Do I have to give up everything I own to file bankruptcy? No!

property 2I am asked this question probably once a week.  Many people believe that they must lose everything they own to file for a bankruptcy.  This is not true.  I believe that this comes from some of the guilt and shame that people feel when they file.  They believe that they are doing something almost dishonest.  They believe that they must “honor” their debts.  The collection agencies that attempt to collect on these debts will encourage these feelings of guilt to dissuade people from filing for bankruptcy and to get people to pay them.

Many of my clients also believe that they have somehow failed when they file for bankruptcy and failure is just not accepted in this country.  They then try for years to pay debts that they cannot afford thinking that they will then not be failures.  I usually remind them that many successful companies have filed for bankruptcy over the years and individuals have the same right to do so.  In fact the filing of bankruptcy can get rid of debt and put an individual on the road to success.

The reality is that bankruptcy is a legal and moral solution to your debt problems and you can keep most of your property in the bankruptcy.  This is because there are very generous bankruptcy exemptions.  These exemptions allow you to keep a lot of stuff.  Your retirement funds can be kept with one exemption, your car with another, a certain amount of jewelry with another, and even “tools of the trade” if you own a business or use those tools in your line of work.

In addition there are homestead exemptions for equity in your house and the contents in your house, like our personal belongings and your clothes, can usually all be exempted.  Anything that exceeds these exemptions can be put into the $23,000 “wildcard” exemption which can be used for cash, stock, bonds, or anything else.

Insurance and social security money and your current income are also exempt so call a bankruptcy attorney if you need a bankruptcy and get a consultation about your property.  Most likely you can keep it.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  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 farquharesq@yahoo.com.

Photo courtesy of Alan Cleaver

Update on home squatters. They have turned into a full fledged political movement!

The squatter phenomenon that began with current recession and is reminiscent of the great depression is still going strong according to an article in “In These Times”.  Squatters are people who move into vacant homes and refuse to get out until someone evicts them or pays them.  There are plenty of these homes to choose from now in California and many other states due to the ongoing foreclosure crisis.  These squatters are often violent, angry, and sometimes hardened criminals.

In an article about a case right here in San Diego a squatter moved into a foreclosed home and refused to get out until he was paid $25,000 for “cash for keys”.  Banks rarely pay former homeowners more than $5000 for this.  This squatter was arrested fortunately but many others are not.  Another article in FOX 5 News told of a Broker that has been attacked by violent squatters when he was checking on a vacant home for a client.

I wrote in a previous blog ( http://bit.ly/JdF7ea ) what a big headache it is for a homeowner when a squatter moves in and takes over the property.  In the end you may have to pay for an eviction the because the cops don’t want to get involved in a legal dispute between you and the squatter.  This is especially true when the squatters create phony rental agreements to say that they have a legal right to occupy your property.  During the eviction process the homeowner has to support the squatters by paying the bills for the home until the eviction is over and the sheriff comes to throw them out.

These realities are the same for a bank which takes over a foreclosed home that a squatter moves into. And worse it can happen to an investor who buys a foreclosed home at a foreclosure sale.  They may try to move in but find that someone has beaten them to it and that someone may have one of these phony rental agreements.  Then a legal eviction would be required to remove the squatters.  Of course once the eviction is finalized the homeowners will find a completely ruined, trashed, and vandalized homes.  Indeed some of these homes are gutted by the squatters.

Technically these people are trespassers but it is difficult to prove that when they have the lies and phony rental agreements.  Cops won’t remove them in these circumstances and owners have to go through the legal process of eviction.  I used to do evictions in San Diego and I know what a mess they can be especially if the squatters hire an attorney who can fight and delay the process.

Worse than this though is the phenomenon written about in the “In These Times” article.  This is the political movement that is growing up around these squatters and their takeover of these vacant homes.  In the article they talk about a woman who has occupied a vacant home in Chicago’s south side with the help of a group called “Liberate the south side”.  The article states that this group “targets vacant homes for reoccupation”.  The home apparently had been vacant and the group put money into renovating the home.

The article points out that this is happening across the nation in cities like Chicago, New York, and Minneapolis (and apparently here in San Diego too).  And it is also a global movement.  They talk about highly organized groups with “squatting offices” in Spain where they coordinate squatting for squatters.  Similar movements are happening in Ireland too.

These political movements are much more disconcerting than the individual criminal squatters that occupy and then extort.  Law enforcement can take care of them more easily but large groups of squatters who hold sit-ins, occupy homes in large numbers, and refuse to get out can be much more dangerous.  They hold up signs  and they come up with names like “sovereign women of the republic of california” or “poor people’s economic human rights campaign” .

I wrote about these groups in a previous blog (http://bit.ly/I5nsoT ).  They are now buoyed by the Occupy movement and they are now and were then calling housing a “human right”.  I presume that this means to them that houses should be free or supplied by the government like health care and eventually everything else.  If these people were to get their way and occupy these homes permanently then what about everyone else who is paying rent?  Won’t they want their free housing?

In my previous blog I warned about the reality of  what really happens when houses are occupied by squatters.  First of all utilities are shut off because they are not provided for free so squatters often live in the dark and cold with overflowing toilets and they still refuse to get out.  Some of these could move into your vacant home sometime before you can find a renter so be wary!  If the have a political movement behind them demanding free housing because it is their “human right” them they could be even more difficult to get out of your home.

I recommend anyone with any kind of vacant property check their home regularly to see of this is happening.  If the entire neighborhood is vacant then it is even more dangerous because no neighbors are there to watch. Be on the lookout for squatters!

I am a San Diego bankruptcy attorney.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.

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

Cash for keys! It’s still available after a foreclosure. My advice is get that cash!

(For the current state of the foreclosure crisis see this blog: http://bit.ly/JGU1dZ ).

How many times does someone hand you cash?  I’m sure it’s not often but it is the case that lenders are offering cash for keys after a foreclosure.  You may or may not be upset about the foreclosure and you may actually be relieved that the process is all over.  You may have tried a short sale that failed (or you may have never attempted one) and now the foreclosure sale has taken place and you are being contacted by the new owner of your property to find out from you what your plans are.

Remember that this new owner will have to evict you legally before he can get you out of this house that you formerly owned even though he is the new legal owner of the property.  He cannot throw you into the street.  There is no “self-help” allowed and the only way a new owner can get you out of your former home is through the eviction process.  You are no squatter.  You originally entered the property legally.   You are the former owner with the legal right to be there until a judge evicts you in court.

In California eviction means that the landlord has to give you a 3 day notice, followed by a filing of an unlawful detainer action, followed by a trial, followed by a sheriff who will actually remove you.  This all takes time and money.  To get you out will take around 4 to 6 weeks depending on how behind the courts and the sheriffs are.  In addition he has to hire attorneys, pay filing fees, and wait until the process finishes.

Or he can pay you money.  The going rate is about $3000 so don’t sell cheap.  Many of my clients have been offered and have received this money.  It will cost the landlord almost that much to proceed with and eviction plus there is the time involved.  The landlord may ask you to leave quickly (like in a week) but you can always try to negotiate for more time.  Just don’t scare him off so he doesn’t pay you.  Remember though that he will know the costs of legally removing you and that is your leverage.

You have a legal right to be in this home until he goes through the lengthy and costly legal process of removing you.  You can remind him of that if it helps the negotiations but always remember that you have legal rights.  If you don’t exercise them you will lose them.  You will be saving him time and money if you get out quickly with no hassles for $3000.

An extra $3000 can help a lot with bills and getting a new place.  If you can get more time then do so but if not then I suggest you take the money.

If you need a bankruptcy now to get rid of credit card or automobile deficiency or medical debt then call me and we will discuss how to free you up from the rest of your debt.

I am a San Diego bankruptcy attorney.  Please visit my website for more information at www.farquharlaw.com or www.freshstartsandiego.com.  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 may need to file a bankruptcy get my FREE E-BOOK: “13 THINGS YOU SHOULD DO TO PREPARE FOR OUR BANKRUPTCY FILING” by e-mailing me at: farquharesq@yahoo.com.

Will I get kicked out of my house after I file bankruptcy?

No! Not necessarily.  You will not automatically get kicked out of your house after a bankruptcy so don’t worry.  Even is chapter 7 there is a stay that covers all of your property including your house and it is created when the bankruptcy case is filed.  A bankruptcy stay prevents any action being taken against you including evictions or foreclosures.  You will therefore not be kicked out of your house after filing bankruptcy.

The problem is that a stay in a chapter 7 only lasts for the three months of the bankruptcy.  After the three months is up the bank or landlord can proceed with a foreclosure or an eviction against you.

Once the house is sold in a foreclosure you will be contacted by the new owner who will want you to move out.  You can then ask for cash for keys.  Ask for $2000 to $3000 to move out because you will have moving expenses and new rent and deposits to pay.  Negotiate with the new owner and get what you can.  They can evict you if you do not move but they would usually rather negotiate.

A Chapter 13 bankruptcy will allow you to stay in your home if you have disposable income (income above and beyond your bills) and if you can afford the payments on the home.  A chapter 13 is a debt repayment plan where you pay back some of your creditors over a three to five-year period.  A chapter 13 will allow you to make up all of your unpaid back payments (arrearages) on your house but most people realistically can’t afford to make these payments.  Also most people prefer the speed and finality of a chapter 7.

A chapter 7 bankruptcy allows you to discharge all of your unsecured medical, credit card, and personal loan debt in 90 days and then you are done with the bankruptcy and you can move on with your life debt free.  With a 13 you have to make payments for up to 5 years.  The chapter 7 will delay the sale of your home in a foreclosure for 2 months or possibly far longer as there is no way to currently predict how quickly a lender will proceed with a foreclosure.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation about a chapter 11 bankruptcy 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 farquharesq@yahoo.com.