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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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In the state of California, I am thinking about filing for

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In the state of California, I am thinking about filing for Chapter 13. I have consulted an attorney in Oakland about doing this. However, I am also considering not doing it. Her fees will be about $4500.00 plus court filing fees of about $850.00. I have about $60,000 in credit line and card, unsecured debt that is more than a year old without payment. I also have $138,000.00 in student loans that I realize I can not bankrupt? The two highest lines are for $24,000 and $ 7400.00. Both were with Wells Fargo and have been written off by them. FAICOLLECT, INC. Bellevue, WA bought them. I believe they are the first to buy them. Some of the other accounts range from $1400.00 to $7000.00 and all of them have been written off by the original creditor. Some have been sold twice. Two questions:

1) If I use an attorney and that attorney settles the debts for a percentage and I begin making payments or pay them off, will the agencies ever go after my wife for the balances once they find out I am married. We have different names and her name was not on any of the accounts that I will bankrupt. However, we are divorcing and our marriage will be public record--or more easily public record since we were married 15 years ago? She was totally unaware of my obtaining the credit lines and cards. Community property considerations here?

2) If I do not use an attorney and negotiate a percentage payoff of say 25%--which is what they are asking for in some cases where they send me a "Last Chance" letter etc..? Same question applies here about them finding my wife 2-3 years from now and suing her for the total or balance amounts? DOES THIS HAPPEN?

Thank You,
XXXXX XXXXX
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 3 years ago.
1) If I use an attorney and that attorney settles the debts for a percentage and I begin making payments or pay them off, will the agencies ever go after my wife for the balances once they find out I am married. We have different names and her name was not on any of the accounts that I will bankrupt. However, we are divorcing and our marriage will be public record--or more easily public record since we were married 15 years ago? She was totally unaware of my obtaining the credit lines and cards. Community property considerations here?

A: California Family Code 910 makes the community property of a marriage liable for the debts of either spouse incurred before or during marriage. If you have community property, and it is divided during divorce, a creditor can attempt to reach the one half distributed to your spouse as part of the divorce action. As a practical matter, most creditors do not attempt to do this, because of the investigation and litigation costs.

However, if you incurred student loan debt directly from the federal government or from a government-guaranteed agency, such as SallieMae, then that agency may well decide to try to reach the community property distributed to your spouse -- because the agency has unlimited financial ability to do so.

2) If I do not use an attorney and negotiate a percentage payoff of say 25%--which is what they are asking for in some cases where they send me a "Last Chance" letter etc..? Same question applies here about them finding my wife 2-3 years from now and suing her for the total or balance amounts? DOES THIS HAPPEN?

A: Same answer -- except that for most ordinary debts, unless suit is brought within 4 years of the date that the debt first becomes delinquent, recovery is barred by the statute of limitations (nb., not applicable to the student loans). Code Civ. Proc. 337.

Hope this helps.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!


Customer: replied 3 years ago.

If I deal with the creditors myself, do you have any idea of what percentage payoff I could arrange with them given the time and amounts?

Is the attorney going to be able to get a better percentage? Our settlement agreement is simple and says that each will pay their own debts. She knows the trustee in Alameda County very well and says that the trustee will not even look at my checking account amounts etc...

Thanks

Expert:  socrateaser replied 3 years ago.
In my experience, claims by attorneys and debt relief programs that they can achieve a settlement of your debts better than you can do yourself are largely fantasy.

Creditors will negotiate based upon their internal policies -- beyond that they won't negotiate at all. They will simply charge off the debt and sell it to a debt collector. Then you can negotiate with the debt collector knowing that it purchased the debt for no more than 10% of its face value. Ultimately, the only leverage that a debtor has is proof of personal insolvency and the threat of Chapter 7 bankruptcy.

If you are in that position, then you can tell the creditor or debt collector that unless they agree to reduce your debt to an amount that would be less than the cost of your Chapter 7 fees, that you will have no alternative but to file for Chapter 7 and wipe out all of the debts.

In the end, for practically every debtor, the solution ends up with a Chapter 7, and everything that happens before that is just spinning wheels in the mud -- due to a sense of personal indignation to the idea of bankruptcy.

Just so you know, some of the people who overcame that problem in the past and filed for bankruptcy, include:

Donald Trump
Walt Disney
Henry Ford
Milton Hershey (Hershey's Chocolate)
H.J. Heinz (57 Varieties -- Ketchup)
P.T. Barnum (circus entrepreneur)
Abraham Lincoln
Thomas Jefferson (more than once)

Get the picture? For a consumer bankruptcy attorney referral, see this link.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

Customer: replied 3 years ago.
Chapter 13 is not as powerful in this situation?
Expert:  socrateaser replied 3 years ago.
If you cannot satisfy the "means test," then you will be forced to use Chapter 13 -- which will require you to live on an extreme austerity plan for the next 5 years, so you can pay off part of your debts before receiving a discharge. Unless you have real estate that you're trying to save, then Chapter 7 is always the preferred solution.

To see if you can satisfy the means test, click here.

Hope this helps.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34828
Experience: Attorney and Real Estate Broker -- Retired (mostly)
socrateaser and other Bankruptcy Law Specialists are ready to help you
Customer: replied 3 years ago.
In our Settlement Agreement, we list all of my debts as NOT being community property. Would that affect what you have said about the collection agencies coming after my wife for half of any amount unpaid after the bankruptcy?
Customer: replied 3 years ago.
Question around the "Means Test". Do my private disability monies received during the six month period count as income?
Expert:  socrateaser replied 3 years ago.
Your creditors are not parties to your divorce settlement agreement. The agreement with your spouse has absolutely no legal effect on the community property character of the obligations, from your creditor's perspective.

Re means test income, all income except Social Security is counted in the calculation. Bankr. Code 101(10A).

Hope this helps.
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34828
Experience: Attorney and Real Estate Broker -- Retired (mostly)
socrateaser and other Bankruptcy Law Specialists are ready to help you

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