By ATTY. CRISPIN CADAY LOZANO
A good bankruptcy lawyer can help a lot to make bankruptcy filing less burdensome. Handling it without an attorney will make it hard, expensive and very painful.
Although Chapter 7 is the chapter under the Bankruptcy Code that most consumers file and seems simple it is not just filing out a few forms.
As the Official Instructions to the bankruptcy forms state, “Completing the forms is only a part of the bankruptcy process. You are strongly encouraged to hire a qualified attorney not only to help you complete the forms but also to give you general advice about bankruptcy and to represent you in your bankruptcy case.”
Q. What are the worst instances that can happen if you don’t use a lawyer?
A. Some of the worst instances are:
1. You can lose your home. Many pro se (without a lawyer) filers are unfamiliar with the exemption laws under which some or all of the equity in your home might be able to be protected. If there’s unprotected equity, the Chapter 7 Trustee might sell your home to pay some or all of your creditors (and take a commission on the distribution).
How your home is titled can also affect things. Most pro se filers don’t understand how the way in which a home is titled can impact whether the Chapter 7 Trustee might be interested in selling it.
A good bankruptcy attorney can review your situation and let you know whether there is any significant risk to your home if you file.
2. Fraudulent Conveyances. Some people think that giving away or selling property for a lot less than its worth just before filing bankruptcy is a good way to avoid its liquidation by a Ch 7 Trustee. It’s not. Called “fraudulent conveyances,” doing this could not only result in your being denied a bankruptcy discharge, it could end up with you serving jail time for bankruptcy fraud.
A good bankruptcy attorney can review your situation and let you know how to protect assets you don’t want to lose (and avoid fraudulent conveyance issues).
3. You can lose your claims. If you don’t schedule personal injury or medical malpractice claims, breach of contract claims, consumer protection violations, and other potential claims you might have (even if you don’t have plan on bringing them), you can lose them, no matter how strong a case you have. A good bankruptcy attorney can make sure that your right to bring your claims is protected.
4. If you don’t schedule all your assets, you can lose them. You are required to schedule ALL of your assets and ALL of your debts. An asset is anything you own, possess, or have any legal interest in. Your home with the big mortgage isn’t “owned by the bank”–it’s owned by you. The bank has a lien against it. And you’re required to schedule it. If you don’t, not only might your discharge be denied, you could end up serving jail time for bankruptcy fraud.
Take note that just because an asset is scheduled doesn’t mean that you will lose it. You may be able to exempt it, it may not be part of the bankruptcy estate, or the Trustee can abandon it. The vast majority of my Chapter 7 clients keep everything they have.
A good bankruptcy attorney can make sure that your assets are properly scheduled and protected.
5. Preference Payments. Paying back loans to family and friends during the year before your case is filed is great way to get them sued for a “preference”. Of course you paid mom back before you paid Capital One. But if the payment is considered “preferential,” the Chapter 7 Trustee can sue mom to get that money back. There are some defenses to preference actions, but you need to know them and make them timely or they could be waived.
A good bankruptcy attorney can make sure that your case filed at the right time so as to avoid preference actions.
Note: This is not a legal advice.
1. Bankruptcy will actually improve your credit within one year because your unsecured debts are discharged. Although the bankruptcy will be in your records for 10 years, not filing bankruptcy will make your credit even worse until most your debts are paid.
2. If you are being sued by your creditors, most money judgment can be eliminated in bankruptcy.
3. Collection actions continue and you can be sued if you are in debt settlement.
4. Chapter 7 will eliminate all unsecured debts. If you are near retirement age, you must eliminate most of your debts.
5. Bankruptcy will stop foreclosure actions. If your trustee sale date is 10 days before, you can still file for bankruptcy.
6. If your salary is being garnished, you have a court case about debts or you are being harassed by creditors, bankruptcy can stop garnishment, court cases, harassing creditors and eliminate the debt.
7. Bankruptcy is cheaper, faster and safer than debt settlement which has no guaranteed success.
8. Preserve your health, eliminate stress and live a happy life by eliminating your debts which is the root of all problems.
Crispin Caday Lozano is an active member of the State Bar of California, the American Immigration Lawyers Association and the National Association of Consumers Bankruptcy Attorneys, and the Consumers Attorneys Association of Los Angeles. He specializes in immigration law and bankruptcy law. He is also a CPA and a licensed Real Estate Broker. He graduated Juris Doctor from Western State University in Fullerton California, and Cum Laude in Ac