primuswebadmin – Page 2 – Law Offices of Michael J. Primus

Will I lose my 401(k) or IRA if I file bankruptcy?

March 15, 2023 by primuswebadmin

The short answer is no. People often assume filing bankruptcy means the system will take a 401(k) or IRA to repay debts, but the truth is the law safeguards 401(k) plans and IRAs along with just about everything most people in northern California have as necessities of life.

This includes union pensions, 401(k)s, 403(b)s and IRAs. For IRAs (including Roth IRAs) the protection is limited to just over 1.5 million per person. If you have more than 1.5 million in your retirement accounts bankruptcy may not be the best choice for you. This limit is adjusted every three years to account for increases in the cost of living.

A word of caution, once money is withdrawn from a 401(k) or an IRA it will no longer be considered retirement, and for that reason will be treated differently which is not necessarily a problem. If you are considering withdrawing money from a 401(k) or an IRA to resolve debts issues, you should consult a bankruptcy attorney. Often bankruptcy will forgive debts while allowing a person to keep their retirement.

At the Law Office of Michael Primus, we have helped hundreds of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in Contra Costa County and have debt problems, contact us for a free consultation. Offices in Walnut Creek, Antioch and Hercules.

SBA Loans Can Be Forgiven In Bankruptcy

March 12, 2023 by primuswebadmin

During the Pandemic, lots of businesses borrowed money from the U.S. Small Business Administration (SBA) to stay in business. Small loans below $25,000 didn't need any security, but larger loans needed businesses to give something valuable as a guarantee.
If a business borrowed more than $200,000, the SBA required someone to personally guarantee the loan. This means that the person guaranteeing the loan and the business itself are responsible for paying it back. If the business closes, that often leaves the individual responsible or some might say on the hook. In 2023, these loans started coming due, and many businesses are finding it hard to repay them, even though the interest rate is low.

If a business or individual can't repay an SBA loan and has to declare bankruptcy, it's possible to discharge the loan in most cases. SBA loans are treated the same way as other debts in bankruptcy. Most businesses took out SBA loans with the intention of saving their business and repaying them. Unfortunately, because of the ongoing economic crisis and high inflation, many businesses are unable to repay these loans. If this is the case, it shouldn't be a problem to discharge the debt in bankruptcy.

At the Law Office of Michael Primus, we have helped hundreds of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in Northern California and have debt problems, contact us for a free phone consultation. Offices in Walnut Creek, Antioch and Hercules

The California Homestead Laws are a Shield for Homeowners

February 26, 2023 by primuswebadmin

The California Homestead laws protect a person’s home from non-mortgage creditor claims in and out of bankruptcy. The homestead laws are part of a broader set of laws called exemptions. In addition to the homestead, the exemption laws protect household goods, furniture, vehicles, retirement and much more. The homestead is the largest exemption and protects the most important asset, your home. As good as that sounds, the homestead has conditions and limitations.

Your Home – The homestead only applies to real estate you own and live in. You do not need to be the only owner to claim the homestead, meaning it is not a problem if there is someone else on title with you or living in the home with you. Similarly, it is not a problem if you rent part of the house to someone else. The idea is to protect the roof over your head.

Value Limitation – The homestead protects realizable equity of up to $678,000 (as of January 2023) in most Bay Area Counites. Realizable equity is the amount of money you would receive if the house was sold, meaning after payment of real estate commissions and all mortgages. For example, assume your home is worth $700,000 and you have a mortgage with a principal balance of $300,000. The calculation is $700,000 minus estimated commissions of $42,000 would leave $658,000 and after payment of the mortgage of $300,000 the realizable equity is $258,000.

No Foreclosure Protection – The homestead does not protect your home from foreclosure by a mortgage lender. This means if your mortgage payments are delinquent and the lender is threatening to foreclose, the homestead laws will not help you.

No Protection from IRS liens – The homestead does not protect against federal tax liens. This means tax liens can be recorded and enforced despite the homestead. Note: many liens that impair the homestead can be removed in bankruptcy but not a tax lien. Fortunately, the IRS almost never attempts to sell a person’s home to satisfy an unpaid tax debt, even huge tax debts.

The homestead in bankruptcy – The homestead is most powerful in the context of chapter 7 bankruptcy. The homestead laws protect your home from being sold to satisfy debts like credit cards, payday loans and medical bills. The homestead, in conjunction with the bankruptcy laws, can even remove judgment liens from the title to your home. The homestead also offers protection in chapter 13 bankruptcy.

The homestead outside of bankruptcy – If a non-mortgage creditor (credit card, payday loan, medical bill) obtains a judgment against you, and attempts to sell your home to satisfy the judgment you are entitled assert the homestead as a defense. Most creditors are well-versed in the homestead laws and do not bother trying to sell a person’s home to satisfy a judgment.

In summary, the homestead laws shield your home from most creditor claims and are most powerful when used in combination with bankruptcy.

At the Law Office of Michael Primus we have helped thousands of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in Contra Costa, Alameda or Solano counties and have debt problems, contact us for a free consultation. We have offices in Walnut Creek, Antioch, and Hercules.

Will I lose my retirement if I file bankruptcy?

October 25, 2021 by primuswebadmin

There are many misconceptions about bankruptcy, amongst them is the notion that people lose everything if they file bankruptcy. Fortunately, the bankruptcy laws are designed to give the honest but unfortunate person a second chance. To facilitate that goal, the law allows bankrupt consumers to retain necessities of life. The legal buzzword for necessities of life is exemptions.

The exemption laws allow people to keep Social Security as well as tax deferred retirement accounts and other assets. Tax deferred retirement accounts include 401k plans, 403b plans, IRA’s, pensions and almost any type of employer or union sponsored retirement. Often in the midst of financial turmoil people consider taking a retirement withdrawal to pay credit cards, payday loans or other debts. For some, taking a retirement withdrawal is the best choice but that choice should be made with a clear understanding of all options including bankruptcy.

What does my ex-spouse have to do with my bankruptcy?

July 25, 2021 by primuswebadmin

Bankruptcy law offers a fresh start to those bogged down by crippling debt. But, alas, there is more to it. To qualify for bankruptcy you need to document your finances and demonstrate a financial hardship. In California, the bankruptcy system can look back four years to see if your divorce was a relatively fair deal between you and your ex-spouse. Why do they care?

In some divorces people are so eager to get out of the marriage they find themselves thinking, and sometimes saying “Take everything, I don’t care just leave me alone.” In other cases, the spouses collude to have one spouse take all the bills and the other take the house, retirement and other assets in order to allow one spouse to avoid bankruptcy altogether. If your ex-spouse got a sweetheart deal that can be unfair to creditors which becomes a problem if you file bankruptcy. The bankruptcy system may question whether you can reopen the divorce to pursue adequate money to resolve your debts. Perhaps you can or should have fought for half the equity in a house. Perhaps you can or should have fought for alimony. In an extreme case your bankruptcy can be dismissed (debts not forgiven) on the basis that your divorce was a scheme to defraud creditors. Conversely, if you ended up with most of the assets from a divorce and nevertheless encounter financial problems and ultimately file bankruptcy, the bankruptcy system will not question the divorce.

That’s quite a bit of scare talk, right? However, there’s no often no reason to worry. The truth is divorce and bankruptcy commonly go hand-in-hand. Financial problems strain a marriage and are often the root cause of divorce. The bankruptcy system will inquire about a divorce but rarely is any action taken and in nearly all cases the bankruptcy is approved.

Another common question is: does my ex-spouse need to know that I filed for bankruptcy? The answer is yes if you owe money to your ex-spouse for any reason including alimony, child support or have joint debts. However, if you have no financial ties to your ex-spouse the court will not notify that person of your bankruptcy and usually that person will not find out.

At the Law Office of Michael Primus we have helped thousands of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in Contra Costa, Alameda or Solano counties and have debt problems, contact us for a free in-office consultation. We have offices in Walnut Creek, Antioch, and Hercules.

When can I get a mortgage after bankruptcy?

June 6, 2021 by primuswebadmin

This is one of the most common questions I am asked. In order to answer, I need to briefly discuss the two types of bankruptcy cases. The most common type of bankruptcy is chapter 7 which forgives debts like credit cards and medical bills. Chapter 7 runs about 3 months from the date the papers are filed with the court to the date the case is discharged. Chapter 13, on the other hand, is a personal reorganization that requires monthly payments to the court for 3 to 5 years. In chapter 13, the discharge occurs at the completion of the payments. The date of discharge starts the clock to get a mortgage.

The law essentially says that a lender can loan money whenever it chooses, meaning as a potential borrower you need to submit an application and wait for a response. That said, lenders have underwriting criteria used in reviewing loan applications. Underwriting criteria and waiting periods vary and are summarized here.

FHA Loans – The waiting period is two years after discharge of a chapter 7. There is no waiting period after discharge of a chapter 13. The Federal Housing Administration or FHA insures mortgages made by FHA-Approved lenders. The FHA is the largest insurer of residential mortgages in the world and its policies create a ripple effect for all mortgage lenders. These government-backed loans are made by commercial banks and generally offer favorable terms.

Conventional Loans – Generally the waiting period is four years after discharge of a chapter 7 and two years after discharge of a chapter 13. These loans are not backed by the government and are offered by most major banks including Bank of America, Citibank, Wells Fargo and Chase.

VA Loans – The waiting period is two years after discharge of either chapter 7 or chapter 13 but can be reduced with a letter of explanation. The Department of Veterans Affairs or VA insures mortgages for servicemembers, veterans and certain surviving spouses thereby allowing the lender to offer better rates and terms. These government-backed loans are made by commercial banks and generally offer favorable terms.

Upon expiration of the waiting period (above) a lender will either disregard the bankruptcy or severely discount its importance. Expiration of the waiting period alone does not qualify you for a mortgage. After a bankruptcy, you should work to rebuild credit and gain or maintain documented income as well as save a down payment. There are many lenders, and many types of loans so you need to carefully review your options. Complicating matters, some lenders like Bank of America, Wells Fargo and many others are FHA and VA approved but also offer conventional loans. All this may seem overwhelming, and if it does a mortgage broker can help you find the right loan for you.

In summary, with some determination and effort you will be able to qualify for a mortgage after bankruptcy if you wait at least two years and work to rebuild your credit. You can do this!

At the Law Office of Michael Primus we have helped thousands of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in Contra Costa, Alameda or Solano counties and have debt problems, contact us for a free in-office consultation. We have offices in Walnut Creek, Antioch, and Hercules.

References

Will I lose my 401(k) or IRA if I file bankruptcy?

SBA Loans Can Be Forgiven In Bankruptcy

The California Homestead Laws are a Shield for Homeowners

Will I lose my retirement if I file bankruptcy?

What does my ex-spouse have to do with my bankruptcy?

When can I get a mortgage after bankruptcy?

Bankruptcy, Not The End But A New Beginning.
We are a debt relief agency.
We help people file for bankruptcy.
We provide Flexible Payment Options.

Get Started with a Free 30-Min Consultation

Office Locations

925-934-0500

925-706-9200

510-741-1800

Bankruptcy, Not The End But A New Beginning. We are a debt relief agency. We help people file for bankruptcy. We provide Flexible Payment Options.

Get Started with a Free 30-Min Consultation

Office Locations

Bankruptcy, Not The End But A New Beginning.
We are a debt relief agency.
We help people file for bankruptcy.
We provide Flexible Payment Options.