How To Avoid Your Case Being Mistaken for a Bankruptcy Fraud

Most people filing for bankruptcy are honest, hard-working citizens caught in an unpleasant financial situation. However, there are also those looking to abuse the laws and find loopholes that will benefit their selfish goals. People who often try to abuse the law this way usually end up in debt through fraudulent acts. To get out of this debt they resort to other fraudulent acts, in this case, bankruptcy frauds.

But sometimes, even honest debtors tend to make mistakes that the court may misinterpret as an attempted fraud. In order to learn how to avoid making mistakes that could lead to your case being mistaken for a bankruptcy fraud, you should first get to know everything about them.

So what does a bankruptcy fraud entail? There are actually several types of bankruptcy frauds. To put it simply, any dishonest practice people use when filing for bankruptcy is considered fraudulent. This includes not disclosing all assets, falsifying forms, handing incomplete forms, filing for bankruptcy several times over, bribing a trustee or not using real personal information. Moreover, these practices are often used in conjunction with other criminal activities, often to cover them, such as money laundering or identity theft.

Common Bankruptcy Frauds

Not disclosing their full list of assets from the court is the most common way debtors try to play the system. They do this in hopes that the unfiled assets will not be liquidated once the case proceeds. Sometimes, debtors might even transfer some of their assets to their friends and family members so the court cannot trace them.

Sometimes debtors try to deceive the court by filing for bankruptcy several times in several states. They do this either under their real name or by using a false identity, sometimes even both. While the court is not likely to fall for this fraud, it is bound to slow the process down. Because of that, debtors often use it to try and buy themselves more time in order to hide their assets. However, in the majority of cases, bankruptcy courts are not fooled easily.

Another common case of bankruptcy fraud occurs often and on a much larger scale. Agents allegedly representing a consulting agency target individuals in bad financial situations and petition them offering to help. And while they lead people to believe they are offering them financial aid, in reality, they are filing for their bankruptcy. These agencies aim to prolong the cases and charge the victims of this scam insane fees and rob them of their savings in the process.

Why Do Debtors Resort to Bankruptcy Frauds

Debtors looking to hide their assets do so in hopes of filing for Chapter 7 bankruptcy. As you already know, some secured debts may be discharged in Chapter 7 bankruptcy. However, in the case of Chapter 13 bankruptcy debtors are presented with a repayment plan that involves monthly repayments for anywhere between three to five years. While their debts are discharged after this, their bankruptcy case is logged for a decade after the discharge and affects their credit score during that period. To avoid being blacklisted this way, debtors resort to frauds.

What is the Punishment for a Bankruptcy Fraud

If prosecutors can prove that the data was deliberately falsified, the debtor is convicted. Bankruptcy frauds are considered a criminal offense. The punishment for a bankruptcy fraud is a five-year prison sentence or a hefty fine. Furthermore, if the court deems necessary, debtors may even have to serve a prison sentence and pay a fine at the same time.

Bankruptcy courts are always on guard, ready to expose any attempts at fraudulent behavior. However, sometimes even honest debtors make mistakes when filing for bankruptcy that may be misinterpreted as trying to hide their assets or give false information. If you want to make sure this doesn’t happen to you, make sure to hire a reputable San Diego bankruptcy lawyer to help with your case. If you need expert legal representation before the bankruptcy court don’t hesitate to contact the BK Lawyers at (619) 312 – 4900.

Five Bankruptcy Mistakes That Could Cost You Your Case

Filing for bankruptcy could help get you out of a tight financial situation and get you back on track after a major debt. But it could backfire just as easily. Similar to other legal cases, filing for bankruptcy means following specific procedures and meeting certain requirements before the court decides to discharge your debt.

One slope those filing for bankruptcy often overlook is that filing for bankruptcy is a complex process which could easily go sideways if you lack any fundamental knowledge of how the process works or if don’t hire an experienced San Diego bankruptcy attorney to represent you in front of the court. People with neither the expertise nor good representation tend to make mistakes. Sometimes these mistakes could simply delay a case, but other times some of these mistakes could cost you not just more money but your case being denied.

Here’s a list of some of the most common mistakes people make when filing for bankruptcy, how to avoid them and how it could impact your case.

Not Filing for the Right Type of Bankruptcy

If you decide that filing for bankruptcy is the best way out of an unpleasant situation, you have to decide which type of bankruptcy you want to file for. In most cases the choice comes down to Chapter 7 or Chapter 13 bankruptcy.

Knowing which type fits your case the most will cut your costs, allow you to retain valuable assets like your car and can help discharge most of your debt. There are several factors that can help determine whether one type is better for you than the other, including your average income, the amount of debt and the value of your assets.

Not Disclosing All Your Assets

Once you decided which type of bankruptcy you are filing for, you will have to prepare the documents needed for your bankruptcy case. During this process, the person filing has to disclose details about their assets, such as their house, cars, bank accounts and the likes.

If you forget to list some of your assets or – worse off – deliberately try to hide them, you could put your bankruptcy case in jeopardy. Sometimes not disclosing assets can result in the case being delayed, but it can also be viewed as trying to deceive the court. You could therefore be denied your request and even face criminal charges.

Not Taking Advantage of Bankruptcy Exemptions

If you file for Chapter 7 bankruptcy, many of your assets can be exempt from liquidation. These exemptions include assets such as motor vehicles, jewelry, personal belongings, home and furniture, insurance policies, tools used for work and many others. There are many factors that determine the maximum allowed bankruptcy exemption such as age or disability. Not making the most out of these exemptions will mean having to give up more of your assets.

Not Hiring the Right San Diego Bankruptcy Attorney

All of the above mistakes can be avoided if you hire an experienced bankruptcy attorney in San Diego. Someone who’s been in the business for more than 20 years will never make a rookie mistake of omitting an asset or not taking advantage of available bankruptcy exemptions. A good bankruptcy representative is not only well-versed in bankruptcy law but also has a deep understanding of finance. Not choosing a lawyer with these qualifications will likely result in inadequate representation and losing more money and assets.

Chang & Diamond, APC is the leading San Diego bankruptcy lawyer group with over 2 decades of experience and numerous successful bankruptcy cases. For a free initial consultation contact our offices at (619) 312 – 4900.

Self-Employed Individuals Can File For Bankruptcy Too!

Being your own boss can have numerous advantages. You can influence when you receive income, have a wider range of retirement saving options, you have more influence over expense deductions and more. But it can also be incredibly expensive. There are many aspects to consider, such as overhead costs, payrolls and marketing.

Self-employed individuals often find themselves spending more than they are earning. A couple of months of being unable to cover your expenses can result in a serious debt. If self-employment costs become absurd and unsustainable, maybe it’s time to consider looking for a good San Diego bankruptcy attorney.

Proving Your Monthly Income

Self-employed individuals are entitled to Chapter 7 or Chapter 13 bankruptcy much like any other consumer, but filing for bankruptcy might be a bit more complicated. A self-employed individual has to disclose their income. The bankruptcy court conducts a means test to determine whether they are eligible to file for bankruptcy or not, and which chapter they qualify for.

If a self-employed individual’s income is less than the family average for San Diego, a bankruptcy attorney can help them, as they are eligible to file without even taking the means test. The American Community Survey (ACS) has a list of median incomes for San Diego and all other states, which can be used use to determine where you fall when it comes to median income.

As a sole proprietor, if it turns out you have to take the means test, you will have to fill different forms according to which chapter you are filing for. The means test is very difficult for self-employed individuals. Company employees can disclose their paychecks, while self-employed individuals have to find other means to prove their income. For example, tax returns and bank deposits can help prove the income.

Sole Proprietors Bankruptcy

When you are a sole proprietor, personal and business debts are counted as one. This means that a sole proprietor has to present both personal and business debts and income. Chapter 7 bankruptcy could remove both types of debt provided the sole proprietor qualifies. Chapter 7 is also a good choice for individuals with a lot of nonexempt assets. This way they will not have to sell much of their property. However, having a lot of these assets might mean losing more of them because the trustee will have to liquidate them to cover the debt.

On the other hand, Chapter 13 bankruptcy is a great option as it won’t hinder the sole proprietor’s business. Not having to sell any assets means that a self-employed individual can keep their business going, earning monthly paychecks and still keep paying the debt off. But they will have to be able to cover both their expenses and the monthly repayment rates. If they fall behind on their bankruptcy payments, the court can dismiss their bankruptcy case and force them into the same difficult situation they were previously in.

Look for a Respectable San Diego Bankruptcy Attorney

If you are a self-employed individual facing this tough financial situation, look for an experienced bankruptcy attorney in San Diego at Chang & Diamond, APC. If your expenses top your earnings, bankruptcy might be your best solution. Contact us at (619) 312 – 4900 for a free initial consultation.

The information you obtain in this article is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

What Are Secured and Unsecured Debts?

People filing for bankruptcy are put before a tough decision. Apart from the implications filing for bankruptcy will have on their life and their credit score, they are faced with a choice of filing for either Chapter 7 or Chapter 13 bankruptcy. Their choice ultimately depends on several factors, mainly which assets they want or don’t want to keep. It is not uncommon that people don’t take secured and unsecured loans into account because they don’t understand what constitutes either. They should ask for professional advice from a reputable San Diego bankruptcy attorney, and educate themselves on various options.

What is the Difference between Secured and Unsecured Debt?

There are three types of debts taken into consideration when a person is filing for bankruptcy. These types are:

Secured Debts: This type of debt is linked to a physical asset, for example, a mortgage or a car loan. If the client wants to keep their car or their home, they will need to cover any late payments. With Chapter 7 bankruptcy, clients need to pay any late amounts and keep current on their future payments or risk losing the asset in question. On the other hand, Chapter 13 allows you to cover late payments through an agreed-upon payment plan.

Priority Unsecured Debts: Unsecured debts were dubbed such because they aren’t linked to any physical assets. Regardless, they need to be paid off and in most cases do not get discharged after filing for bankruptcy. Some examples of priority unsecured debts include court fines, child support, and various taxes. In Chapter 7 bankruptcy, these debts are paid off by liquidating assets. Chapter 13 involves a payment plan that is supposed to cover your debt within the next three to five years.

Non-Priority Unsecured Debts: Debt such as medical bills, utility bills, and credit card debt are considered non-priority and are usually discharged after filing for bankruptcy.

Reaffirming Debts

Some clients can reaffirm their debt through chapter 7 bankruptcy, allowing them to keep an asset falling under the secured debt category. You can decide to keep your car but will have to cover all future payments on time. When the bankruptcy discharge is awarded, you can reaffirm the loan, which means you continue paying the agreed-upon rate from the original contract from that moment on. When you reaffirm such a debt after bankruptcy, your loan reverts to the original agreement, as if you never filed for bankruptcy. However, if you choose to reaffirm your debt, the lender retains the ability to repossess your assets if you don’t continue making payments.

Can Student Loans Be Discharged?

Student loans are a bit of an exception to the rules above. While they are considered non-priority debt, they usually don’t get discharged after filing for bankruptcy. In order to have them dismissed, you have to prove that both you and your dependents were unable to pay them off due to an undue hardship. This process can be extremely difficult and the chances of this debt being discharged are very slim.

Need Professional Advice? Seek Help From the Leading San Diego Bankruptcy Attorney!

If you are still unsure whether your assets constitute secured or unsecured debts, don’t hesitate to reach out to the Bankruptcy Lawyers Chang & Diamond, APC. Our company was founded in 1998, and has helped clients in numerous bankruptcy cases since, building a reputation as accessible and affordable bankruptcy attorneys in San Diego and surrounding areas. Reach out for a free initial consultation at (619) 312-4900.

How Bankruptcy Affects Taxation

When weighing the pros and cons of bankruptcy, many often forget to ask about the relationship between bankruptcy and taxes. There are several things you should ask about how bankruptcy and taxes interact if you are considering filing for bankruptcy: are there any consequences, what are they, and is the timing a factor. Luckily, the experts at the leading San Diego bankruptcy lawyer group explained the basics of how bankruptcy and taxes relate.

Chapter 7 Bankruptcy

When filing for Chapter 7 bankruptcy, two estates are created: one individual and one related to your bankruptcy case. The bankruptcy estate is most commonly handled by an appointed trustee. Each of these estates is treated separately when it comes to taxing.

What this means is that you can file a tax return only for the individual estate. This includes income, deductions and credit for the individual estate and not for the bankruptcy estate. In turn, these are managed by the trustee, who files the tax return independently. The remaining assets are returned without any tax consequences after the case has been closed.

The IRS can file a proof of claim for income taxes as far due as three years from the date you file for bankruptcy, but any tax claims older than that are removed in the case of Chapter 7 bankruptcy. Afterwards the proof of claim is paid in assets that are left after the other creditors are paid.

Chapter 13 Bankruptcy

With Chapter 13 bankruptcy there are no separate taxable estates. The most likely scenario is that you will end up providing tax returns to a trustee as a result of the repayment plan. These refunds will in turn be used to pay creditors. You might also be charged with unpaid income taxes and will have to settle them according to the repayment plan in the next three to five years.  In case you excluded discharged debt from the income, the tax attributes are charged from your personal tax return. The trustee can then decide whether to use the tax return to pay the creditors or allow you to keep it.

Taxes and Debt after the Bankruptcy Case

Even after filing for either chapter 7 or 13 bankruptcy you will still be obligated to settle taxes and any debts acquired after the bankruptcy proceedings. Neither the taxes nor debts in this case are protected by an automatic stay as they were not disclosed in the filing to begin with. The automatic stay covers the collection by creditors that were involved in the process from the beginning.

Any debts discharged during bankruptcy are not considered taxable income. However, you must file for bankruptcy before receiving Form 1099-C, or the debt will be considered taxable income unless there’s an exclusion or exception referring to that debt.

Seek expert San Diego bankruptcy lawyer advice

If you are still uncertain how bankruptcy and taxes intertwine, you should probably hire a respectable bankruptcy attorney and follow their expert advice on the subject. It’s important to be completely familiar with how taxation works after bankruptcy in order to avoid mistakes that may cost you in the future. Furthermore, make sure you keep your tax records and allow your attorney to go through them. If you have any questions about taxation relating to chapter 7 or chapter 13 bankruptcy, contact us for a free, no-obligation consultation.

How Does Filing for Bankruptcy Affect Your Rent?

People looking for a professional bankruptcy attorney in San Diego are worried about this particular thing: what happens to tenants and the rent they pay after they’ve filed for bankruptcy? This question interests both the panicking occupants who are not sure if they will be able to keep paying for their rent or end up evicted, and from worried landlords who fear they will never be able to collect their due payments. Both parties should be well-informed in order to separate fact from fiction and avoid any serious repercussions, especially as new financial crises lurk around the corner.

Talk It Out

The first step both parties should take in the event a tenant files for bankruptcy is sitting down and having a talk about their options. Some landlords may be willing to develop a payment plan or accept half of the rent amount owned, while others may not be that open to negotiations. Many landlords use the rents collected to pay their own mortgage and cannot afford to support a bankrupt tenant. If you are a tenant filing for bankruptcy, the worst thing you can do is to avoid the landlord, similar to how you shouldn’t avoid the creditor. Maybe the landlord will understand your situation and offer to take a partial amount or accept late payments. In this case, make sure you get a written agreement and a receipt, as you might need them down the road.

Review the Agreement

Reviewing the lease agreement is imperative to tenants filing for bankruptcy. Tenants will need to review their obligations to the landlord as agreed upon in the document. This includes the amount they need to pay each month and the date the rent is due. It also includes the preferred payment method and the terms under which the landlord can increase the rent amount. Finally, they should find out if there are any fees for late rents and the terms and conditions of cancelling the agreement.

Bankruptcy and Rent

The law states that landlords are not allowed to terminate the lease or evict tenants after they’ve filed for bankruptcy. However, landlords can seek compensation for automatic stay but the relief won’t be immediate unless the tenants did not satisfy their lease obligations. Tenants can occupy the leased apartment up to 60 days (or more if the court allows an extension) before they decide whether they want to assign the lease to another party or accept the lease. In the latter case, the tenants are obligated to fulfill their financial obligations to the landlord in full.

If the tenant does not pay their rent on the first date after filing for bankruptcy, the landlord can address the bankruptcy court and seek payment. Tenants filing for bankruptcy are obligated to pay the rent and other contractual obligations, such as taxes, common maintenance bills and insurances. The most common problem landlords face is tenants filing for bankruptcy in between their due dates, meaning they only have to cover the rent for the month following the bankruptcy procedure. If the tenants cannot afford to pay their due rents, the landlord can move for eviction according to the lease agreement. Many tenants try and fight eviction, but this can lead to more serious complications for the tenant depending on their defense.

Consult an Expert Bankruptcy Attorney San Diego

Whether you are a tenant filing for bankruptcy or a landlord trying to collect the due expenses, contact the BK Lawyers, the respected San Diego bankruptcy lawyer group to review your options and obtain legal advice with no additional obligations. We promise informative, affordable and accessible service to all clients and promise the best results through full cooperation during the process.

How to Plan your Summer after Bankruptcy

Filing for bankruptcy can be a difficult period to cope with, especially if you do so during the summer. Your friends have been posting pictures of their lush vacations or expensive events all over their Snapchat and Instagram accounts while you have been feeling defeated and in a financial dead alley. And there’s still a month before it’s over, leaving you wondering what you can do.

Luckily, every experienced San Diego bankruptcy attorney can tell you that summer can be a great season to plan your finances and start working towards a better life. Disregard all the false myths about bankruptcy you may have heard. Learning how to save and cut unwanted expenses will go a long way in securing your financial future. Here are a few tips on how to use this summer to your advantage.

Saving for the Future

If you’ve recently filed for bankruptcy, you will likely lack the funds to afford a summer trip or visit an expensive event. Don’t despair, and remember that you will always have the summer after this, and the summer after that. This summer, however, is the great place to start saving money for a fun trip next year. Save up a small amount from your salary every month, and start planning the budget for next year’s fun trip. Planning in advance might also help you save some money on early bird arrangements.

Fun is Free

You don’t have to spend a lot of money to have fun, contrary to what you might believe. Look for free festivals in the San Diego area. A lot of libraries offer fun activities for children that are free of charge, such as story readings. You could organize a family picnic – San Diego is rich in exciting picnic areas. You can look for free activities or discounted tickets for the movies or the zoo on Facebook. You would be surprised how much money you could be saving on these free activities and how many of them you can find in your area.

Use Cash Whenever You Can

Finding a free or a discounted event is just one step towards smart spending. Allocating money you are allowed to spend on such events is the other. Whether you are buying souvenirs at the zoo or expensive junk food for the picnic, the expenses can quickly go out of hand. This is why it is important to use cash instead of cards. Having cash will help gain more control over how much you spend, and if you think you might still be tempted to use it, leave your credit card back home. Fighting impulse shopping will vastly improve your financial situation.

Prepare Your Own Food

Whether you are going on a picnic or packing food for the kids, preparing your own food can save you a lot of money. Fast food is not only ridiculously expensive, it is very unhealthy. Nothing can beat food prepared in your kitchen, which is why you should stop spending money on junk food and buy groceries and prepare meals yourself. This will give you a chance to be creative, try different dishes and flavors, and have fun while cooking up a meal for your family.

The Leading San Diego Bankruptcy Attorney

Filing for bankruptcy can be stressful, which is why the professionals at Chang & Diamond, APC, are here to answer any questions you may have on planning your life after bankruptcy and share their expertise with you. If you are about to file for Chapter 7 or Chapter 13 bankruptcy, do not hesitate to contact us for legal advice and a free consultation.

Infamous Bankruptcy Myths Debunked by Leading San Diego Bankruptcy Lawyer Group

Filing for bankruptcy is a huge step for any individual, and can put you in an awkward and unpleasant situation. A lot of myths perpetuated by those who understand little about how bankruptcy works via the internet are certainly not making it easier for individuals who need to take this huge step in their lives. This is why our seasoned San Diego bankruptcy lawyer group has decided to take a closer look at the worst of these viral myths and address their verity once and for all.

All Debts Will Be Relieved

While both chapter 7 and 13 bankruptcy will relieve most debt, there are some types that cannot be forgiven. Personal debts like family or child support, debts stemming from a fraud you committed or, in most cases, student loans will not be forgiven. Debts that will be discharged include credit cards, loans, medical bills, etc.

You Will Lose Everything

Most individuals are scared of the perpetuated myth that filing for bankruptcy means they will lose their cars, homes and other possessions. However, filing for bankruptcy does not necessarily mean losing all your assets. If filing for Chapter 7 bankruptcy, you will not have to give up any assets. You can hold on to possessions that facilitate your daily needs like your car, which falls under the category of exemptions. Exemption laws vary from state to state, which is why it is best to get in touch with an experienced bankruptcy attorney. Since filing for Chapter 13 bankruptcy involves a repayment plan, you will be allowed to keep your assets. However, they will have a significant impact on your repayment plan.

Your Credit Score is Forever Ruined

It is true that your credit score will be bad in the beginning. Filing for bankruptcy is introduced to your credit report and will be there up to 10 years. However with every passing year the bankruptcy will have a reduced impact on your ability to ask for a loan. Most individuals even experience an increase after a few months. There is a number of ways you can repair your credit score, and it is best to consult with an expert in the field.

Married Individuals Cannot File for Bankruptcy on their Own

This myth is completely untrue, and you can file for bankruptcy on your own even if you are married. The only prerequisite is to assure the bankruptcy agent that your spouse is not extremely wealthy by offering insight into their income state. This way filing for bankruptcy will only affect you. It will not have any impact on your spouse’s credit or possessions.

It Will Ruin You Financially

Individuals filing for bankruptcy are usually hard-working, honest citizens and are reluctant to take this step. Whatever reason you have to file for bankruptcy, you need to remember that all of us are prone to taking a bad step and ending up in a difficult financial situation. But filing for bankruptcy is not your ball and chain, it is a way to help you regain control of your finances.