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Bankruptcy Law/Los Angeles Bankruptcy Attorney Advice on BANKRUPTCY FILING

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Question
Dear Mr. Bayer:

We live in Marin County, California, considering filing a bankruptcy.  I have taken on line Chapter 7 Means Test at http://www.legalconsumer.com/bankruptcy/bankruptcy-means-test.php.
At line 53, it concludes:  "You Pass the Means Test.  Because the amount on Line 51 is less than the amount on Line 54, the presumption of abuse does not arise. You can file for Chapter 7 or Chapter 13 Bankruptcy." So, according to this, we have a choice between chapter 7 and 13 to file. I understand that in chapter 13, a second loan secured to the home can be reduced in the repayment plan.

Our house has a loan total about $500k+ now. Zillow estimate is $412k; County's market value is $230k-they are required by law to set tax base based on its appraiser's market values. So, we can keep the house.

Q1. When the loan was modified, the lender put aside $99k as no interest bearing and I am paying interest for the rest $400k+. The $99k is due when we sell the house or at the end of the term and is listed in the statements as "Second Mortgage". Does this mean that if we choose to file Chapter 13, we can reduce this amount in a repayment plan?

Q2. Also, I had an equity loan (about $20k)from Chase secured to the house. It was originally created to finance the house purchase. But I do not see it anymore in Experian's credit report. Does that mean the bank wrote it off? So, I do not have to worry about listing it in our bankruptcy filing?

Thank you in advance for your assistance.

Answer
Dear Makoto,

There are a number of issues which need to be covered in addition to your two specific questions.

First, maybe you do pass the means test, but maybe you don't. I have no way of knowing if you did it correctly. The means test can be very tricky to do correctly, especially if you have above median income. I hope you are right.

You are incorrect as to your assumptions regarding the value of your home. There is no law requiring the court or anyone else to accept the county tax appraisers assessment as proof of real property value, (except the assessor for tax assessment purposes).

For example, let's say your home was fully paid for and you have decided to sell. Would you be asking for the amount established by the County Assessor, or would you asking for something in the range that Zillow came up with? As you can see, nobody other than the assessor gives a rip what the assessor says it's worth.

Chapter 13 may allow you to treat the claim of a junior mortgage as "unsecured" and treat it for payment the same as what you provide for all other unsecured claims in your Chapter 13 plan. Upon successful completion of your case and receipt of a Chapter 13 discharge you may then complete the removal of a junior mortgage from your property.

To make this happen, you must prove in court that any senior mortgages which will stay have a current balance due which GREATER than the current market value of the property. Let's use an illustration:

Assuming your market value is $412,000, and assuming the 1st mortgage balance is $400,000, and assuming you have a 2nd and a 3rd mortgage, you are going to be able strip only the loan that is in 3rd position. That is because your current market value,(in the hypothetical), is more than what is owed on just the 1st mortgage. That leaves a tiny bit of value for whatever lien is in 2nd position, but none for the lien in the 3rd position. Hence, the 3rd lien is the only one you would have a chance of removing, (in the example).

Doing this in 'real life' should be done using a written appraisal prepared by a licensed appraisor. Hopefully the appraisal would come in below $400,000, and then you would have a shot at getting rid of both the 2nd and the 3rd.

Finally, a credit report is not the final 'say so' on anything. The absense of your Chase loan from the report does not have any legal significance.

Bankruptcy, especially Chapter 13, is not a 'do it yourselfer.' I hope you will retain a Certified Bankruptcy Specialist before you go any further. In Los Angeles where I practice, a recent court study shows a Plan approval rate that is less than 1% for all Chapter 13 filer's who don't have an attorney.

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Bayer, Wishman & Leotta are Los Angeles Bankruptcy Attorneys. Each lawyer in the firm is a Los Angeles Bankruptcy lawyer and is a Certified Specialist in Bankruptcy Law by the State Bar of California. The firm has successfully represented individuals and small business clients in Los Angeles bankruptcy proceedings for over 32 years.

Los Angeles Bankruptcy Attorney Leon Bayer and his partner, Los Angeles Bankruptcy Attorney Jeff Wishman, are  Bankruptcy experts who bring experience, skill and creativity to the highly complex area of bankruptcy law. And not just a little experience. Between the two Los Angeles Bankruptcy Attorney partners, they have over 65 years of experience handling bankruptcy cases in Los Angeles, Long Beach, Woodland Hills, North Hollywood, Riverside, Santa Ana, and the entire Los Angeles basin.

As a long-standing expert, Leon is frequently called upon by the media, the California Bar and other associations to give opinions, provide insight and help educate new attorneys on bankruptcy and its changing laws. This column is one more way that Leon Bayer shares his knowlege and expertise in the confusing world of bankruptcy law with the public and provides resources of free bankruptcy help for individuals struggling with debt problems.

If you or other readers want to keep up with my Los Angeles Bankruptcy Attorney blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/,  my professional web site at http://www.debt-relief-bankruptcy.com, and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/.  

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Los Angeles Bankruptcy Lawyer Leon D. Bayer

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Leon Bayer is a bankruptcy attorney in Los Angeles, California. Leon has successfully represented clients in Los Angeles bankruptcy cases for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. Leon Bayer es un abogado de bancarrota en Los Angeles, California. León ha representado exitosamente a clientes en casos de bancarrota de Los Ángeles por más de 30 años. Él es llamado con frecuencia en los medios de comunicación, la barra de California y otras asociaciones para proporcionar información y ayudar a educar a los abogados en materia de quiebra. Leon's Los Angeles bankruptcy law firm is Bayer, Wishman & Leotta, founded in 1989 and has successfully represented individuals and commercial clients in bankruptcy proceedings for over 22 years. Leon Bayer and his partner, Jeff Wishman, are Certified Bankruptcy Specialists who bring experience, skill and creativity to the highly complex area of bankruptcy law. And not just a little experience. Between the two partners, they have over 60 years of experience as bankruptcy attorneys representing consumer debtors in Los Angeles, Long Beach, Woodland Hills, North Hollywood and the entire Los Angeles basin. As a long-standing expert, Leon is frequently called upon by the media, the California Bar and other associations to give opinions, provide insight and help educate new attorneys on bankruptcy and its changing laws. This blog is one more way that Leon Bayer and Jeff Wishman share their experience with the public and provide resources for individuals struggling with debt problems. You can learn more about Los Angeles Bankruptcy Attorney Leon D. Bayer at Hyperlink Code

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years. To learn more about Los Angeles Bankruptcy Attorney Leon D. Bayer, go to http://en.wikipedia.org/wiki/Leon_D._Bayer Leon Bayer es un abogado de bancarrota en Los Angeles, California. León ha representado exitosamente a clientes en casos de bancarrota de Los Ángeles por más de 30 años. Él es llamado con frecuencia en los medios de comunicación, la barra de California y otras asociaciones para proporcionar información y ayudar a educar a los abogados en materia de quiebra. Los Angeles bufete de abogados de bancarrota de León es Bayer, Wishman y Leotta, fundada en 1989 y ha representado con éxito a clientes individuales y comerciales en proceso de quiebra desde hace más de 22 años. Leon Bayer y su socio, Jeff Wishman, son Especialistas de Concursos certificados que aportan experiencia, la habilidad y la creatividad a la zona de alta complejidad de la ley de bancarrota. Between the two partners, they have over 60 years of experience as bankruptcy attorneys representing consumer debtors in Los Angeles, Long Beach, Woodland Hills, North Hollywood and the entire Los Angeles basin. Entre los dos socios, que tienen más de 60 años de experiencia como abogados de bancarrota de los deudores que representan a los consumidores en Los Angeles, Long Beach, Woodland Hills, North Hollywood y toda la cuenca de Los Angeles. Como experto de larga data, Leon se llama con frecuencia a los medios de comunicación, la barra de California y otras asociaciones para dar opiniones, proporcionar información y ayudar a educar a los nuevos abogados de la bancarrota y las leyes cambian. Este blog es una manera más que Leon Bayer y Jeff Wishman compartir sus experiencias con el público y proporcionar recursos para las personas que luchan con problemas de deuda.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association. Presidente, 1995-1996-Los Angeles Forum bancarrota; Miembro - Comité de la Asociación de Abogados del Condado de Los Angeles en la Ley de Bancarrota Comercial, 1988. Law Advisory
Opinión de la Comisión-Personal & Small Derecho Concursal del Colegio de Abogados del Estado de California, 1996-2000

MR. BAYER DICE: Los grandes bancos y de los companys de tarjetas de crédito han estado trabajando horas extras durante muchos años para vulnerar el derecho constitucional que del pueblo estadounidense para que pueda reclamar la protección de bancarrota. En 2005, el lobby bancario logró convencer al Congreso y al Presidente que hacen las leyes y proceedures más complicado, hopeing que va a obstaculizar las personas que sí que la declaración de quiebra. Tuvieron éxito en la obtención de estos nuevos y complejos proceedures legales por engrasar el sistema legislativo con cientos de millones de dólares en contribuciones de campaña "." La buena noticia para el pueblo estadounidense es que mientras que las nuevas leyes han hecho los proceedures innecesariamente complejas hasta el punto donde la gente sin experiencia no puede dejar de tropezar con el laberinto de las nuevas normas y reglamentos, el proceso es aún factible, especialmente con un abogado que está bien entrenado y con experiencia en esta especialidad.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.
A free on line bankruptcy books for consumers at www.bestbankruptcybook.com

Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases throughout my career. Probablemente he manejado algo del orden de alrededor de 15.000 casos de quiebra en toda mi carrera.

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