of debts that you wish to discharge in bankruptcy then it might be good for you to file before you get a new job.  If the economy is actually improving then so will job prospects.  If you get a new job then this will possibly impact your ability to file.  If you make too much money you may be “means tested” out of bankruptcy.  There are limits to how much income you can make and still file a chapter 7 bankruptcy.

The means test was added in 2005 to force people into a chapter 13 so the creditors could get some sort of payments on their debts.  The law was lobbied for and written by the credit card companies and big banks (same thing).

At the time of this article in San Diego county income limits range from just over $47,000 per year for an individual to $77,596 for a family of four.  (You add $7,500 per year for each family member after 4 people).  If you make more than these amounts that are allowed for your family size then you would go into the means test.  When you are in the means test then all of the deductions for mortgages, cars, healthcare, charity, and taxes are subtracted from your income to see if you pass.  If you do not pass the means test then you must do a chapter 13 bankruptcy as you are “means tested” out of a chapter 7.

It is far better though to not go into the means test at all.  It is better to fall below the means test cut-off line and not take the test at all.  If you file while you are still unemployed or soon after you job starts then you will have a higher chance of coming in below the means test limits.

If your income is going to go up significantly then it is a good time to file sooner rather than later.  The means test looks back six months so if you just started a job then you would still be okay but don’t delay the filing and risk not qualifying for a chapter 7.   A chapter 7 will allow you to eliminate all of your dischargeable debts and then get a fresh start as you move on with your life and your new job.

Remember that most people can keep most of their assets in a bankruptcy and most people can eliminate all of their dischargeable debts.  Some debts are not dischargeable but consult me or another bankruptcy attorney if you are wondering which debts are dischargeable.  Also you can file alone and your spouse does not have to file with you.  Bankruptcy will remain on your credit report for up to ten years but with the proper re-building most people can get their score up significantly after two or three years.

So bankruptcy is not the end but a new beginning!  It is a fresh start that many need!  It might be a good time to file now though if you are going to start a new job so you can start a new life debt free!

I am San Diego bankruptcy attorney.  Please visit my websites at or  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!  For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at

Why are seniors are filing more and more bankruptcies?

As reported on Fox Business, according to something called “Consumer Bankruptcy Projects”, senior citizens (55 to 64 years old) are filing more bankruptcies now than they did in 1991.  In 1991 they filed only 6.1% of all bankruptcies.  By 2007 that number had risen to 15.3% and by 2009 it was up to 16.9%.

The numbers for the 45-54 year olds increased from 15.8% to 23.5% during the same period.  The numbers declined for the 35 to 44 year olds and for the 18 to 24 year olds the percentages declined even further.  The younger people seem to be filing a smaller and smaller percentage of the bankruptcies and the older folks are taking up the slack.  My question is- are the younger getting more responsible and the older folks less responsible?

According to the study the reason for this is mainly credit cards.  The older people are getting more credit card offers and they are using them.  Older folks are apparently more likely to have 5 or more cards which is a dramatic increase over the last 16 years.  Apparently seniors are less likely to negotiate with their credit cards for lower interest rates or payoff amounts.  They seem to accept and thus get stuck with whatever the credit card company gives them.

The other factor that the study points out is that seniors (55 to 64 years old) are also likely to be paying for their children and their parents simultaneously.  People are living longer and this age group often has living parents who need care.  Their medical care can be expensive and seniors often turn to their credit cards and lines of credit to pay the medical debts of their parents.

Seniors may also have adult children who need help with their families so they turn to their parents who turn to credit cards and lines of credit.  Sometimes these children get their parents to sign onto business loans to start businesses which ultimately fail.   The parents then become responsible for the debt.

I have noticed a just such a change with my clients.  I am seeing more and more seniors with credit card debt who are in need of a bankruptcy.  They often have significant credit card and personal loan debt.  They are often very ashamed that they have such debt but according to this study it is indeed very common.

The study predicts that as the baby boomers age the numbers of seniors who file bankruptcy will increase.  Having the financial responsibility of care for both parents and children can really be expensive for this age group.  It is not surprising then why they get into debt and need a bankruptcy.

I am hoping that people can at last not be ashamed that they must file for bankruptcy.  I am convinced that it is a financial decision that should carry no shame.

I am a bankruptcy attorney practicing bankruptcy law in San Diego.  Please visit my website for further help at