Blog – 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A word of caution, once money is withdrawn from a 401(k) or an IRA it will no longer be considered retirement, and for that reason will be treated differently which is not necessarily a problem.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.

You do not automatically lose your home if you file bankruptcy

January 2, 2023 by Michael Primus

In talking to people about bankruptcy, I have seen time and again the same erroneous assumptions. One common misconception is that people filing bankruptcy automatically lose their home. Many people assume the judge will strip them of their possessions and their dignity, presumable as a punishment. This notion does not exist in the law but stubbornly persists in society. To rectify this misunderstanding, I will first say the purpose of bankruptcy is to offer a fresh start to people in a financial hardship. The law acknowledges that food, shelter and transportation are necessities of life, and provides limited protection for these assets so people can go forward in life after bankruptcy. But wait, maybe you’ve heard of people that filed bankruptcy and lost their home? Alas, there are threats to homeownership.

The single largest threat to the family home is not bankruptcy, it’s foreclosure. Another misconception is to equate foreclosure and bankruptcy. Foreclosure is the procedure for a lender to take a person’s home if the mortgage payments are not paid; foreclosure is not an issue if the mortgage payments are current. Bankruptcy can forgive credit card debts, payday loans, personal loans, lawsuits and much more. Bankruptcy is also a powerful tool to stop foreclosure and give the homeowner an opportunity to make payment arrangements. Usually when mortgage payments are six to twelve months behind the lender will initiate foreclosure. The California foreclosure laws require notices and waiting periods before a lender can actually sell a home to collect the money owed. Filing bankruptcy can give homeowners a last chance to save their home from foreclosure.

Another threat to the family home is filing chapter 7 (sometimes called straight bankruptcy) if you are “land rich” in the eyes of the law. A person is land rich when the equity in their principal residence exceeds the protection provided by the homestead laws. Filing chapter 7 when a person is land rich can result in the home being sold by the bankruptcy trustee. In 2023, the California homestead laws allow a person to protect realizable equity in their principal residence of $678,000 in most Bay Area counties.

Note: realizable equity is the amount you would receive after paying all mortgages, commissions and costs of sale.

In summary, the bankruptcy system will not take your home as a punishment. On the contrary, one of the goals of the law is to protect the family home. If your home is in foreclosure, or if you have substantial equity in your home, you should speak to an attorney and carefully review your options before filing bankruptcy.

Can I File Bankruptcy Again?

October 29, 2022 by Michael Primus

Can I file Bankruptcy Again? Many people assume they can only file bankruptcy once in their lives, other people assume they need to wait until their bankruptcy comes off their credit report before they can file again. The truth is the bankruptcy laws are more flexible than most people think. This article is limited to cases where debts were forgiven in a past bankruptcy.

Chapter 7 After Chapter 7

If a person has filed a chapter 7 and received a discharge (debts forgiven) then section 727(a)(8) of the Bankruptcy Code provides that another chapter 7 within 8 years will not forgive debts.

Chapter 13 After Chapter 7

If a person has filed a chapter 7 and received a discharge (debts forgiven) then section 1328(f) of the Bankruptcy Code provides that a chapter 13 filed within 4 years of the chapter 7 will not forgive debts.

Chapter 13 After Chapter 13

If a person has filed and completed a chapter 13, section 1328(f) of the Bankruptcy Code provides a chapter 13 filed within 2 years of the filing of the prior case will not forgive debts. However, if the original chapter 13 was dismissed (did not complete plan, debts reinstated) then a person can file another chapter 13 almost immediately but must get a court order pursuant to Bankruptcy Code section 362(c)(3) to be protected from creditors. This type of court order generally requires a brief explanation of why the first case failed.

Chapter 7 After Chapter 13

If a person has completed a chapter 13 and received a discharge then section 727(a)(9) provides that a chapter 7 filed within 6 years of the filing of chapter 13 will not forgive debts.

Call now for a free consultation. Offices in Walnut Creek, Antioch and Hercules.

Law Offices of Michael Primus

Biblical Thoughts On Bankruptcy

May 28, 2022 by Michael Primus

Biblical Thoughts On Bankruptcy – The concept of bankruptcy is troubling for most people. The Bible offers guidance to both borrowers and lenders. There are four principles to consider.

First, the Bible teaches that people should perform on any agreement including paying debts. This is part of the general principle of the ninth commandment:

“You shall not bear false witness against your neighbor.” (Exodus 20:16)

Similarly, there’s Numbers 30:2 that says:

“If a man makes a vow to the Lord, or swears an oath to bind himself by some agreement, he shall not break his word; he shall do according to all that proceeds out of his mouth.” (Numbers 30:2)

Second, lenders are instructed that interest should not be charged on a loan to the poor. The Lord also forbade the lender from keeping things necessary for living even when the borrower offered such as security:

“If you lend money to any of My people who are poor among you, you shall not be like a moneylender to him; you shall NOT charge him interest. If you ever take your neighbor’s garment as a pledge (security for payment of a debt), you SHALL return it to him before the sun goes down. For that is his only covering, it is his garment for his skin. What will he sleep in? And it will be that when he cries to Me, I will hear, for I am gracious (and, by implication, the lender is not).” (Exodus 22:25-27)

Third, in two parables Jesus used the illustration of forgiveness of a financial debt to teach about God’s forgiveness and the requirement that mankind forgive (see Matthew 18:21-35 and Luke 7:36-50). “And when they had nothing with which to repay, he freely forgave them both” (Luke 7:42).

Fourth, interestingly our modern bankruptcy laws resemble Biblical law as it relates to forgiveness of debt. U.S. Bankruptcy law allows for the forgiveness of most debts every 8 years through chapter 7. Biblical law released debts every 7 years.

“At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the LORD’s release” (Deuteronomy 15:1-2).

Conclusion, people should pay their debts if possible, however the Bible clearly contemplates release of debts and forgiveness for people unable to pay. Modernly that release is found in the bankruptcy laws. Additionally the Bible, like some modern laws, prohibits predatory lending including loans designed to make the borrower a slave to the lender.

Call now for a free consultation. Offices in Walnut Creek, Antioch and Hercules.

Law Office of Michael Primus

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

You do not automatically lose your home if you file bankruptcy

Can I File Bankruptcy Again?

Chapter 7 After Chapter 7

Chapter 13 After Chapter 7

Chapter 13 After Chapter 13

Chapter 7 After Chapter 13

Biblical Thoughts On 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

Chapter 7 After Chapter 7

Chapter 13 After Chapter 7

Chapter 13 After Chapter 13

Chapter 7 After Chapter 13

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.