Modesto Bankruptcy Lawyer Blog

Many Modesto residents are currently going through or considering Chapter 7 or Chapter 13 bankruptcy. While bankruptcy can be a huge relief for many people, it is not a process to be taken lightly. In Louisville, a federal bankruptcy judge recently froze the assets of a local businessman after allegations that he fraudulently transferred funds to his ex-wife in order to hide his assets from the court.

Randall Waldman was slapped with a $3.2 million judgment back in October of 2009 for defrauding a tool company owner, Ronald Stone. After that judgment, Stone's lawyers alleged that Waldman had his lawyer switch his two roofing businesses into his ex-wife's name in an attempt to hide his assets. He now faces even larger fines and possible jail time. His lawyer also faces disbarment if the allegations are true.

Bankruptcy is a Serious Matter
It simply doesn't pay to try to defraud the court system when it comes to filing for bankruptcy. If you're having financial difficulties, you don't have to go it alone. Contact a bankruptcy lawyer in Modesto who can help you examine your options for Chapter 13 and Chapter 7 bankruptcy.

Only a qualified lawyer can tell you what your choices are and what a court will and will not allow. Taking matters into your own hands or dealing with a less than reputable attorney can often make matters much worse. Never try to lie to the courts or falsely file for bankruptcy.

When housing prices were up in the mid 2000s, homeowners often hedged their home values against the market to take out home equity loans or lines of credit (HELOCs) in order to pay for various expenses. Some homeowners wisely invested the money back into their homes, making value-added improvements and needed repairs. Others unwisely spent the money on cars, credit cards and other items that would soon depreciate in value.

Now, with the housing market digging out of a major slump nationwide, homeowners are defaulting on home equity loans in record numbers. According to a recent article in the NY Times, lenders wrote off $11.1 billion dollars in uncollectible home equity loans and $19.9 billion in HELOCs in 2009, more than even primary mortgage loans that same year.

Struggling borrowers are contending with not only not being able to afford to repay the loans, but also having far lower home values than when they initially purchased. Lenders are trying to recover money where they can, but many banks are simply writing off losses because so many people can't afford to pay. Buyers, on the other hand, defend their inability to pay, citing that many banks engaged in practices that were unfair to homebuyers, including predatory lending and indiscriminate loan approval for unqualified buyers.

The delinquency rate in the first quarter of 2010 was 4.12 percent, slightly down from the fourth quarter of 2009 (which marked the highest in 26 years). If you are a part of the thousands of Americans struggling to pay back a home equity loan or line of credit, you can work with a Modesto bankruptcy lawyer to settle your accounts.

New census data regarding health care coverage in Stanislaus County is revealing a disturbing trend: nearly 1 in 4 adults (ages 18 to 64) live without health insurance of any kind. This statistic includes both those who cannot afford coverage as well as those who are young and healthy and opt to not pay for health insurance.

Many residents in the Modesto area who need care the most are going without health insurance in lieu of paying for the basic necessities. Among the 40 to 65 age group - those most at risk for chronic disease - a full 15 percent lack the ability to pay for treatment of conditions such as heart disease, diabetes, high blood pressure and cancer. On the other side of the age spectrum, an estimated 16,000 children in Stanislaus County do not have health insurance because their families can't afford it or because they are unaware of state-sponsored programs that provide coverage.

Without insurance, people don't get regular checkups and only have to visit a doctor when medical conditions are dire. This can lead to overwhelming bills for emergency surgery or ongoing treatment. No matter if a parent or a child gets sick, the exorbitant cost of medical bills for the uninsured and underinsured can be enough to drive any family to consider filing bankruptcy.

If you are swamped by incoming and past due medical bills, contact a bankruptcy attorney to examine your options. Chapter 7 or Chapter 13 bankruptcy may offer you choices that you didn't know you had. You can pay down your debts over time or perhaps get rid of your bills altogether.

Modesto homeowners who have experienced foreclosure may not be done paying, according to a recent article in the Modesto Bee. According to the July 22, 2010 story, people who refinance their homes typically take out a first mortgage at 80 percent of the home's appraised value and a second mortgage for the remaining 20 percent. If foreclosure occurs, then both loans need to be settled with the loan holders. However, after foreclosure of the first (primary) mortgage, the secondary loan company will often file suit against the former homeowner to recoup their loss if it's not covered in the original foreclosure.

Since home prices continue to drop at record rates, many homeowners are unable to complete even short sales due to the nature of the 80-20 structure. Usually, one lender would let the owner out of the loan but the other won't, eliminating the chance for a short sale. This is when foreclosure must take place. And if the secondary lender is not satisfied, homeowners may still owe 20 percent of the home's original purchase price.

Furthermore, according to the article, the holder of the second mortgage can also tack on interest, late charges and attorney's fees in addition to the face value of the original 20 percent loan. Facing this unforeseen debt after foreclosure is enough to seriously threaten the financial security of many Modesto families. If you've been foreclosed on or are facing foreclosure, you might also think about filing for bankruptcy. A bankruptcy attorney in Modesto can help you weigh your options to see what would work best for your situation.

RealtyTrac, a website that tracks foreclosure properties in the U.S., recently listed Modesto and most of Stanislaus County as two of the highest concentrations of housing foreclosures in the nation. Based in Irvine, California, RealtyTrac aggregated housing data at the state, county and city level to develop statistical reports for housing units that received a foreclosure filing in June 2010.

According to the data, the city of Modesto averaged foreclosures on 1 in every 117 housing units in June. The average for Stanislaus County was even higher, averaging 1 in every 99 housing units. By comparison, the state of California as a whole averaged foreclosures on 1 in every 194 housing units and the national average was 1 in every 411 housing units.

While other states are slowly experiencing economic improvement, the state of California continues to see a rise in unemployment, foreclosures and debt. From June 2009 to June 2010, Google Data reports that the unemployment rate in California rose from 11.6% to 12.2%. In addition to those who have already experienced foreclosure, there are countless homeowners who are on the verge of losing their homes by year's end due to continued unemployment and underemployment.

Bankruptcy May Be An Option to Stop Foreclosure
If you're facing foreclosure, a professional bankruptcy attorney may be able to help you save your home. Chapter 7 or Chapter 13 bankruptcy give homeowners options when it comes to financial restructuring and dealing with overwhelming bills. While bankruptcy isn't ideal for everyone, consulting a lawyer can help you make an educated decision about your choices.

Several large California nonprofits have recently had to reorganize and/or declare bankruptcy in order to keep their doors open. Effective July 1, 2010, American Red Cross chapters in Stanislaus and San Joaquin counties folded into the Sacramento-Sierra regional organization in order to continue providing services. Offices in Modesto and Stockton are still open and operating as normal. The consolidated chapters will still continue to offer emergency assistance to individuals and families as needed, but any unnecessary expenses have been cut drastically.

Additionally, two support non-profits tied to Yosemite National Park have also folded into each other to save money. The Yosemite Association and the Yosemite Conservancy will now work together on fund-raising efforts and educational efforts. Even the Stanislaus United Way is considering collaborating with other offices to reduce expenses as an alternative to closing. Other nonprofits, such as the Modesto YMCA, have simply had to shut down due to financial constraints. Still other businesses, such as the Fresno Metropolitan Museum, have filed for bankruptcy in an effort to get back on their feet.

Filing for Commercial Bankruptcy
Non-profits have many expenses to meet, including payroll, benefits and tax filings. Just like any other business, these costs can become overwhelming in times of economic crisis. If your non-profit business is struggling to make ends meet, you may consider contacting a commercial bankruptcy attorney who can advise you on your options. Chapter 11 bankruptcy is designed to reorganize commercial finances and sell off assets in order to pay off outstanding debts. Non-profits can also file for Chapter 13 bankruptcy in order to reduce debts and get on a 3 to 5 year repayment schedule based on financial capability.

A: In many cases, creditor calls will stop within 2 weeks of delivered notices of bankruptcy. However, if you've been sent to collections for delinquent accounts, it may take 30 days or more for calls to stop.

When you file for Chapter 7 or Chapter 13 bankruptcy, you immediately qualify for an "automatic stay," which is a court injunction that halts the actions of creditors (with some exceptions) to collect debts from you. This means that harassing letters, phone calls and emails must stop as soon as creditors receive notices of bankruptcy from your court-appointed trustee (the person in charge of your bankruptcy filing at the court level).

Since most of these notices are delivered via mail, though, the calls most certainly won't stop the same day you file for bankruptcy. You will need to allow at least a full business week for the trustee to mail the notices, another full week for the post office to deliver them and then another few days for processing time by your creditors. Some trustees will fax the notices, however, and this can reduce your wait time.

Still, you can expect to wait up to 30 days for most calls to stop completely. During this time, you can calmly let creditors and/or collection agencies know that you have filed for bankruptcy and even provide them with your trustee's name and contact information if they wish to verify this information. This may help reduce call volume as well.

In order to receive the fastest results and to get the most out of filing for bankruptcy, it is necessary to hire a Modesto bankruptcy lawyer. A lawyer can expedite the process where possible and ensure your protection every step of the way. The bankruptcy rules in California are constantly changing, so it is imperative that you have a professional legal representative to help you stop creditor harassment and help you get back on your feet financially.

Although Modesto area foreclosure rates dropped by 3% in May 2010, this area continues to have one of the highest foreclosure concentrations in the nation. With many factories and companies in Central and Northern California closing their doors, the Central Valley is still being hit hard by the economic and housing crisis that began back in 2007.

According to the Modesto Bee, the three-county region including Stanislaus, Merced and San Joaquin counties continues to have the highest percentage of defaulted mortgages in California. Nearly 52,000 homes in these three counties alone have been foreclosed upon since the housing crisis began three years ago. This accounts for nearly 13% of all houses and condos in Stanislaus County, 15.5% in Merced County and 14% in San Joaquin County.

Bankruptcy Can Help Save Your Home From Foreclosure
With the help of a professional bankruptcy attorney, you may be able to save your home from foreclosure by filing for Chapter 7 or Chapter 13 bankruptcy. Since bankruptcy rules and laws are constantly changing, it is imperative that you have a reputable lawyer on your side to help you file all the necessary paperwork required by the federal government.

There are many services out there that promise refinancing and loan modification options that sound appealing, but only a lawyer can truly review your financial situation to recommend a viable course of action. What's more, if you try to file the paperwork yourself, you could end up disqualifying yourself from any type of bankruptcy relief.

On May 21, 2010, the Modesto Bee reported that homeowners from seven Stanislaus County cities, including Modesto, were victimized in a multimillion-dollar loan modification scheme that promised to pull underwater owners out of imminent foreclosure. Instead, the operation simply robbed residents of as much as $5,000, never fulfilling the promise of loan modification.

The scheme was known by several names, including Mason Capital Group, LLC and Gretchen Fox and Associates. It was run out of a boiler room in Southern California by a dozen or so representatives who promised homeowners that, for a fee of several thousand dollars, they could modify their current loans to keep their houses out of foreclosure. In all, nine men were arrested on 97 charges of grand theft, unlawful foreclosure consulting, tax evasion and conspiracy.

Attorney General Jerry Brown said that the men bilked some 1,500 Californians out of more than $2.3 million, many of whom resided in Modesto and surrounding cities. In many cases, not only were homeowners denied the promised loan modifications, but they also lost their homes and accrued additional debt after paying the scammers.

Brown's office began investigating the scheme in 2009 after a number of consumer complaints. Reports indicate that many of the company's high rollers were using their ill-gotten gains to pay for private school tuition, travel, entertainment, shopping and lavish personal expenses. The Attorney General's office will seek restitution for the victims.

If you are facing foreclosure on your home, consider hiring a reputable bankruptcy attorney in Modesto. Don't rely on fly-by-night scams--if it seems too good to be true, it probably is. A lawyer will follow the letter of the law to help you save your home and rebuild your credit after financial hardship.

Choosing a bankruptcy lawyer in Modesto can make all the difference in the outcome of your bankruptcy filing. According to Buzzle.com, you should take five key steps when selecting the right attorney for your bankruptcy:

1. Contact the Stanislaus County Bar Association in order to get a list of lawyers in the Modesto area. Scan your options to target lawyers who specifically work in the area of bankruptcy law (Chapter 7 or Chapter 13).

2. After you've developed a list of three to five options, research each attorney using Internet search engines. Even if an attorney doesn't have an individual firm website, you may be able to find information on newspaper websites, bar association notices or review sites.

3. Ask your neighbors and co-workers about lawyers they've used for their bankruptcy filings or other financial matters. The best way to get an accurate assessment of an attorney's ability is directly from former or current clients.

4. Set up initial consultations a handful of lawyers. Most lawyers will offer this meeting for free. Pay attention to your interaction with the lawyer - does he listen to your needs? Does he take notes? Is he responsive to your requests?

5. Once you've settled on the attorney you like, be sure to finalize a fee structure that you're satisfied with before signing any paperwork.

Bankruptcy attorneys must often handle several cases at once, so their attention may be divided. The key is to find a bankruptcy attorney who can devote individual attention to your case to get you the most efficient and effective results.

According to Lita Epstein of HousingWatch.com, Modesto-area homeowners are one of the hardest hit groups of the American population when it comes to negative equity in their homes. Her May 11, 2010 article cites CoreLogic's recent study of homeownership across more than 47 million homes, in which Modesto ranks as the #4 city with the highest number of underwater borrowers in the U.S (62 percent).

When coupled with unemployment or underemployment, being underwater, or owing more than your home is worth, is forcing many homeowners in Modesto and surrounding areas to consider Chapter 7 bankruptcy. Chapter 7, or total, bankruptcy allows your unsecured debts to be forgiven so that you can gain a fresh financial start. In some cases, you can even save your home.

CoreLogic estimates that the average underwater borrower will need another 10 to 20 years to make up for negative equity. Unfortunately, for many people, they just don't have the resources needed to stay in their homes for that length of time. This is why bankruptcy rates have been steadily rising in the Modesto area since 2007. Although bankruptcy can stay on your credit history for up to 10 years, it is also not considered as heavily as it once was by creditors. As a matter of fact, some filers find that they are able to apply for new lines of credit almost immediately after filing for Chapter 7.

Chapter 7 bankruptcy is strictly regulated by the government, and several steps must be completed before you can be approved and your debts can be wiped clean. A Modesto bankruptcy lawyer can walk you through the process to ensure a speedy and efficient solution to your financial problems.

On April 30, 2010, the U.S. Bankruptcy Court (Central California Division) updated the following bankruptcy code on its website:

"LBR form F 2090-1.2.APPLICATION was modified to require the applicant to attach a copy of the receipt for payment of fees, as required under LBR 2090-1(b)(5), to the application."

To the average person, this sentence sounds like gibberish, right? But to a qualified bankruptcy lawyer in Modesto, this phrase is everyday language. A lawyer knows that even the smallest changes to bankruptcy code in California are critically important. The Bankruptcy Act of 2005 overhauled the federal bankruptcy code, but subsequent, smaller, more recent changes at the state level are just as crucial. A lawyer must stay current on all the bankruptcy laws at both a state and federal level in order to provide superior service and results that clients desire.

One of the primary advantages to hiring a bankruptcy lawyer for Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases is that you can rest assured that your case is being filed accurately and efficiently. Doing it on your own could result in disqualification of your application, denial or worse.

Another advantage of hiring a professional bankruptcy lawyer is that you can get all your questions answered regarding your mortgage, your credit score, your outstanding debts and more. If you try to file for bankruptcy on your own, you will most likely have dozens of questions for which you may not be able to secure verifiable answers.

What's more, it can be tough enough for a lawyer to keep up with assets, creditor claims, court-appointed trustees, deadlines and funds allocations associated with filing for bankruptcy - do you really feel qualified to handle all this and more on your own? It's much better to simply hire a lawyer to save yourself time and money when filing for bankruptcy.

Some of the highest expenses that small business owners often incur are related to advertising. The costs of TV ads, flyers, billboards and marketing personnel can quickly add up. And, without targeted efforts, advertising dollars can be quickly wasted. Further, many Modesto entrepreneurs find themselves struggling with the choice between spending money on advertising and paying their bills.

In order to reach a large segment of potential customers, it's important to be able to advertise effectively, yet within your means. If mounting debt is putting your business at risk, here are some ways to reduce advertising expenses while still reaching out to your target audience:

1. Use social networking sites like Facebook, LinkedIn, Twitter and MySpace to connect with people who would likely buy your goods/services. Create a page for your business and offer special deals to people who "follow" you.

2. Rely on word-of-mouth to drive customers to your business. Offer your current clients discounts for bringing in referrals and make an effort to know the names and buying habits of all your customers.

3. Incentivize your current clients by offering returning customer deals that require them to shop frequently.

4. Stop spending money on expensive TV ads if you're not seeing any return on that investment. Instead, focus your efforts on creating free email newsletters and mobile text blasts at little or no cost to you.

If you're still having trouble making ends meet, you might consider filing for Chapter 13 or Chapter 11 bankruptcy to save your business. In Modesto, the ailing economy has made it difficult for many small businesses to stay open, but there is help. Contact a Modesto bankruptcy lawyer to discuss your concerns.

Chapter 11 bankruptcy just might be the saving grace that your small business needs to stay afloat in Modesto. The stigmas that are sometimes associated with individual bankruptcy aren't nearly as prevalent in the business world, because entrepreneurs understand that Chapter 11, also known as "restructuring" or "reorganization" bankruptcy, can be a viable tool that can save your business from property foreclosure, repossessions of equipment and vehicles, or even permanent closure due to overwhelming debts.

Corporations, sole proprietorships and partnerships can file Chapter 11. In order to qualify for Chapter 11 commercial bankruptcy, your business must pay a $1,000 filing fee. It is highly recommended that businesses file for Chapter 11 with a qualified commercial bankruptcy lawyer so that all the paperwork is filed swiftly and accurately. A lawyer can also help you devise the debt management plan that must also be filed with your claim.

Chapter 11 bankruptcy is similar to Chapter 13 bankruptcy in that your outstanding bills are stretched out over a period of 3 to 5 years for repayment. This reduces your monthly liability and allows you to restructure your business's financial plan to match your ability to pay. You can also choose to liquidate your assets in order to pay off debts over time. In rare cases, a court-appointed trustee will oversee these plans closely, but typically, a business needs only to present a plan to the court for approval.

It's important to note that Chapter 11 does not discharge business debt. However, when you file for Chapter 11 commercial bankruptcy, an "automatic stay" will immediately go into effect, stopping all creditor collections and harassment, foreclosures and repossessions, at least temporarily. During this time, you can work with your bankruptcy attorney to create a proactive plan to eliminate your debt and save your business.

On April 27, 2010, mid-level department store chain Gottschalks announced it would be reopening two new stores in Central California in the fall of 2010. This news came as a shock to many residents in the area, since Gottschalks had effectively closed its doors in July 2009 after failing to reorganize its outstanding debt under Chapter 11 bankruptcy. All 58 stores were liquidated and closed, indicating that company was done for good. However, the liquidation process actually put the company in a better position to start anew.

The new chain, possibly named Gottschalks by Joe Levy, Inc., will stay true to their customer base as an independent department store chain catering to moms, students and other buyers with mid-level income. Gottschalks will re-vamp its design to offer customers a new, yet familiar experience. Former company chairman Joe Levy said that the Fresno-based chain will stay in the area, cutting the ribbon on their first new store in Clovis on November 1. Stores in Oakhurst and Auburn will likely be reopened soon thereafter.

Bankruptcy May Be Able To Save Your Business
Bankruptcy doesn't have to end your business, it can actually be just the beginning of a new frontier for you. The lesson to be learned from Gottschalks is that if you're considering Chapter 11 bankruptcy, you might be able to save your business as well, or at least reopen another business after a successful liquidation process.

There are certain restrictions you must follow and very strict deadlines that must be met in order to file for commercial bankruptcy in California, though, so it is vital that you have a reliable bankruptcy lawyer on your side. A clever financial consultant can also be an excellent resource for Chapter 11 reorganization.