Modesto Bankruptcy Lawyer Blog

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.

Chapter 13 bankruptcy allows individuals in Modesto to pay down debt over a period of time, usually 3 to 5 years. However, this type of bankruptcy also applies to self-employed business owners and sole proprietorships. If you're self-employed and you are struggling with mounting debt, Chapter 13 may be the right solution to help you pay off bills and stop creditor harassment, foreclosure and/or repossessions.

Chapter 13 bankruptcy is available to self-employed business owners who meet the following criteria:

- You must be an individual, sole proprietor and/or small business owner (Chapter 11 is for large businesses, partnerships or corporations).

- Your debt (personal and business) must not exceed $360,475 in unsecured debt (i.e. credit cards) and your secured debt (debt backed by collateral) must not exceed $1,081,400.

Once you file for Chapter 13 bankruptcy with a professional bankruptcy attorney in Modesto, the court will need to approve your extended repayment plan. Once in place, spreading your debts across this amount of time can drastically reduce your monthly payments and help you devise a smart financial plan to save your business as well as your personal property.

No interest will accrue on your accounts as long as you continue to make the court-arranged payments as outlined by your bankruptcy plan. Some secured loans, such as those on business vehicles, may not be eligible for repayment under Chapter 13. However, with a smart plan and a qualified bankruptcy attorney, Chapter 13 can be an effective tool for many Modesto sole proprietors.