Lauren Rode Lecture at the LA Law Library: Chapter 7 Bankruptcy

Wednesday, September 3, 2014
12:15 p.m. — 1:15 p.m.

As part of the LA Law Library’s MCLE Lunchtime Speaker Series, this class will cover the basics of Chapter 7 bankruptcy, and when it may be the most appropriate course of action for a client to take when they are faced with certain types of overwhelming debt. Topics will include the qualifications necessary to file Chapter 7 bankruptcy, the preparation of proper documentation, the filing process, the automatic stay that stops creditor collections, and whether a particular debt will be discharged forever or survive Chapter 7.

Class Covers:

  • Meetings with the bankruptcy trustee;
  • Determination of non-exempt property;
  • A discussion of secured debt and whether the automatic stay will apply to that debt;
  • Unsecured creditor liens and Chapter 7.

Presented by Lauren Rode
Lauren Rode is an attorney at the Consumer Action Law Group in Los Angeles, California. She concentrates her practice on Chapter 7, 11, and 13 bankruptcies, business law, and financial planning and analysis. Prior to becoming a member of the California Bar, Lauren headed a bankruptcy clinic that provided pro bono assistance to debtors, reaching out into the community and representing indigent individuals in their Chapter 7 bankruptcy cases. She graduated from Cornell University with a B.A. in Applied Economics and Management, and earned her J.D. from the University of Minnesota Law School, with an emphasis in business law.

One hour general MCLE credit

Fee: $35 for the class (nonrefundable payment reserves spot)

Lauren Rode Will Cover the Following During the Event

Chapter 7 PDF Can Be View Here

DISCUSSION TOPICS

  • CHAPTER 7 BANKRUPTCY LAW: GOVERNING LAW AND DISTRICTS WITHIN CALIFORNIA
    • 4-5 MONTH PROCESS; GENERALLY ELIMINATION OF ALL UNSECURED DEBT
  • CHAPTER 7 BASICS: MAIN AREAS TO DISCUSS WITH PROSPECTIVE CLIENTS
    • INCOME – MEAN’S TEST; MONTHLY HOUSEHOLD INCOME/EXPENSES
    • ASSETS – CALIFORNIA STATE EXEMPTIONS
    • DEBTS – NO DEBT LIMIT IN CHAPTER 7; NONDISCHARGEABLE DEBTS
  • CHAPTER 7 PROCESS
    • EMERGENCY PETITION V. COMPLETE PETITION
    • MEETING OF CREDITORS (§ 341) -> DISCHARGE
  • PRACTICE TIPS

CHAPTER 7 BANKRUPTCY LAW

  • GOVERNING BANKRUPTCY LAW IS FOUND AT 11 USC § 101-1532
  • CALIFORNIA FOUR DISTRICTS – EACH DISTRICT HAS OWN SET OF LOCAL RULES; LOCAL RULES VARY GREATLY
  • CENTRAL
    • EASTERN
    • NORTHERN
    • SOUTHERN
  • PARTIES: DEBTOR, JUDGE, TRUSTEE, CREDITOR(S)

CHAPTER 7 BASICS: INCOME

  • MEANS TEST
    • SEE CHART (BY STATE) IN MATERIAL
    • To be eligible for a chapter 7 discharge, the household income must meet the Department of Justice Medium Income Standards (updated May 1, 2014)
    • Payments Debtor must make on secured debt (car, mortgage) or priority debt (tax, child support) could help qualifying
    • Involuntary deductions from paychecks (taxes, union dues, health insurance, etc)
  • SELF-EMPLOYED DEBTOR
    • Must be prepared to provide monthly profit and loss statements and complete additional business debtor documents

CHAPTER 7 BASICS: ASSETS

  • DEBTORS DO NOT BECOME HOMELESS OR GIVE UP ALL POSESSIONS TO FILE BANKRUPTCY
  • EXEMPTIONS VARY BY STATE: CALIFORNIA HAS TWO SETS IN CA CODE OF CIVIL PROCEDURE
    • “704” EXEMPTION SET – PROTECTS EQUITY IN HOMES BUT GIVES LITTLE PROTECTION FOR OTHER LIQUID ASSETS
    • “703” EXEMPTION SET – PROTECTS $26,925 IN LIQUID ASSETS (“WILDCARD”)
  • MARRIED COUPLE MAY NOT DOUBLE THEIR EXEMPTIONS

CHAPTER 7 BASICS: DEBTS

  • NO DEBT LIMITS WHEN FILING CHAPTER 7 BANKRUPTCY; ARE LIMITS IN OTHER CHAPTERS (13)
  • CERTAIN DEBTS ARE NOT DISCHARGEABLE:
    • UNSCHEDULED DEBTS (PETITION, MAILING LIST) – §523 of the Bankruptcy Code, a debtor is required to give all of his or her creditors notice of the bankruptcy. Doing so allows the creditors ample time to file proofs of claim and participate in the distribution of assets.
      • MAJORITY VIEW: NO ASSET CASE, DEBT IS DISCHARGED – In re Anderson, 72 B.R. 783, 787 (Bankr. D. Minn. 1987) – “NO HARM, NO FOUL”
        • See Beezley v. California Land Title Co.( In re Beezley, 994 F.2d 1433 (9th Cir. 1993))
  • TAXES < 3 YEARS
  • CHILD SUPPORT OR ALIMON
  • DEBT TO GOVERNMENT; STUDENT LOAN
  • CHILD SUPPORT OR ALIMONY;
  • DEBT TO GOVERNMENT (PENALTIES AND FINES);
  • STUDENT LOANS (HARDSHIP EXEMPTION – ADVERSARY PROCEEDING
  • DEBTS FROM PERSONAL INJURY CASE WHERE DEBTOR WAS DRIVER OF VEHICLE WHILE INTOXICATED
  • DEBTS OWED TO TAX-ADVANTAGE RETIREMENT PLANS
  • ATTORNEY FEES IN CHILD CUSTODY AND SUPPORT CASES
  • COURT FINES AND PENALTIES INCLUDING CRIMINAL RESTITUTION

CHAPTER 7 PROCESS

  • DISCLOSURE OF NON-DISCHARGEABLE DEBT
  • CREDIT COUNSELING CERTIFICATE
  • MAIN DOCUMENTS: 60 DAYS PAYSTUBS; 2 YEARS TAX RETURNS; CURRENT BANK STATEMENTS
  • EMERGENCY V. COMPLETE PETITION
  • MEETING OF CREDITORS (§ 341) – 30 DAYS AFTER FILING
    • DRIVER’S LICENSE, SOCIAL SECURITY CARD
  • FINANCIAL MANAGEMENT CERTIFICATE

DISCHARGE ORDER & REASONS FOR DENIAL OF DISCHARGE

  • The court may deny a Chapter 7 discharge if you:
    • Do not provide requested tax documents
    • Don’t complete a course on personal financial management
    • Transfer or hide property in order to defraud or hinder your creditors
    • Destroy or hide books or records
    • Commit perjury or other fraudulent acts in connection with your bankruptcy case
    • Cannot account for lost assets
    • Violate a court order, or

Eliminating Judicial Liens

  • CAN ONLY ELIMINATE JUDICIAL LIENS, NOT 2ND MORTGAGES
  • HAVE TO BE JUDICIAL, CANNOT ARISE STATUTORILY (HOA, UTILITY, TAX ETC)
    • UNSECURED DEBT JUDGMENT
    • CIVIL JUDGMENT
  • FILE MOTION TO AVOID LIEN
    • Show how Debtor’s exemption is impaired:
      • Fair Market Value of property is less than other encumbrances
      • Bank levy: debtor’s funds are protected under CA Exemptions

PRACTICE TIPS

  • Tax Returns – Trustee needs them at least 7 days before Meeting of Creditors (Required by Bankruptcy Code)
  • Recent Tax Debt – halt collection but will remain
  • Student Loans
  • Selling/Buying personal or real property while in Bankruptcy
  • Lottery Winnings
  • Undisclosed Assets
  • Exceeding Exemption – convert to Chapter 13?
  • Recent substantial credit purchases or cash advances – within last 90 days
Lauren Rode Lecture at the LA Law Library: Chapter 7 Bankruptcy
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