Negotiating with Debt Collectors


Dealing with Debt Collectors

Under the Federal Fair Debt Collection Practices Act (FDCPA), it is illegal for creditors to utilize threatening, offensive, and intimidating behavior against a debtor. If you have been feeling unsettled by the tactics taken by a debt collector, you have a right to make a formal complaint.

For the most part, talking to debt collectors is never pleasant but they are reasonable. If you are ready to pay off your debt but need to negotiate the terms, we have some tips that will help you.

How to Negotiate with Debt Collectors

For many, debt is not a state that they chose. It can stem from the loss of a job and be unable to find a new one or hospital bills brought on by an accident. Once you are ready to pay off a debt, you must know that you have options.

Talk about garnished wages tends to come up when facing debt. The truth is that they would need to take you to court and file a judgement against you. Instead of letting the collectors set the terms, take control of the situation yourself.

Debt collectors will either try to ask for the full amount, a chunk of it, or ask for a monthly payment. You must figure out what works for you financially. If you are still unemployed, you may have to ask for an extension of payment. You may be able to negotiate your monthly payments as well. You never want to pay more than you can honestly afford least you find yourself in the same predicament.

Some debt collectors may be willing to settle for one lump sum that is less than what you originally owe. For the most part, they want their money as soon as possible and are willing to take less for it all in one go.

Debt Settlement in Sacramento

Some individuals are not comfortable dealing with debt collectors one-on-one. That is where the attorneys at Liviakis Law Firm step in. Our attorneys are experts at negotiating with collectors so that you can get the best deal and can rebuild the financial aspects of your life.

For more information about our services, please contact our office at 916.459.2364.

Selling Your Home While in Chapter 13 Bankruptcy

Can I Sell My Home While in Chapter 13 Bankruptcy?

There are many questions that those in Chapter 13 have and one of those is, “Can I sell my home while in bankruptcy?”
The answer is yes.

When in Chapter 13, individuals are able to pay back part of their debt and that means you are also able to keep your home because your attorneys have set-up a payment plan. Many times, homeowners decide to sell their home and if that is the route you choose then there are specific steps you have to take.

How to Sell Your Home in Chapter 13

Inform Your Attorney

No matter where you are in the process of your bankruptcy, you must inform all of those involved in the process. Your attorney is the first person you should contact since there will be a lot of paperwork involved.

Your attorney will need to contact your bankruptcy trustee and put all of the documents together. The real estate agent and potential buyer will also need to be informed that you are in Chapter 13. Often times your attorney will have to create a contract that states the sale relies on the approval of the trustee.

Do Not Wait to Sell

It is suggested that you give your attorney plenty of time to negotiate the sale with your trustee. On average, it takes anywhere from 30 to 50 days for your trustee to approve the plan. As soon as you decide you want to sell your home, talk to your attorney to get the ball rolling.
Getting Your Trustees Approval

One key piece of paperwork that will speed along your trustee’s approval is the Motion to Sell. This piece of paperwork consists of the sale price of the home, its value, the appraisal, and the plans of fund distribution. If the document is agreeable to your trustee then they will push the sale of your home forward.

Sale of the Home

Once your home is sold then you will need to give your attorney a copy of the statement of sale. They will then forward the statement to the trustees. You will then need to make payments set during the selling phase.

Sacramento Bankruptcy Lawyer

One great reason to sell your home during bankruptcy is that it can help you pay off the rest of your debt. Sacramento residents in need of an attorney to help them navigate the sale of their home can look to Liviakis Law Firm, where we specialize in bankruptcy law.

Rebuilding Your Credit after Filing for Bankruptcy


How to Recover Your Finances after Filing for Bankruptcy

When you file for bankruptcy, it will be listed on your credit score for up to ten years. Your credit score will remain low until you start to rebuild your credit.
Rebuilding your credit score after filing takes time and diligence. Taking out credit is the best and easiest way to do so. After filing for bankruptcy, it may seem impossible to get a line of credit ever again. There are easy and safe ways to apply for credit but we must stress that payments should always made every month and on-time.

Pay Off Existing Debt

The most important thing to do before you begin your rebuild your credit is paying off existing bills. Set-up automatic bill payments and pay your rent on time as rent payments are also tracked by creditors.

Setting up a realistic budget for yourself is the best step you can take to ensure you do not fall victim to debt once again.

Secure Card          

A secured card is the best option for those who are not approved for an unsecured card. The difference between the two is that a secured card requires a cash deposit beforehand. The cash will serve as a credit line for the account. Your payment history will be given to credit reporting agencies by the credit card issuers. Over time, your credit will improve if you make payments on time and keep your balances low.

Retail Card

Department stores that offer credit cards tend to have more lacked credit requirements. Even with bankruptcy, you may still qualify for a credit card. They also have a higher interest rate, so be sure to make your payment every month.

Debt Consolidation in Sacramento

Many let their shame of filing for bankruptcy as a reason to not move forward. It is vital to let that go in order to not only rebuild your credit and your lives. For assistance with your bankruptcy needs, look to Liviakis Law Firm. We will help you navigate your bankruptcy and aid you in rebuilding your debt. For a free consultation, contact our office at (916)459-2364.

Remember to come back to our blog page for more information about how to navigate your bankruptcy.

Filing Taxes after Bankruptcy


Navigating Your Taxes after Filing for Bankruptcy

Tax season is upon us and those who have filed for bankruptcy may be wondering if they have to file for taxes. The answer is simply, yes. Filing taxes after filing for bankruptcy does not have to be a big ordeal. Keep in mind that there are aspects to filing to look for pertaining to when and how to file.
According to the Bankruptcy Tax Guide provided by the IRS, a debtor is required to file and individual tax return or request an extension. The trustee must file an estate tax return known as the 1041 form.
Here are a few ways you can file for a tax return post-bankruptcy.

How to File a Tax Return Post-Bankruptcy

Much of the confusion stems from the requirement of filing two types of tax forms. As mentioned above, one is for the individual while the other is for the bankruptcy case. This is due to the fact that when one files for bankruptcy, a trustee becomes in charge of your financial affairs. Your affairs are now known as an estate.
A debtor who has filed for chapter 7 bankruptcy will file an individual 1040 as they would at any other time. A separate form, the 1041 form, must be filed separately for the estate by the trustee.
Chapter 11 debtors differ as they have to file both forms themselves. This is because chapter 11 debtors remain in control of their assets. Keep in mind that in both cases, they must file the 1040 and 1041 forms.
When filing for Chapter 13 bankruptcy, the debtor pays a disposable income into a monthly plan but the trustee will also have to file a 1041 form.
Keep in mind that debtors must not accrue new debt once they have filed bankruptcy. This includes not paying your taxes.

What to Keep In Mind

Individuals filing their taxes after bankruptcy should seek the help of a professional attorney. If you have filed before seeing an attorney, make sure they look at the return.
If you have not filed for taxes, consider doing so before filing for bankruptcy unless you are getting a large refund. If you have, do not pay bills with the money as it can slow down the bankruptcy process.
Always make sure to file your taxes every year.
Residents of the Sacramento area can look to Liviakis Law Firm for guidance. Contact us at (916)459-2364 for a free consultation.

Allowing the Chapter 7 Trustee to Sell Your Home

Sometimes a debtor should allow the chapter 7 trustee to sell his or her house. The chapter 7 trustee can keep the mortgage company from immediately foreclosing. By stalling foreclosure the trustee is able to maximize the value of the house on the open market.  When the house is sold the debtor walks away with as much as their exemption allows them to keep.

Selling your home at a time before you are mentally ready is a shocking blow and a debtor’s first instinct is often to resist.  There are many alternatives to sale which offer hope to debtors, the most frequently considered by debtors being: mortgage modification, chapter 13 bankruptcy, and chapter 11 bankruptcy.  These methods of blocking foreclosure and catching up are viable options when the debtor is fairly close to having enough money to pay the mortgage payment.  For example there are lots of folks that fall behind on mortgage payments because of a temporary drop in income.  When the debtor regains their income at a later date they have the money to pay the mortgage payment again. Unfortunately by this time the mortgage is in arrears, sometime ten, twenty, or thirty thousand dollars behind.  Most homeowners don’t have nearly that much in savings.  In comes the chapter 13 option wherein the debtor can stop foreclosure proceedings by agreeing to pay the regular mortgage payment again plus one sixtieth of the arrears.  For a ten thousand dollar arrears balance that’s only an additional $166.67 per month.  A homeowner in that position can stomach the increase by simply cutting a few of the extras from their cable television programing package.

But what about the homeowner that never regains their lost income.  Despite their effort seeking overtime or a second job the homeowner keeps coming up way short from being able to meet the regular mortgage payment.  In that situation there is no way the homeowner is able to pay an extra amount to start catching up on their mortgage  arrears.  If the debtor’s budget suffers from being distinctly far from having the money to pay the current mortgage payment the classic debt reorganization options might prove to be a lost cause.

If the homeowner chases their dream of staying in their home despite not having enough income to do so things can end badly.  Chapter 13 cases get dismissed pretty quickly when the debtor misses their monthly payments and only a small percentage of mortgage modification applications are granted in time to truly help a desperate homeowner.  In the chapter 7 bankruptcy setting when the debtor refuses to allow the trustee to sell his or her home the trustee can quickly terminate the protective boundaries imposed by the bankruptcy estate process.  When that happens some mortgage companies rush to the court house steps to cash in their investment with what is often low-priced foreclosure sale.  Foreclosure sales typically force the homeowner out of the home within a few weeks and with little to show for it.

So when other options are not realistic a debtor can think hard about working with the chapter 7 trustee even when selling the home is not their first preference.  The debtor should take a careful look at their real ability to pay for their home.  When the numbers don’t add up selling it in bankruptcy can be a financially rewarding move.  Trustee’s are trained to maximize value of assets with the help of real estate professionals.  There are trustee fees that must be paid out of the sale and there are other considerations that can impact the final decision.  That’s why is important for a debtor to find and consult with a local bankruptcy attorney when there is so much riding on the case.

Is Chapter 7 Bankruptcy Really Better Than Chapter 13

One of the main reasons people don’t seek the protection of bankruptcy is because there are so many misconceptions out there. Some people think it simply bad to file bankruptcy. Others think Chapter 7 is better than Chapter 13, or vice versa. The truth is that bankruptcy is a tool that the Constitution has provided us to ensure that people don’t become wards of the state when times get tough. And times certainly get tough for different people, for different reasons. This blog is intended to highlight when Chapter 13 bankruptcy is better than Chapter 7 bankruptcy.

Some debtors simply cannot file for Chapter 7, which leaves Chapter 13 as the only reasonable option. A debtor can not file for Chapter 7 if her current monthly income over the six months prior to filing is more than the median income for a similar household and her disposable income, after subtracting certain expenses, is higher than the limits set by the law. This can be very complicated, but the short version is that some folks just aren’t eligible for Chapter 7.

Another good reason to file Chapter 13 over Chapter 7 is when the debtor is behind on her mortgage payments or car payments. The options in Chapter 13 are much better for these situations. A Chapter 13 plan can allow the debtor to make up the back payments over time and get back into the terms of the original agreement. This is not possible in Chapter 7 bankruptcy.

Some people have too many assets to protect with bankruptcy exemptions and they want to keep them all. A debtor who is otherwise eligible for Chapter 7 might have to allow the trustee to sell her jet skis or her ’57 Chevy. If the debtor instead puts forth a Chapter 13 plan that pays a certain percentage of unsecured crediors, the debtor can keep those assets and still get many of the benefits of the bankruptcy.

Another reason Chapter 13 can be better than Chapter 7 is that tax obligations, student loans, or other nondischargeable debts can be included in the plan to pay over time. It’s very hard to get out from under tax debt, so using Chapter 13 can relieve some of the pressure and allow the debtor to satisfy the IRS.

Finally, most people have a sincere desire to pay back those that lent them money. But if they’re coming at the debtor with lawsuits, garnishments, and levies, it’s not possible. So, by filing a Chapter 13 bankruptcy, the debtor can stop those tactics while still paying back some or all of the debt.

The overall theme to this story is that there is no one type of bankruptcy that is better than the other. It always depends on the specific facts and situations in which the debtor finds herself. With the assistance of an experience bankruptcy law firm, the best possible solution is just around the corner.

Is it a good idea to file bankruptcy if you’re unemployed?

Everyone has a different idea of what bankruptcy is. Some people think that it’s a scary court proceeding in which the debtor has to give up all her possessions. Others know just enough to think that it’s a process by which the debtor has to pay back all of her debt over time. Others think that the debtor is required to yell,”I declare bankruptcy!” on the courthouse steps. The truth is that there are different types of bankruptcy for different situations, even if the debtor is completely unemployed.

Losing a job is a very common reason that leads people to file bankruptcy. Job loss makes it harder to keep paying debts and keep up with the bills. Bankruptcy can alleviate some of that stress and make it so that the debtor can get back on her feet.

A typical Chapter 7 case is designed to wipe out unsecured debts, like credit cards, medical bills, and the like for low-income debtors with few assets. During the lion’s share of these cases, creditors don’t receive anything because there is nothing left to squeeze out of the debtor. In these situations, it may actually make the bankruptcy process a little easier to be unemployed. This is because it will very likely mean that the debtor passes the “means test.” The means test exists to ensure that people aren’t filing Chapter 7 when they should be filing Chapter 13 and paying back a portion of the debts. So, since most unemployed debtors have no income, they are very likely to be below the income limits for Chapter 7.

A Chapter 13 is very different from a Chapter 7 because the debtor is required to back all or a portion of his debts via a three to five year repayment plan. This can help unemployed debtors that have some form of income or family support who also have assets like homes and vehicles to protect. That is to say, Chapter 13 allows a debtor to catch up on mortgage arrears, lower car loan payments or balances, eliminate second mortgages, or catch up on certain taxes.

Obviously, such a plan requires some level of monthly income to make it feasible. So even an unemployed debtor may have income from unemployment benefits, social security income, or perhaps family support. If the debtor can show the trustee that there is enough income of some type to afford to make payments, then the Chapter 13 plan will likely get approved by the Court.

Whether the unemployed debtor needs to just get rid of all the unsecured debt, or she has assets that she needs to protect for her future, bankruptcy has many benefits and solutions for a wide variety of situations. The only wrong thing to do when problems start to add up is to refuse to seek help. If you are unemployed, don’t wait, talk to a bankruptcy attorney to discuss options.

Protecting Unpaid Wages in Chapter 7 Bankruptcy

When a consumer gets to the point of filing bankruptcy, they often are living paycheck to paycheck. Making car payments, keeping food on the table for the family, and making sure the lights stay on are the important interests that bankruptcy debtors often wrestle with. So, making sure that they can keep their wages protected from the bankruptcy trustee is extremely important.

When a debtor files for Chapter 7 bankruptcy, their property becomes property of the bankruptcy estate. Whether she can keep her wages in Chapter 7 bankruptcy depends on the exemption laws and when the income was earned. In Chapter 7 bankruptcy, the wages the debtor earns after the filing of the case are not considered property of the bankruptcy estate. That means the trustee can’t take those funds to pay off creditors. Therefore, she is entitled to keep all wages earned for work after the filing date.  Note that there is a big difference between “earned” wages and “paid” wages.  Often times a debtor has some wages that they have earned already but have not yet been paid.

Wages earned prior to filing bankruptcy, even those not received until after the filing date, are property of the bankruptcy estate. Those wages the debtor is waiting to receive for work done prior to filing must be listed as an asset in the bankruptcy schedules. Whether the trustee can take them depends on the bankruptcy exemptions, the amount of income, and whether those funds are needed for reasonably necessary expenses.

In California, there are two sets of exemptions available for use in Chapter 7 bankruptcy. They are called “703 exemptions” or “704 exemptions.” These names are derived from the California code numbers that provide the rules. There are many reasons a debtor would use one set of exemptions or the other. A very common reason to use 704 exemptions is to protect equity in a home. If the debtor has no equity in their home, the 703 exemptions are often the best choice because the debtor can use the “wildcard” exemption, which allows the debtor to protect a certain dollar amount of otherwise non-exempt property.

However, if the debtor has equity in a home they want to keep, they often use the 704 exemptions. This makes it a little more difficult to protect certain assets, like unpaid wages. This can make the timing of filing bankruptcy very important. For example, many people are paid on a monthly basis in Sacramento because there are many state workers. So, if the debtor uses the 704 exemptions to save her home and files her bankruptcy petition on the 28th of the month, those unpaid wages for that month from the 1st to the 28th are not protected under that exemption scheme. Thus, the bankruptcy trustee could require that the debtor turn over those funds to pay back the creditors.

Since many bankruptcy debtors are living paycheck to paycheck, this can be backbreaking. This is yet another reason to seek the counsel of an experienced bankruptcy attorney in your area to make sure that the exemption scheme used is most beneficial to you.

Catching Up on Your Mortgage in Chapter 13 Without Foreclosure

Homeowners all over the Sacramento area are taking stock of their finances to plan ahead for the New Year. Mortgage obligations can lead to financial stress when mortgage payments change or income fluctuates. Fortunately, Chapter 13 bankruptcy provides various opportunities for homeowners to delay or prevent foreclosure and pay off backed up payments on their mortgages. Chapter 13 bankruptcy can even help with home loan modifications.

The following scenario happens way too often: The homeowner wants to refinance or modify the mortgage to get a more favorable interest rate or payment and avoid foreclosure. So, the homeowner submits applications to the bank. Over and over the application is either denied or sent back multiple times requesting more information. Some people try several times and still end up without success in their modification attempts. What’s worse is that during this time that the bank has been stringing the homeowner along, more months of missed payments accrue.

After all these depressing procedures have been exhausted, many homeowners then contact a bankruptcy attorney for help. The problem is that it may be too late. If the amount of back mortgage payments is too high, it might not be possible to create a feasible Chapter 13 plan to save the home.

That is why it might be a good idea to talk to a bankruptcy attorney much earlier. Then the homeowner can pursue a loan modification while under the protection of the Bankruptcy Code. This means that the worry of foreclosure would be gone and the homeowner can catch up on past payments and stay current with ongoing payments while the application is pending. Nothing about a Chapter 13 bankruptcy specifically makes it so a homeowner is not allowed to go after a loan modification.

The many benefits of filing a Chapter 13 bankruptcy include: stopping foreclosure sales, forcing the mortgage company to accept repayment of past due amounts, eliminating unsecured debts like medical bills and credit cards, and the bankruptcy can be voluntarily dismissed if necessary. All the while, the homeowner can continue to pursue a loan modification to lower the regular monthly payments on the mortgage.

It is even possible that the loan modification could move along faster once the bankruptcy is filed. This is because a mortgage lender typically sends bankruptcy files to a different department with different staff people than those folks that were rejecting the homeowner’s application over and over again. So, filing Chapter 13 bankruptcy could actually improve the chances of receiving a beneficial loan modification.

It’s a great time to explore options to make 2016 a financial successful year. Contact a bankruptcy attorney to discuss options today.

How Bankruptcy Can Help With Medical Debt

Most people think that credit card debt and student loans are the most problematic type of debt today. However, the booming increases in medical debt can be just as much of a problem for the average consumer. In fact, studies have recently shown that an estimated 1 in 5 American adults may be contacted by a debt collection agency about medical debt in a given year. Many of these debts, if unpaid, get sent to collection agencies. These agencies then have many tools at their disposal to get the consumer to pay. What’s worse is that there are rampant billing errors in the medical industry that can cause consumers to overpay.

Fortunately, bankruptcy can be the solution that can help consumers eliminate that medical debt.

In bankruptcy, different types of debts are treated differently based on priority because some debts are more “important” than others. A secured debt is when a creditor has a lien on the debtor’s property and can repossess or foreclose on it if the consumer fails to make the loan payments. The most common types of this are mortgages and car loans. Medical debt is typically not a secured debt.

Unsecured debts are those debts that are not secured by a piece of property. There are priority and nonpriority unsecured debts. Priority debts are usually not dischargeable and will get paid before most other debts in a bankruptcy. The most common examples of these priority debts are taxes and domestic support obligations. The group of debts known as nonpriority general unsecured debts do not get special treatment and are the last group of debts to get paid in bankruptcy.

So, medical debt is most commonly treated as a debt in that last group of debts. Because it is likely to be general unsecured debt, the medical debts will not receive priority and will get paid last. Even if a portion of the medical debt is paid through the bankruptcy, any deficiency left at the end will be discharged, or wiped out.

Because medical debt is in the category of general unsecured debt, Chapter 7 bankruptcy is often the easiest and best solution for dealing with large amounts of medical debt. Of course, the consumer still needs to qualify for Chapter 7 bankruptcy. To qualify for a Chapter 7 bankruptcy, the consumer’s income bust be low enough to pass a disposable means test. However, even if they do not qualify for Chapter 7, Chapter 13 can still provide a great deal of relief depending on the total debt situation of the consumer.

It’s a fact of life these days that medical costs are high. Plus, bills are confusing and often inflated. So, rather than paying for exorbitant medical bills and enduring years of punishing interest, call a reputable bankruptcy attorney in your area to discuss options today. Every day that goes by without filing bankruptcy is more interest accruing.