Author Archives: Ryan C. Wood

About Ryan C. Wood

Ryan C. Wood is a California attorney practicing primarily in the areas of Bankruptcy Law, Business Law and generally seeking justice for under represented clients in the Bay Area.

Foreclosure Scams in Bankruptcy – How Does it Affect You?

By Ryan C. Wood

There always seems to be an increase in crime when the economy is not doing well.  Whether it is increase of violent crimes like muggings and burglaries or white-collar crimes like embezzlement and ponzi schemes it all hurts us  – it makes life  more difficult for more people.  This is evidenced in the recent economic downturn.  An old scam is resurfacing that may delay the foreclosures on homeowners’ properties.  There has been an increase in distressed homeowners transferring a small interest in their home to a person that has recently filed for bankruptcy.  Another variation of the crime is when the homeowner downloads a deed from the recorder’s office and photo shops fraudulent information on the deed.  The county recorder’s stamp is left on the deed.  Most of the time the lender or foreclosure trustee does not verify the information and only sees the deed with the fraudulent information.

The person filing for bankruptcy usually does not know about the transfer of interest in the home.  They probably do not even know the distressed homeowner.  The distressed homeowner probably found the information of the bankruptcy through looking at recent bankruptcy filings.  The homeowners would then send the notice of bankruptcy to the creditors about to foreclose on their home.  Once the lender or foreclosure trustee receives notice that there is a bankruptcy filed from a person that has an interest in the home the foreclosure process is momentarily stopped.  This was the intention of the distressed homeowner all along – stopping the foreclosure and not having to file for bankruptcy.

The worst part is that most of the time the distressed homeowners probably had no idea that they were doing something fraudulent.  They hire companies that guarantee that you will be able to stay in your home for a certain amount of time and the distressed homeowners pay them thousands of dollars upfront to delay the inevitable.  Before these fraudulent companies can get shut down or prosecuted they change name and move elsewhere to provide the same services to other desperate homeowners.  It is a vicious cycle where there are no winners except these fraudulent companies.

How does this affect you, the person that filed for bankruptcy and had no knowledge that someone had transferred a property interest to you?  It may look like you have committed fraud by not disclosing the home in the first place and it costs you time and money to fix something you had no idea would occur.  If a Motion for Relief from Stay is filed in your case by the lender or foreclosure trustee, courts have recommended that bankruptcy attorneys should file a response to the motion with evidence that you had no interest or knowledge in the property and the bankruptcy filer was not involved in a scheme to hinder, delay or defraud the lender.  The bankruptcy trustee and the U.S. Trustee should be notified so they can investigate the issue and prosecute the offenders.

If this occurs in your bankruptcy case and you are not represented by a bankruptcy attorney you should contact the bankruptcy trustee and U.S. Trustee regarding these matters.  If you have any questions you may also us at 877-9NEW-LIFE or 877-963-9543.

How Does a Tax Lien Affect My Bankruptcy?

By Ryan C. Wood

You owe taxes to the Internal Revenue Service (IRS).  To make matters worse you find out the IRS has placed a tax lien on your property with the county recorder’s office.  What can you do?  Is the tax lien dischargeable in bankruptcy?

Under 11 U.S.C. §§507 and §523, the following taxes are dischargeable in bankruptcy if:

1)      The return was last due at least three years before the bankruptcy petition was filed;

2)      The tax claim was assessed within 240 days before the date of the filing of the petition;

a)      If you have requested an offer in compromise related to the tax you are trying to discharge, the time it takes the IRS to consider the offer in compromise is not counted towards the 240 days.  In fact, the IRS adds another 30 days on top of the time it takes for the IRS to make a decision. This means that if you submitted an offer and compromise to the IRS and they rejected the offer in compromise 3 months later, the 240 days assessment period does not include the 4 months (3 month consideration period plus an additional 30 days).

b)      If you have filed a previous bankruptcy case, the 240 days assessment period does not include the time you are in bankruptcy and it adds another 90 days on top of that time. So if you filed for a Chapter 7 bankruptcy case previously and it was closed 3 months later, the 240 days assessment period does not include the 6 months (3 months in bankruptcy plus an additional 90 days).

3)      The tax return was filed more than two years before the bankruptcy petition was filed;

4)      The tax return was not fraudulent or there was no willful attempt to evade the tax.

These rules do not apply if there is a tax lien placed on your property.  A tax lien is not dischargeable in bankruptcy. If you own real property the IRS may record a tax lien on the title.  If you do not own any real property, the IRS may place a lien on all your personal property.

If You Own Real Property

If the tax lien was recorded on your real property, your personal obligation to pay the debt may be wiped out in the bankruptcy if the income taxes meet the rules listed above.  However, even though your personal liability is discharged when filing bankruptcy the tax lien would remain recorded against your property until the tax lien is released.  This means if you try to sell your house when the tax lien is still recorded against your property, you will have to pay off the IRS lien in the sale of your home.

If You File Chapter 7 Bankruptcy and You Do Not Own Real Property

If you do not own any real property in a Chapter 7 bankruptcy then the tax lien only attaches to your personal property.  Your obligation to pay the tax debt may be wiped out in the bankruptcy case if the income taxes meet the rules above.  However, the tax lien would still survive the bankruptcy and the lien remains recorded against all the assets you have owned on or before the date your bankruptcy petition was filed.  Fortunately the IRS cannot go after income or assets you acquire after the date you have filed for bankruptcy protection.  They can only go after the assets that you have owned prior to filing for bankruptcy.  This means the IRS can only repossess the furniture or cars that are paid in full or other personal assets you have owned prior to the bankruptcy filing.  Chances are the IRS will probably not come to your door to collect your 20 year old couch because it would be a waste of time for the IRS. The IRS may potentially go after your retirement plans as well since the retirement plans were excluded from the bankruptcy estate.  However, they cannot go after your retirement plans until you retire and are eligible for retirement income.  By that time, the tax lien may have expired.

If You File Chapter 13 Bankruptcy and You Do Not Own Real Property

So what happens if you are in a Chapter 13 bankruptcy plan and you owe income taxes for both 1) tax years that would have otherwise been eligible for discharge if the rules above are met and 2) recent tax debt that is not eligible for discharge? In a Chapter 13 bankruptcy case, your recent tax debt is considered a priority unsecured debt, and they must be paid in full through your Chapter 13 bankruptcy plan.  The other income tax debt that would normally have been eligible for a discharge but for the tax lien is secured up to the amount of assets owned and that amount needs to be paid in full through the Chapter 13 plan (for example, if you have $25,000 of personal property, including cars, bank accounts, furniture, etc., then the $25,000 would need to be paid in the Chapter 13 plan in addition to the priority unsecured debt).  The remaining tax debt from the tax lien is treated as an unsecured debt that is discharged in the bankruptcy, but as indicated above, the tax lien still survives the bankruptcy.  Therefore the remaining tax debt subject to the tax lien is treated the same as in the Chapter 7 bankruptcy case above.  The IRS will still retain the IRS lien on your personal property but they cannot go after income or property you acquire after your bankruptcy case was filed.

If you have tax liens and you need to file for bankruptcy, you should consult an experienced bankruptcy attorney.  You can schedule a free no obligation consultation with us by calling 1-877-9NEW-LIFE or 1-877-963-9543 today.

Do You Need to File for Bankruptcy? You are Not Alone

By Ryan C. Wood

A lot of my clients that are faced with having to file for bankruptcy feel like they are alone in this financial calamity and that they will never recover financially.  You do not have to feel alone. There were over 1.4 million bankruptcy filings in the United States for the 12-month period ending September 30, 2011.  These people came from all aspects of life – poor, middle class and even some mega rich people have had to file for bankruptcy.  You may even recognize some of these famous people that have filed for bankruptcy in the past: Cyndi Lauper, Kim Basinger, La Toya Jackson, Larry King, Mickey Rooney, Mike Tyson, Natalie Cole, Stephen Baldwin, Toni Braxton and Walt Disney.

I would view filing for bankruptcy as a financially sound business decision.  I am sure the famous bankruptcy filers above look at bankruptcy the same way.  You take a hard look at your bottom line – after paying all the necessities of life like a mortgage/rent, utilities, food, insurance and transportation do you have enough left over to pay your creditors?  If not, then one of the options you should take a look at is filing for bankruptcy protection.

Filing for bankruptcy does not mean that it is the death of your financial history.  There are two things learned from these famous filers:  1) Anyone can have financial problems and even the rich and famous may need to file for bankruptcy, 2) You can get a fresh start and come back even stronger financially.  Some of these famous people that have filed for bankruptcy are more financially well off than ever.  Filing for bankruptcy helped these people restructure or discharge their debts.  Once their debts are discharge they are free to pursue their passion and their dreams to get back to where they used to be.

You can do the same as these famous people who have fallen on hard times.  If you are having problems with your mortgage payment qualify to file a Chapter 7 bankruptcy we take a look at your financial situation and see which chapter of bankruptcy would benefit you the most.  After your bankruptcy case is filed and your debts are discharged you can rebuild your credit and financial life back up to its former glory or even exceeding it.

If you are struggling with credit card debts, a car payment or mortgage payment bankruptcy can help.  I have been a bankruptcy lawyer my whole career and am available to help you at 1-877-9NEW-LIFE or 877-963-9543 to schedule a free consultation today.

What Happens to My Unpaid HOA Dues if I File Bankruptcy?

By Ryan C. Wood

What happens when you have unpaid homeowners association (HOA) dues when you file for bankruptcy? Are they dischargeable in your bankruptcy case?  The answer, like most things, depends on the situation.  Here are some scenarios:

You are Filing a Chapter 7 Bankruptcy Case and You are Surrendering Your Property

If you are filing a Chapter 7 and you have unpaid HOA dues, all the pre-petition unpaid dues (dues you owe up to the time you file your bankruptcy case) are dischargeable.  This means those dues are wiped out and you do not have to pay them upon the discharge of your bankruptcy case.  The HOA dues that are unpaid prior to filing are considered unsecured debts.  However, you must pay all the HOA dues that come due after your petition date. Even if you surrender your property the only debts that are dischargeable are the ones you have incurred prior to filing your bankruptcy petition.  All post-petition debt is still your responsibility until the property is out of your name either by foreclosure or other means.

You are Filing a Chapter 7 Bankruptcy and You are Keeping Your Property

If you are filing a Chapter 7 bankruptcy case and you are keeping your property, the same rule applies – only pre-petition debt is dischargeable and post-petition debt is your responsibility.  If the homeowners association board files a lien against your property and you would like to keep your property, then the lien is treated the same as a mortgage – it is a secured debt that is not discharged and you would need to pay the balanced owed.  The homeowners association may potentially foreclose on your property if the lien is not satisfied. Filing a Chapter 7 bankruptcy case will most likely not relieve you of the HOA dues in this scenario.

You are Filing a Chapter 13 Bankruptcy and You are Surrendering Your Property

If you are filing a Chapter 13 bankruptcy case and you are surrendering your property, your pre-petition HOA dues are treated as an unsecured debt. They will be paid with all the other general unsecured creditors. Since you are surrendering your property it does not matter whether there is a lien on the property or not. Even if there was a lien on your property, it does not affect your case given that you are surrendering the property and the HOA will be treated like all other creditors with secured debts and the collateral is being surrendered. One of the advantages of filing a Chapter 13 bankruptcy versus a Chapter 7 bankruptcy is that in a Chapter 13 bankruptcy case your post-petition HOA dues will be dischargeable as well if you are surrendering your property.

You are Filing a Chapter 13 Bankruptcy and You Wish to Keep Your Property

If there is a secured lien on your house when you file your Chapter 13 bankruptcy case the treatment of that lien depends on whether there is equity in your property at the time you file your bankruptcy case. If your house is underwater (meaning the house is worth less than what you owe on the first mortgage) then the HOA lien can be stripped. A request to the court can be made to value your property and remove or strip the lien. If the house is worth more than what you currently owe on the senior liens (first mortgage), then the HOA lien cannot be stripped, and you will need to pay the unpaid HOA dues in your Chapter 13 plan. Additionally, all post-petition HOA dues will still be your responsibility if you intend to continue living in your property.

Whether you would like to keep or surrender your property, you should consult with a bankruptcy attorney regarding your unpaid HOA dues.  Contact us toll free at 1-877-9NEW-LIFE or 1-877-963-9543 today for a free consultation.

What Should I Avoid Prior to Filing for Bankruptcy Protection

By Ryan C. Wood

In addition to the previous article, How to Avoid Fraud Charges in Bankruptcy, there are certain things that you should not do prior to filing for bankruptcy, as it may inconvenience you, or hinder or delay your case.

Banking

When it comes to banking, most consumers are loyal to their banks.  The most common phrase I hear is, “But I’ve been banking with “X” Bank for more than “X” years!  They have been very good to me.”  These banks are so good to their customers that they are allowing them to take out credit cards that are linked to their bank accounts.  What the consumers don’t realize is that if they are behind on their payments, the banks have the ability to offset the debt by taking the money from their customer’s bank accounts.  They are able to do so because the contracts signed (which most people don’t read) allow them to do so.  Thus, consumers are surprised to find that when it comes time to send off the rent check or mortgage payment, they don’t have the money to do so because their bank already has a chunk of their money.  To avoid this scenario, do not bank at an institution where you owe money.  Some consumers think they are safe if they do not have the funds in their bank accounts.  This is not always true.  Banks can still offset the debt, and then you would be considered overdrawn, and now you would owe bank fees and bounced checks due to non-sufficient funds.

Paying Down Debt

If you were trying to avoid bankruptcy, then paying down your debt is a great idea.  However, if you already know that your only available option is to file bankruptcy, you should not be paying back your creditors, especially your family and friends, whom are considered “insiders.”  Paying creditors back is considered a “preference.” If you have paid back more than $600 to an “insider” in the past year, the trustee has the option of going after the person you paid back to get the money back for the bankruptcy estate, if the funds are significant enough.

Receiving Inheritance

If you believe you are listed as a beneficiary in a will, trust, or life insurance policy, and you are about to receive the inheritance within the next six months, you may not wish to file for bankruptcy.  Any proceeds received within 180 days of the filing of your bankruptcy petition are considered to be a part of your bankruptcy estate.  If you receive a substantial inheritance, there may not be enough exemptions to protect the inheritance, and in a Chapter 7, the inheritance could be used to pay off your debt to your creditors.  Thus, if you think you will receive a substantial inheritance, you may be better off trying to negotiate with your creditors instead.

Lying to Your Attorney

If you retained the services of an attorney to proceed with your bankruptcy case, it is imperative that you do not lie to them about your finances.  You should not hide your assets from your attorney, nor should you lie by omitting certain important information regarding your situation to your attorney.  Your attorney cannot protect you if they do not know about your problem.  If there was an issue in your bankruptcy case, you do not want your attorneys to be the only one in the room surprised by the problem.  Your attorneys are not mind readers, they would not know that they need to help you if you do not tell them.

If you need the help of an experienced bankruptcy lawyer or bankruptcy lawyer in Union City, call us today at 877-9NEW-LIFE or 877-963-9543 to schedule a free consultation.