California Business and Family Attorney

Please read the following carefully to avoid problems with your Chapter 7 bankruptcy:

1. Inheritance: Once you have filed a Chapter 7 petition, all your earnings and property in which you obtain a right to possess after filing belong to you; and they are not subject to creditor claims. The one exception is an inheritance or bequest in which you obtain a right to receive within six (6) months of the date you filed your bankruptcy. Thus, please let my office know if you have an ill “rich uncle” who may include you in his.
   
   
2. Offsets by Financial Institutions: Although you may be able to except funds held in banks or other financial institutions, if you owe that bank money, they may offset the balance in your account against that debt. For example: Assume you owe Wells Fargo Bank $1,000.00 on a Visa Card, and have a checking account at Wells Fargo with a balance of $500.00 on the date that you file bankruptcy. Even if you are able to except the $500.00 balance as a part of your “grubstake” exemption, the bank will be able to take your deposit and apply it to the balance owed to them on your Visa Card. The way to solve this problem is to withdraw your funds prior to filing and/or deposit the funds in a bank in which you have never had a relationship and owe no money.
   
   
3. Credit Card Charges: Do not “run-up” charge cards prior to filing! If you make credit card charges without a reasonable likelihood of repayment such debts will not be discharged. Credit card companies look for filers who make substantial charges, or max-out their credit card just prior to bankruptcy.
   
   Further, cash advances totaling more than $1,100.00 (as of December 1, 2023) on or within 70 days before filing your Chapter 7 are presumed to be non-dischargeable. In addition, consumer debts incurred to a single creditor and totaling more than $800.00 (as of December 2023) for luxury goods or services on or within 90 days before your filing your Chapter 7 are also presumed to be non-dischargeable. “Luxury goods or services” do not include goods or services reasonably necessary for the support or maintenance of the debtor, or a dependent of the debtor. Thus, if you took a trip to Hawaii in the 60 days prior to filing, and you used your American Express credit card to pay for such trip and such charges totaled more than $800.00, such charges would not be discharged.
   
   
4. Homestead Exemption in California (see C.C.P. 704.710 et seq.): In 2021 the homestead exemption was substantially increased to a minimum of $300,000 (adjusted upwards for inflation) up to $600,000 (adjusted upwards for inflation, depending upon the county which is your residence. This exemption only applies if it is your residence at the time of your filing. In 2024 the exemption amount adjusted by inflation is $349,710 up to $699,420 depending upon the median sale price of your county.
   
   In California there is an automatic homestead which protects your home against a forced sale if the proceeds would not be enough to pay the homestead before the creditor. There is also what is termed a declared homestead (a filing with the county in which the home is located) which protects exempt equity when a home is sold voluntarily. However, please be aware the proceeds are protected for only a period for six months during which you must reinvest the homestead amount in a new home. You should file a declared homestead if you have equity in your home and are under financial stress.
   
   Just be careful and follow the advice of an experienced and competent attorney that knows this area of the law.
   
   
5. Timeshares: Timeshare ownership and their fees are like glue. With a Chapter 7 filing you can discharge money owed prior to your filing date, but HOA/maintenance fees start to accrue after your filing. Upon filing you must list your intention to “abandon” your ownership, and notify the timeshare management company of your intention. In certain circumstances you should also do a filing to abandon your interest back to the management company.
   
   
6. Certain Debts not discharged: Certain Debts not discharged: Certain debts may not be discharged. Although the following is not a complete list, the most common debts that may not be discharged are spousal and child support; taxes generally; debts procured by fraud; debts for willful and malicious injury to another; student loan debts; homeowner association dues that become due and payable after your filing if you continue to live in such home or condominium (or time share) after filing; and fines, penalties or forfeitures payable to and for the benefit of a governmental unit. An example would be a fine for a speeding ticket.
   
   If you have any of these types of debts please consult me. Remember, they must be listed as a debt even if they cannot be discharged.If you have any of these types of debts please consult me. Remember, they must be listed as a debt even if they cannot be discharged.Certain Debts not discharged: Certain Debts not discharged: Certain debts may not be discharged. Although the following is not a complete list, the most common debts that may not be discharged are spousal and child support; taxes generally; debts procured by fraud; debts for willful and malicious injury to another; student loan debts; homeowner association dues that become due and payable after your filing if you continue to live in such home or condominium (or time share) after filing; and fines, penalties or forfeitures payable to and for the benefit of a governmental unit. An example would be a fine for a speeding ticket.
   
   If you have any of these types of debts please consult me. Remember, they must be listed as a debt even if they cannot be discharged.
   
   
7. Listing ALL Assets: It is important that you list all your assets, even if you consider it belonging to someone else — such as a car in your name for insurance purposes that really belongs to your 18 year-old son. Another example would be if a home is in your name because you had better credit than your brother, but your brother lives in the house, and pays the trust deed and all expenses. If it is your name it must be listed. We may be able to explain the proper ownership — but not easily after a trustee discovers it was not listed. Assume your Chapter 7 trustee will check the real property rolls for property in your name. A few years ago there was a judge in this district who spent her weekends searching the Department of Motor Vehicle records for vehicles in the name of the debtor that the debtor had not listed. She no longer is on the bench, but you must assume there is someone who will review your schedules for discrepancies.
   
   Do not play games of transferring assets to others or hiding assets in a relative’s name. That may be a federal felony. We are here to assist you in obtaining a “fresh economic start” – not to allow you to create more problems for yourself.
   
   
8. Wells Fargo Bank: Wells Fargo Bank has a policy of freezing the bank accounts of all debtors if they are notified or learn of the filing. Assuming it is exempted, it is a hassle in getting your funds released. Thus, my advice is that if you have Wells Fargo Bank accounts either close them prior to filing, or have a very minimal balance. This is true even if you owe them no money.
   
   
9. Your appointed Chapter 7 trustee: Most Chapter 7 trustees only request your last filed tax return. However, at least one trustee in Orange County will require your last 2 years returns, your bank statements for the 90 days before filing, and copies of any lender statements on any real property you own. So be prepared to product such documents if requested. Unfortunately, we cannot choose trustees.