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.
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.
k to paycheck? Planning to file bankruptcy but wondering how you’ll be able to pay for it? A tax refund can be the opportunity to get it done. Bankruptcy law gives you the right to have debts forgiven if you are in a financial hardship. Between the high cost of housing and growing income inequality, financial hardship is common in the Bay Area. Most people recognize when they are experiencing a financial hardship, but do not know the law regarding tax refunds and bankruptcy. Caution is warranted. There are two general prohibitions regarding use of money when planning to file for bankruptcy. A person is not allowed to: (1) repay loans to family members and friends if they are not paying other creditors at least the monthly minimum payments when due and (2) give large (over $500) gifts with the exception of regular giving to a church or charity. Conversely, a person is allowed to pay living expenses such as: monthly rent or mortgage(s), car payments, utilities, and usual household expenses. Of course, bankruptcy is not free and the law allows a person to pay for bankruptcy with a tax refund or other money.
According to a recent study by the American Psychological Association, money and finances have remained a leading cause of stress for the past decade regardless of the economic climate. Lower income households (below $50,000) experience higher stress levels than higher income (above $50,000) households. Stress can be good, and most of us need some level of stress to feel useful and valuable. I know the stress of a work deadline or an athletic competition motivates me. Motivation is great, but according to the study too much stress can alter the brain’s chemicals and lead to depression particularly in susceptible people.
Small business is the backbone of our economy. In 2014, according to U.S. Census Bureau data, firms with less than 20 employees made up 89% of all businesses and employed nearly half of the U.S. workforce. Small businesses operate in a myriad of industries and are as diverse as the customers they serve. Despite their diversity, small businesses share many common elements. From customer service to accounts receivable t0 personnel, a small business owner wears many hats. Most business owners start with industry skill and work to develop business acumen. Even a veteran small business owner will need to make quick decisions with limited and imperfect information – essentially an educated guess. Will a particular ad produce? Will a potential employee become a company leader? With so many risks, things are bound to go wrong. Usually the business can survive and even thrive when most things go well but what happens when several things go sour at once? Business reorganization can be the solution.