types of bankruptcies chapter 7 vs 11 vs chapter 13

3 Types of Bankruptcy (2023 update)

Posted by Hale Andrew Antico on

Table of Contents

Types of Bankruptcies: Chapter 7 vs 11 vs 13

There’s a lot of confusion about the types of bankruptcies. Firstly, some clarification on jargon. You’ll hear a lot about bankruptcy chapters. What’s a chapter? Think of it as a bankruptcy type, or a kind, or flavor. While there at least five types of bankruptcies, most people thinking about consumer personal bankruptcy will focus on just two or three bankruptcy types, or chapters, including Chapter 7 vs 11 vs 13.

The type name “chapter” just refers to the part of the Bankruptcy Code, which is Title 11 of the United States Code. For example, much of the bankruptcy laws that cover Chapter 7 bankruptcy starts at 11 U.S.C. 701, and following. The book I have on my desk literally has a section called Chapter 7 – Liquidation.

Listing the Types of Bankruptcies

Ok, so now that we have some basics out of the way, let’s take a look at the different bankruptcy types commonly used when people file bankruptcy.

  • Chapter 7 bankruptcy: the most common bankruptcy type, used by people who don’t earn much income.
  • Chapter 9 bankruptcy: for cities and municipalities.
  • Chapter 11 bankruptcy: reorganization, typically of a large business
  • Chapter 12 bankruptcy: for farmers and fishermen. Not used very much by Los Angeles bankruptcy debtors.
  • Chapter 13 bankruptcy: repaying all or some debt with regular payments
  • Chapter 15 bankruptcy: cases that cross borders, like international law

So many choices! Strangely, almost no matter what you select will be an odd choice. Where does someone even start with such a list when want to file bankruptcy? We can narrow the list down a bit.

Choosing a Bankruptcy Type or Chapter

In narrowing the list down, we notice that there are really two big classes of chapter: it’s either for an individual (consumer bankruptcy), or for a larger entity (government or business bankruptcy)

Personal bankruptcy vs business bankruptcy

The personal consumer bankruptcies are Chapter 7 and Chapter 13. These are the bankruptcy types done by most people who declare bankruptcy. They’re personal bankruptcy or consumer bankruptcy. Why? Because the individuals, the people, filing them, are consumers who are trying to get rid of (discharge) consumer debt, like credit cards, car repos, etc.

Getting down to business

In contrast, the business bankruptcies are Chapter 9 (city government), Chapter 11 bankruptcy (think of General Motors), Chapter 12 (fish or farms), or Chapter 15 (foreign).

What about a mom-and-pop business? Is that a personal bankruptcy since it’s “personal?” Is it a consumer bankruptcy because the people who own the business are consumers who decided to take a risk and start a business? It feels like a business bankruptcy. Or is it closer to a Chapter 11 reorganization like GM? There’s no hard-and-fast rule, but more often than not, a small business has debt guaranteed by the business owner, and can be a consumer bankruptcy. But you’ll want to contact to a Los Angeles bankruptcy attorney about that.

2023 Stats: Bankruptcy Filings for Los Angeles

2022 Los Angeles Bankruptcy Filings (last complete year)
  • Chapter 7
  • Chapter 11
  • Chapter 12
  • Chapter 13

Types of Personal bankruptcies (Consumer Bankruptcy)

Look at the chart above. if you’re like most people, you’re not a farm or fisherman, so chances are you’ll want a consumer bankruptcy (you can’t even see the Chapter 12 slice: most years in our district the number is single digits). So, this really narrows things down for most individuals to Chapter 7 bankruptcy and Chapter 13.

Chapter 7 is where you can’t afford to pay on your debts. Therefore, you don’t have to. Alternatively, Chapter 13 bankruptcy is where you can afford to make debt repayment.

And just for fun, some moreCentral District of California bankruptcy statistics about bankruptcy filings over time. This time, we’re just focusing on newly opened Chapter 7 bankruptcy cases in the Los Angeles area.

Central District of California Bankruptcy Filings

  • Chapter 7
  • Chapter 13
  • Chapter 11

(Credits: filing statistics courtesy of Kathleen J Campbell, Clerk of Court; graphed by Los Angeles bankruptcy attorney Hale Antico)

A few points:

Chapter 7 filings are always more than Chapter 13 and Chapter 11 and Chapter 12 combined. This doesn’t mean Chapter 7 bankruptcy is better; it’s merely what more people are doing based upon the advice of the person to whom they’re consulting.

BAPCPA

Next, Chapter 7 bankruptcy cases spiked in 2005. This was largely due to over-hyped fear that Chapter 7 was going away with the new means test for Chapter 7.

Further, in 2006, all filings went down. This is because anyone thinking about filing bankruptcy did it in 2005 before it was “too late.”

Additionally, after 2007 the Chapter 7 filings were up higher than the 2005 reform. All chapters did. That may partially be due to BAPCPA and the bankruptcy means test. It’s also due to breaking of the Great Recesssion.

Boom and bust

After 2008, Chapter 13 filings really took off. This was largely because of people filing to stop foreclosure and save their home. Sure, there were probably some just paying the smaller filing fee with no intent on following through. Mostly, people were trying to use Chapter 13 to pay back the mortgage lates. This cycle peaked in 2010 with filings 3 to 4 times higher than what they were in 2017.

Finally, the mortgage market stabilized and the economy improved over the next few years. Consequently, bankruptcy filings went down for the next half-dozen years. The last few years leading up to 2019, Chapter 7 filings started trending up slightly.

In 2020, California median incomes are breaking milestones, which seems counterintuitive, since the COVID-19 pandemic hit and caused unemployment to spike up to double-digits for a time. Yet despite the virus pandemic and its hit on the economy, the Los Angeles County median home price remained high.

But what about Coronavirus and bankruptcy? You’ll see that 2020 bankruptcy filings were down across the country because of COVID, and in some chapters in the chart above, down by over 50% with Los Angeles bankruptcy filings compared to the year before. In 2021, Chapter 13 cases were down sharply from 2020, and that was the year we were under lockdown, moratoriums were put in place, stimulus and unemployment money flowed, and we couldn’t get to the court.

October 2022 saw about 20% fewer Chapter 7 filings in the Central Dist than were filed in October 2021. In fact, Oct 2022 marked the tenth straight month that Chapter 7 filings in the CDCA were lower than the same month the prior year. Year-over-year, each month has measured a decrease of at least 20% for Chapter 7 filings (most months over 30% lower), for all of 2022.

On the other hand, also through 10/2022, Chapter 13 filings have been higher each month this year in our district compared to the same month last year with the exception of February.

For the year of 2022 , there were 17,290 Los Angeles bankruptcy new filings of all chapters in the Central District of California. we were down about 25% of filings of all chapters compared to the 2021 total of 23,128, already a depressed year for filings (though, oddly, Chapter 13 filings were up last year). For context, 2019 (the last pre-pandemic year) saw approximately 38,168 filings. This puts 2022 filings down about 55% from before the pandemic hit. And 2019 was already slow. So unless something changes with inflation, gas prices, or recession, 2023 may be another one of the slowest years of bankruptcy filings in recent memory.

Chapter 7 vs Chapter 13

For most people, it comes down to whether to file Chapter 7 bankruptcy vs Chapter 13 bankruptcy. Each side has advantages and disadvantages, and every situation is different.

Key Advantages of Chapter 7 bankruptcy compared to Chapter 13

Chapter 7 bankruptcy has a lot going for it. Focusing only on the major benefits of Chapter 7 vs 13 types of bankruptcies:

  • No debt repayment (usually)
  • Over in less than 6 months (usually)
  • Many people keep all their stuff
  • Usually less expensive attorney fee
  • Only one court hearing (usually)

Key Advantages of Chapter 13 bankruptcy compared to Chapter 7

Chapter 13 bankruptcy is not without its own benefits over Chapter 7. Here’s a look at where it shines:

  • No trustee takes your assets. You keep all your stuff.
  • Transfers and other interesting things you did before filing bankruptcy not an issue
  • Can file bankruptcy again sooner
  • Lets you catch up on mortgage lates and save your home.
  • Feel good about paying back your debt on your own terms.
  • It’s an open door if ineligible for Chapter 7 due to Means Test
  • Automatic Stay bankruptcy protection extends to your spouse and co-signers
  • Not forced to sign a Reaffirmation Agreement to be potentially stuck with debt after bankruptcy

Read our Ultimate Chapter 7 Bankruptcy Guide

Chapter 7 Guide

Is it better to file a Chapter 7 or Chapter 13

The choice in types of bankruptcies leads many people to ask, “Is Chapter 7 better than Chapter 13?” There really is no way to say if it’s better to file Chapter 7 or Chapter 13, as each situation is different. Every client is unique, with priorities and circumstances unlike anyone else’s.

But it seems Chapter 7 Bankruptcy better than Chapter 13

It seems that Chapter 7 is the best of the types of bankruptcies, but again, everyone’s situation is different. How about some examples. Firstly, consider the person who doesn’t make much money, and qualifies for Chapter 7. However, maybe he has a two paid-off cars and some home equity. Or a lot of home equity. Or has filed bankruptcy before. This is not an ideal Chapter 7 bankruptcy.

Secondly, what about the person who transferred some assets in the past four years? Or took out $150,000 from their IRA and spent it all two years ago. They qualify for Chapter 7, but is it wise to file bankruptcy under that chapter? It may make more sense to file Chapter 13 bankruptcy.

Too much credit after bankruptcy

Thirdly, another example. More than a couple of times I’ve met someone who filed bankruptcy, got credit after bankruptcy, then got more debt before a job layoff and they can’t pay and they’re being sued, or suffering a wage garnishment. They need another bankruptcy, but enough time hasn’t passed. Chapter 7 bankruptcy just won’t work here.

These are three examples where someone will want to file Chapter 13 bankruptcy instead of Chapter 7, and we didn’t even talk about people disqualified from Chapter 7 by the means test.

I was told I should choose Chapter 7 Over Chapter 13

As you see, of the types of bankruptcies, Chapter 7 isn’t always better than Chapter 13 bankruptcy. However, some bankruptcy attorneys really only do Chapter 7 bankruptcy cases. These bankruptcy lawyers never really took the time to learn the intricacies of Chapter 13, and as a result, they shy away from them. When all you have is a hammer, everything looks like a nail. And when a bankruptcy attorney only does Chapter 7 cases, everything looks like a Chap 7.

Why wouldn’t bankruptcy lawyers do Chapter 13 cases?

When weighing Chapter 7 bankruptcy vs Chapter 13 bankruptcy, some bankruptcy attorneys don’t even compare; they just do Chapter 7s. Why wouldn’t a bankruptcy lawyer do all types of bankruptcies?

Firstly, Chapter 13 bankruptcy cases take longer. It involves a commitment of between 36 and 60 months. Not all bankruptcy lawyers want to be on the hook for everything that happens over the next 5 years. They want to get the money and run. Heck, I know of a Chapter 13 bankruptcy attorney who gets the fee, then disappears after the first three months. They then hand their clients off to another bankruptcy lawyer to deal with all the things that might arise the next 57 months. The person they bonded with at the consultation bails. Los Angeles bankruptcy lawyer Hale Antico sees all his Chapter 13 bankruptcies through to the end.

Some bankruptcy attorneys never learned Chapter 13 bankruptcy

types of bankruptcies chapter 7 vs 11 vs chapter 13
Types of bankruptcies: Chapter 7 vs 13 vs Chapter 11

Secondly, Chapter 13 bankruptcy cases have a much lower success rate than Chapter 7 bankruptcy. Nationally, about one of three cases have their payment plan finish. Judge Wayne Johnson of the Central District of California (where Los Angeles bankruptcy cases are filed), estimates only 3% of CDCA Chap 13 cases succeed, and approaches 0% where the person files without an attorney.

However, Los Angeles bankruptcy attorney Hale Antico has a Chapter 13 success rate higher than 0%, higher than 3% (the district average) and about double the national average. Over 70% of this bankruptcy lawyer’s cases succeed to the end. Partially, this is due to understanding all the twists and turns of Chapter 13 bankruptcy. Also, it’s because we prepare our clients, so there aren’t surprises. We have more than one tool in our belt, and not every case is a nail. We’ve successfully completed hundreds of Chapter 13 bankruptcy cases in an district where bankruptcy attorneys have a rate of success at just 3%.

Finally, because we succeed in Chapter 7 cases and Chapter 13 cases, we won’t steer you away from the scary thing we never learned. I’m pretty darn good at both, and so I’ll can give you an honest opinion if Chapter 13 is better than Chapter 7 for your situation. Because in many situations, when weighing Chapter 7 vs 13 in the types of bankruptcies, Chapter 7 is not always better than Chapter 13.

Chapter 7 vs 11

Looking at types of bankruptcies, many people want to compare Chapter 7 vs 11 for individuals. This doesn’t always make sense. When given the option between Chapter 7 vs 11 personal it’s like asking what’s better: apples or Thursday. Chapter 7 bankruptcy is for people who can’t afford their debts. Chapter 11 bankruptcy is typically for large businesses, and corporations. Yes, these corporations can be owned and controlled by an individual, so they may be curious about Chapter 7 vs Chapter 11 for individuals. However, the circumstances where that would make sense are few and far between. (disclaimer: Chapter 11 bankruptcy lawyers are a niche in the bankruptcy attorney field, and this one doesn’t do them).

You Keep Using that Word

One reason people compare Chapter 7 vs 11 is because of confusion. 7 and 11 go together on the craps table and convenience stores, so people naturally assume they’re a pairing in bankruptcy. As I wrote above, Chapter 7 and 13 are the real pairing. Most individuals don’t choose Chapter 11. There would have to be a good specific reason. When they say Chapter 11, many people really mean Chapter 13.

Another reason people automatically don’t really mean Chapter 11 when they’re thinking of Chapter 11 is the cost. I don’t know of too many bankruptcy lawyers who will start a Chapter 11 with anything less than a $10,000 retainer, all up front, just to get started. Few people can do that. A larger business might have the resources to do that, or an individual with a more complicated family corporation.

Individual Chapter 11 Does Fit Sometimes

Chapter 11 bankruptcy does provide some additional flexibility over a Chapter 13, and this can be more appealing to the person thinking about a personal Chapter 11. You’ll want to consult with a Chapter 11 bankruptcy lawyer. Additionally, some individuals don’t qualify for Chapter 13 bankruptcy because of the debt limits. This can come up more in Southern California where someone owning a rental property or two can have secured debt exceeding $1.5 million and can’t do Chapter 13, won’t want to do Chapter 7 because of liquidation, and would need to give a hard look at a Chapter 11 bankruptcy for individuals.

Finally, experience dictates that people who ask me about Chapter 11 really mean Chapter 13. We do both Chapter 7 vs Chapter 13, and are upfront that we don’t do Chapter 11 bankruptcies, but know a few good attorneys in the Los Angeles area that do. If interested, drop us a line for some good Los Angeles bankruptcy lawyers that do Chap 11 cases.

Summing up, tl;dr

There are about half-dozen types of bankruptcies. We took a good look at Chapter 7 vs 13 vs 11. But the real comparison is between Chapter 7 vs Chapter 13. While many bankruptcy attorneys steer people to Chapter 7 bankruptcy because that’s all they know, Chapter 13 bankruptcy has some advantages over Chapter 7. When you interview your Los Angeles bankruptcy attorneys, make sure they do both. Our Chapter 7 success rate is over 99%, and our Chapter 13 success rate is over the double the national average.

I’d consider it an honor to get the chance to help you.

Contact us now.

    California bankruptcy exemptions can save your house.

    New! 2023 California Homestead Exemption Increased by Inflation

    Posted by Hale Andrew Antico on

    2023 California Homestead Exemption, increased by inflation

    The 2023 California homestead exemption numbers are already available, and different from last year, and even the original range of $300,000 to $600,000. In fact, in 2023, they top out even higher than $600,000, which helps you save more of your home from creditors than the homestead exemption could in 2022. Why? Because of inflation. The new California homestead exemption is tied to the CPI, or consumer price index. And everyone knows things lately aren’t cheap.

    Basics about exemptions

    Chapter 7 bankruptcy is liquidation; the bankruptcy trustee can take your stuff. They don’t take the shirt off your back, but at some point they draw the line regarding what you can keep. These are the bankruptcy exemptions, and each state has its own. The California exemptions include a way to protect home equity.

    There are two sets of California bankruptcy exemptions. California bankruptcy attorneys call these the 703s and 704s. The California homestead exemption is found in the 704s, at California Code of Civil Procedure 704.730. If you choose this way, you lose other things, including the ability to protect a tax refund. Meet with a bankruptcy attorney to find out what’s best for you.

    The Three Homestead Exemptions in California Before 2021

    The California homestead exemption can save your house.
    Talk to a experienced bankruptcy attorney about the California homestead exemption

    In the old days, and by that, I mean prior to 2021, the California homestead exemption was based on the characteristics of the person filing bankruptcy, not the location of the real estate. It was subdivided a few ways. Firstly, there was the bankruptcy exemption that a single homeowner gets. This was in old subsection (a)(1). Most recently, a single person who lived in a house gets to protect $75,000 of home equity under the California exemptions.

    Secondly, there was a higher exemption for a married person’s residence. This was in (a)(2). The California homestead exemption for a married person is $100,000 in the last year of this system.

    Finally, if you can tick one of three boxes, you would get the superduper $175,000 homestead exemption in California’s bankruptcy exemptions. To level-up and qualify for this, you have to either be:

    • 65 years old;
    • have a disability that prevents gainful employment; or,
    • 55 years old, and make below a certain income level that changes from time to time

    This may seem simple, but what exactly is “disabled?” What does “as a result of?” What is the income level, and which time period is measured? Also, a good thing about the $175,000 California homestead exemption is that it would extend to the spouse of the person filing Chapter 7. So if the debtor is, say, 63 years old, but their husband is 67 but really doesn’t want to file bankruptcy, the 63 year old who does file Chapter 7 bankruptcy gets the $175,000 homestead exemption in California anyway.

    In the right circumstances, someone filing consumer bankruptcy can protect a lot more house equity under this third option, which is less than the minimum after the law changed in 2021.

    The new California Homestead Exemption starting in 2021

    Then, in 2021, the California homestead exemption increased dramatically. This provided tremendous relief to California homeowners. What this means to the person contemplating filing bankruptcy is that more of their home equity can be protected. Why? Because they really do take houses in Chapter 7 bankruptcy.

    Previously, the amount of home equity which could be protected was inadequate and hardly kept up with the inflated Calif real estate. But then in 2020, COVID-19 struck, and people were suddenly unable to pay their rent and mortgages. Partially in response to the pandemic, the state legislature passed and the governor signed a dramatic increase to the California homestead exemption.

    The result is a system which depends upon the location where the house is, and has nothing to do with marital status or age. And this makes sense, as a homeowner in Ventura County probably has a higher home value than someone who owns a home in Lancaster CA. It’s now tied to the median home price for the previous year.

    So, starting in 2021, homeowners who’ve lived at a home for 4 years or more get a minimum of $300,000 of home equity protection, and a maximum of $600,000 of California homestead exemption, based on what is, or was, mysterious data. What exactly is the county median home price? In Los Angeles and Orange County, a consensus slowly formed about the amount of the Los Angeles County median home price. And it changes each year (more on that below).

    But be warned: if you haven’t lived there that long (and there are other factors which could jeopardize the new massive California homestead exemption), you don’t even get the $300,000 minimum.

    Los Angeles County median home price 2023 and Exemption Inflation Calculator

    Read More

    You will want to consult with a qualified bankruptcy attorney before you risk losing your house.

    2023 California Homestead Exemption: Updated numbers

    The 2023 homestead exemption amount adjusts starting on January 1, 2023. Due to today’s historic inflation, the California homestead exemption in 2023 will be higher than in 2022, which was higher than the the initial range of $300,000 to $600,000.

    Why? CCP 704.730 (b) says: “The amounts specified in this section shall adjust annually for inflation, beginning on January 1, 2022, based on the change in the annual California Consumer Price Index for All Urban Consumers for the prior fiscal year, published by the Department of Industrial Relations.” So let’s walk through the progression.

    Warning: there are those who think that the CPI adjustment is applied only to last year’s median, and not last year’s adjusted number. Or put differently, there is disagreement as to whether the CPI adjustments stack up other CPI adjustments, or go only to last year’s median. If the adjustment applies only the most recent year’s median, that will make this year’s homestead exemption lower. Beware!

    In 2021, the top limit for the California homestead was $600,000. Then, in June 2021, the CPI was 297.447, a 4.4% increase from the June the previous year. Applying that factor to the homestead amounts, that would increase both ends of the spectrum to $313,200 and $626,400. As inflation in 2022 is higher yet again, 2023 California homestead exemption will be even more than that.

    Now, in 2023, we do the same thing all over again. With such high inflation recently at 8.27%, the 2023 California homestead exemption will be a little over $675,000. To be more precise, the 2023 inflation-adjusted range of the California homestead exemption is $339,189 and $678,378. To see how these numbers are reached, check out our own custom calculator for county median home price to reach the homestead exemption after adjusting for inflation. This will be helpful for the many counties whose median home price is between these two numbers.

    2023 California homestead exemption chart los-angeles-bankruptcy-net
    2023 California homestead exemption chart

    Fun fact: Do you have to actually live at the home to get the exemption? For how long? Find out more here.

    Be careful in Chapter 7 bankruptcy. It’s not always the best type of bankruptcies.

    Read my 12 crucial tips before filing bankruptcy.

    Do's and Don'ts

    Don’t go it alone

    You really should consult to a qualified Los Angeles bankruptcy lawyer, as you get what you pay for, and it’s not worth risking your home. If you don’t do this right, you’re literally gambling with your house.

    Schedule a Zoom consult with me, and let’s talk.

    bankruptcy attorney

    3 Reasons You Need a Bankruptcy Attorney

    Posted by Hale Andrew Antico on

    3 Reasons Why You Need a Bankruptcy Attorney

    Technically, you don’t need a bankruptcy attorney. But going through this process without one is crazy, and the few pennies saved can cost you your bank account, car, or house. To help explain, here are five reasons why you should retain a Los Angeles bankruptcy lawyer. (Specifically, one who’s been voted best bankruptcy attorney four times and chosen by L.A. bankruptcy lawyers to be President twice).

    1. Bankruptcy lawyers can give legal advice

    Trust a licensed lawyer.

    Sure, you can have a paralegal prepare your documents. But that’s all they can do. They cannot practice law, and cannot even tell you whether you should do a Chapter 7 or a Chapter 13. Only a lawyer (and preferably a bankruptcy attorney) can give legal advice. Sometimes, legal document assistants give advice, and they’re violating California law.

    Only a bankruptcy attorney who has passed the California Bar can give you legal advice. There are lots of people who didn’t pass the bar who claim to know as much as a lawyer. But legally, without a bar license, they’re only allowed to type the information you give them. You are completing the papers yourself, and they just take what you say and type it up. They may offer to do more, but now they’re veering into practice of law territory. And if they’re wrong, you have no one to complain to. They’re not accountable for their mistakes and innocent consumer debtors get burned.

    A bankruptcy attorney, not a dabbler.

    Once you’ve decided to retain an attorney for your debt solution, you don’t want just any lawyer. You will want a legal professional skilled and experienced in this very specialized field of law. Not just anyone, but a bankruptcy attorney.

    Just because a counsel files bankruptcy cases doesn’t make them a bankruptcy lawyer any more than riding in an airplane a dozen times makes you a pilot. There are lots of attorney dabblers out there who will file bankruptcy cases. They’ll also take car accident cases, divorce and custody matters, and then help you plan your will and living trust. But they lack the experience and insight to stay focused on the changes (and danger spots) of this narrow field of law.

    At Los Angeles Bankruptcy, I only file bankruptcy cases, and have stayed focused as a laser beam on this field for two decades. When the law changed in 2005, a lot of bankruptcy lawyers fled the field or diversified taking on dog bite cases or whatever because things became slow. I kept doing only bankruptcy. When the housing crisis and Great Recession came in 2009, I got busy, and saw a flood of new dabblers trying to make a buck off the disaster.

    When the economy recovered in the years after 2014, bankruptcy filings went down, but I remained specialized on just bankruptcy. Now that COVID and lockdowns wrecked havoc with the economy in 2021, the future is uncertain. But what is certain is that I continue to practice bankruptcy cases, and only bankruptcy cases. I’ve helped thousands of people and discharged over $50,000,000 in credit card debt. This dedication is what makes a bankruptcy attorney, and is what you want. There are just a handful of us in Los Angeles. I’m one of them, and would like to help you, too.

    2. It’s affordable with a payment plan

    Affordable payment plan

    A good Los Angeles bankruptcy lawyer has an affordable payment plan. This is how we’ve been able to stay in business for two decades, helping people who don’t have a lot of money. When you consider that you’re going to discharge tens of thousands of dollars of debt, paying a skilled professional a fraction of that is smart insurance.

    You are able to file bankruptcy on your own to try to save a few bucks. But at what long-term cost? “It’s just forms!” Many people who try to do all their own forms end up having their cases dismissed, and maybe have to wait 6 months or more to file again, even if they want an attorney to help them. In the meantime, all their bills and debts and creditors can call again at home and at work or even sue or foreclose.

    Protecting your assets

    And even if the bankruptcy case you file yourself doesn’t get dismissed, you have to worry about whether the bankruptcy trustee can take some of your stuff. You can try to research yourself exemptions and whether you can use a wildcard and homestead, but it can be confusing. And again, a paralegal can’t help you with bankruptcy exemptions because that’s practicing law without a license.

    A skilled bankruptcy lawyer can advise you before you even file your case what risk you may have. Then, in preparing to file, can take steps to minimize any exposure or risk you’ll lose things by properly filling out exemptions.

    And while you might think, “how hard can this be?” There’s still a lot of confusion among bankruptcy attorneys about the California homestead exemption, the L.A. County median home sale price, and gotchas on how to lose the homestead exemption. There are tons of ins and outs, nooks and crannies, and one wrong step and you lose your house. Trust a professional with your valuables. Otherwise, you’re literally betting your house.

    3. We’re respected by peers and appreciated by clients

    So you’ve reviewed bankruptcy FAQ, learned about the types of bankruptcies, know you need to file bankruptcy and now decided to retain a bankruptcy lawyer. But now you just need to find someone that can trust. A lawyer who specializes in consumer debt to help you with something that will shape your financial life for years to come.

    Respected by other bankruptcy lawyers

    We are humbled to have been chosen by some of the best Los Angeles bankruptcy attorneys to be President of the cdcbaa, the largest association of consumer debt lawyers in Southern California. Then after guiding the organization through the COVID chaos, Hale Andrew Antico was elected President for a second term in 2021, and continues to serve on its board of directors. Mr. Antico doesn’t just attend continuing legal education webinars, he hosts and moderates the panels attended by other bankruptcy lawyers.

    Prior to leading cdcbaa, Mr. Antico was selected by his peers and bankruptcy judges and trustees to be President of the Southern California Bankruptcy Inn of Court. This is an organization of bankruptcy judges, bankruptcy trustees, and of course debt lawyers. The Inn of Court’s focus is on elevating the practice of law with presentations while also building relationships between the different groups of members above

    Appreciated by clients

    Hale Antico was honored to be voted best bankruptcy lawyer in local newspapers not once or twice, but four times. This shows a level of trust and appreciation by clients who know the level of service we provide.

    Further, we are blessed to receive so many 5-star reviews on Yelp and Google. This is important when trying to find an attorney not only skilled and experienced in this nuanced specialty, but with the care and compassion for what can be an emotional decision and process.

    Summing Up

    In short, you want not just an attorney, but a bankruptcy lawyer to help you with a confusing maze-like procedure. You’re also going to want someone with an affordable payment plan, who is able to protect your assets so you don’t lose things in the bankruptcy. And finally, you want someone who is respected by other Los Angeles bankruptcy attorneys, and appreciated by the thousands of clients he’s helped for twenty years.

    The choice is simple: Hale Andrew Antico of Los Angeles Bankruptcy .net. I’d be honored to have the opportunity to help you.

    Contact us

    For most people, it really pays to contact a lawyer who knows this area. You get what you pay for. Don’t delay: set up a consultation with an affordable bankruptcy lawyer and let us help you now.


      credit card lawsuit options and shield

      4 Options if a Credit Card Lawsuit Hits

      Posted by Hale Andrew Antico on

      4 Options if a Credit Card Lawsuit Hits

      When a credit card lawsuit strikes, it’s terrifying. However, you have options. None are perfect, but let’s look at some pros and cons and how each of these might work for you, and whether you need a credit card lawsuit attorney.

      How we got here

      How likely is it for a credit card company to sue you?

      First, it helps to stop and look at how things got to this point. It surprises many of my clients when they initially contact me. They ask, “can a credit card or collector sue for missing payments?” The answer is, “yes.” If you miss a payment or two, we all know that a credit card company or their collectors can bug you. Collection harassment is extremely common, and of course a collection harassment lawyer is valuable to protect you.

      Do credit cards usually sue? It depends. However, what many people don’t realize is that a credit card or their collection company can advance from collection harassment to credit card lawsuit. They don’t do this right away, and not every one of your credit cards will take their customers to court in all cases. But as a right and business practice, yes, if you wait long enough, the odds are that one of your credit cards will give you a collections law suit.

      Credit card lawsuit statute of limitations in Calif

      The lawsuit won’t be too soon

      How long will credit cards wait to sue you if you’ve stopped paying? Or put differently, how many months before the credit card sues you? Can they wait too long where they blow the statute of limitations where I have a real defense? The answer, like most things in law is: “It depends.”

      Firstly, credit card companies don’t typically file lawsuits for one missed payment. Or even two or three. It’s possible their collection harassment might produce results. Plus, it costs creditors less money to robocall you incessantly than lawyering up. Consequently, they wait a while if they’re going to file a complaint or summons with the local court for a collections lawsuit.

      The lawsuit usually won’t be at the last minute

      On the other hand, they’re not going to wait until the last minute to sue you either. They know how much time they have remaining on the statute of limitations, and as a rule, don’t wait until the final moment. They want to avoid miscalculating, and now you having the possibility of a defense.

      The statute of limitations can be a successful defense to a cause of action. Each type of lawsuit has a different amount of time. Failure to maintain your payments is breaking your cardmember agreement. That is a contract between you and the credit card company.

      In California, the statute of limitations for a breach of written contract claim is four years. That is, the credit card lawsuit statute of limitations in California is four years. Each state has a different law, so if you’re outside California, check with a local bankruptcy attorney near you like me.

      Your options if a credit card company sues you

      Now we understand how this happened. We can’t change the past. However, you can control how you respond. You can make an informed decision about how to best move forward.

      Let’s start with a disclaimer. None of these options is advice for you, it’s just information, and none of them will be ideal. Each has a downside, and it doesn’t take a trained eye to find the negative in any given situation. The challenge is to identify the positive, and then weigh the good and the bad against your current priorities, future goals, and resources. This is one benefit of setting up a chat with an impartial professional who can analyze things objectively. But before you contact me, read on.

      1. You can ignore the credit card lawsuit

      Yes, that’s right: you can respond by not responding, and do nothing. Doing nothing is an option. No one is saying that ignoring a legal summons or complaint is a good option. In fact, it’s horrible to ignore legal deadlines and impair your legal rights. However, when brainstorming, everything goes on the table.

      If you ignore the collections lawsuit, it will eventually and almost certainly turn into a judgment. A credit card judgment is a terrible, awful, very bad thing. With that, they can collect on the judgment and take your assets.

      Pros: It’s free and costs nothing… yet; avoids bankruptcy; stress of wondering when they get the judgment and your life will change for the worse.

      Cons: Judgment can garnish wages (usually 25% of your net pay in California), empty and levy bank accounts, and put a lien on your home, Also, the judgment grows at 10% annually with post-judgment interest until the balance is paid.

      Ignoring a credit card lawsuit is generally a bad option.

      2. You can defend the credit card lawsuit in court

      Second, you can find a credit card lawsuit attorney and defend the collection lawsuit and respond to it. This involves preparing a legal response which explains valid grounds why you didn’t breach the contract. Note: it’s generally not a valid defense to explain that you don’t have the ability to repay. To win on this, you’ll need to prove that no, you did not break the contract.

      Unless the credit card company sued the wrong person or you’re actually current with your minimum payments or they blew the credit card statute of limitations in your state, chances are there is no valid legal defense. That means that even if you go through the steps of replying to the lawsuit, that there will likely still be a judgment against you.

      Pros: delay the inevitable; avoid bankruptcy… temporarily; chance you could win if you really didn’t break the contract or they waited too long to sue you

      Cons: your lost time, money, and emotional strain of fighting ruthless collection lawyers in court for months or years

      A small warning of caution of defending a collection lawsuit

      How to defend a credit card lawsuit: There are numerous websites selling the notion “how to beat a credit card lawsuit” and how to win and defend a credit card law suit with these 5 common defenses and this one weird trick (and you won’t believe number 4!). Many of these are suggesting stalling tactics or technicalities to clog up the court system with defenses and discovery requests (which will take you a lot of time and energy with which to comply).

      I say the following as someone who provides relief to desperate souls for twenty years. I write also as an attorney who successfully won a case against a large credit card company where a judge ordered them to pay tens of thousands of dollars. Beware of those selling false hope. Yes, you may be able to seek documents, or debt authentication by requesting evidence of chain of custody or lots of other things in discovery. And this may successfully slow down the inevitable end (and result) of the lawsuit. But it may also be frowned on by the judge as bogus or bad-faith defenses or discovery.

      If they can afford a Jedi Knight, they will spend to collect their debt

      However, do you believe that the same credit card companies who pay major movie and TV stars to advertise for them will turn around and hire Barney Fife as lawyers who are so sloppy that it makes the debts noncollectable? Even if one person were to successfully defend a credit card lawsuit in court due to negligent oversight, it’s reasonable to expect the massive conglomerate would immediately shut down that loophole so no one else ever did again.1

      Again, I dedicate my life to help people who are overwhelmed by credit card debt. As a consumer debt attorney, I provide hope and relief to those who most need it. But that compassion must be tempered with truth and reality when appropriate.

      The most likely result of fighting to win and defend a credit card lawsuit will be long, drawn-out discovery. This lawsuit discovery will require hours of your time. It will be a major emotional drain, cause bitter resentment, and a hard-fought battle when the multi-billion-dollar credit card company wins and its lawyers obtain a judgment in court for the debt.

      The “win” of slowing things down will come at the cost of your inner-peace, angry obsession with the evil credit card company, and its bitter disappointment corroding a small piece of our soul.

      However, in some cases, there can be strategic benefit to defending the credit card lawsuit. This, like most decisions in law, should only be done with clear-eyed realistic expectations.

      3. You or a credit card lawsuit attorney can settle with the credit card company

      Third, you have the option of settling the lawsuit. All they want is money. If you’re extremely fortunate, the credit card attorneys will agree to a series of payments. However, don’t expect a significant discount to settle the debt for pennies on the dollar. That ship sailed long before lawyers go involved, and they expect to get reimbursed for costs and fees.

      Further, if they’ve spent the money to take you to court, they usually feel the ‘win’ or judgment is assured. There is little reason to give you a discount or accept $25 a month. As a rule of thumb, credit card companies will negotiate a settlement on a lawsuit with a lump sum payment.

      Pros: You can negotiate a discount and save money on your balance; avoid bankruptcy; have the whole process over; get peace of mind.

      Cons: Typically requires lump sum payment which you don’t have; stress of negotiating with attorneys; time involved of back-and-forth offers and counter-offers.

      “How much can I settle a credit card debt for?” The answer is (as always), “it depends.” Yes, with credit card debt settlement you can really settle a debt for less. However, the opportunity for the biggest negotiated discounts are gone now that the collection has incurred legal costs. At the collection lawsuit stage, you’re not going to settle for 10% of the debt you owe, though it would be a major win if you can negotiate the credit card debt for 50%. You should have at least that amount in cash ready to pay immediately in case you settle your debt for less, as they’ll want a lumpsum payment.

      While you don’t need a debt settlement attorney to negotiate a debt resolution, it helps to have a professional who is outside the situation involved. First, it saves you a lot of emotional wear and tear. Second, this is what we do. Third, if a bankruptcy attorney like me makes an offer to settle a credit card debt, there’s an implicit threat that if they don’t accept, you file can bankruptcy and they get nothing. That kind of leverage can help a credit card lawsuit attorney negotiate a good result.

      4. Filing bankruptcy ends a credit card lawsuit

      Finally, bankruptcy should be the last resort, and usually is. You can file bankruptcy, and that will end the collection lawsuit. The benefit of the automatic stay — typically known as the Code‘s “bankruptcy protection” — means that creditors cannot start or continue any collection activity once they know you’ve filed bankruptcy. It’s an extremely powerful shield with the force of the federal government; creditors can be sanctioned thousands of dollars for willfully ignoring it.

      Now, you should not just run into the safety of bankruptcy without first surveying the landscape. As each case is different, this is really where the major advantage of talking to a skilled bankruptcy attorney comes in. We can advise about any specific risks or benefits to your particular situation. So the following list of pros and cons will be very generalized until we learn your unique facts.

      Pros: peace of mind; stops the credit card lawsuit; protects assets, paycheck, home, and bank accounts from collections; possibility of debt consolidation repayment, which could also be a con.

      Cons: on your credit report for a number of years (but you can rebuild credit after bankruptcy); some cases involve liquidation of assets; payment to a bankruptcy lawyer, (which is almost always cheaper than paying all your debt).

      Closing words

      When faced with a credit card lawsuit, you have options. What you should do when you are sued for credit card debt depends on your unique circumstance, your priorities and goals, and your resources.

      I’ve successfully settled collection lawsuits, which can be done if my client has the ability to offer a lump sum settlement. Payments on a debt settlement are possible, but less likely.

      Doing nothing is the simplest: it literally requires no action on your part. But, it can lead to disastrous results.

      If you’re in Los Angeles County, Orange County, Ventura or Santa Barbara Counties, reach out to me. I’ll provide a free Zoom consultation to those residents for 30 minutes to go over your options, provide the best advice I can, and explain if bankruptcy may help. I vow you’ll get experienced honest advice about what I believe is your best step forward.

      Contact me now


        Footnote

        1It remain the opinion of this consumer debt attorney that large credit companies refuse to spend the money to put in processes to protect codebtors in Chapter 13 bankruptcy. Not enough debtor counsel prosecute violations of the codebtor stay, so credit card companies refuse to take measures to protect themselves and their shareholders. This is quite different from the very common process of ensuring they can prove you owe your debt, as it’s their bread-and-butter to come after you for their high-interest money and how they can afford superstars like Samuel L. Jackson and Jennifer Garner.

        California eviction moratorium

        California Eviction Moratorium Ends, L.A. Renters Still Protected

        Posted by Hale Andrew Antico on

        California Eviction Moratorium Ends, Renters Have Protections

        The California eviction moratorium ends September 30. Foreclosures have spiked as those moratoriums ended. Student loan deferment ends January 2022. But for renters, there are still options, particularly locally with Los Angeles County and City of Los Angeles moratoriums on evictions.

        How We Got Here: September 30 Deadline

        Bill Signed

        Back in June, California governor Gavin Newsom signed legislation extending the California eviction moratorium. While federal eviction protections ended last month, California was still protected. The end date for Calif renter protections is September 30, 2021.

        Legislature on Break

        The COVID-19 Delta variant is running rampant. You’d think that the California state legislature would pass a bill extending the deadline. In June, legislators beat the deadline with days to spare before June 30. However, now, there are just hours to go.

        The legislative session ended weeks ago on September 10. So the people California sent to Sacramento are not there to extend the moratorium.

        Regardless, it appears that state representatives don’t have the will to extend the protections again. “I believed our eviction protections for tenants should be extended beyond September 30. The Delta variant and the end of many unemployment benefits make that more urgent. Unfortunately, some of my colleagues feel differently, and there’s not consensus for that,” said David Chiu of San Francisco.

        So, California’s legislature is out of the picture. This leaves Gov. Newsom as the last hope to extend the landlord restrictions. However, earlier this week, Newsom signed an affordable housing package. Missing in that and his statement was any indication he’d extend the protections.

        What Renters Can Do When California Eviction Moratorium Ends

        Los Angeles County Eviction Moratorium

        First, the Los Angeles County moratorium on evictions is still in place. The Los Angeles County Board of Supervisors extended it to January 31, 2022.

        City of Los Angeles Moratorium on Evictions

        Also, there’s anLA eviction moratorium protecting renters in the City of Los Angeles until August 1, 2022.

        Court Protections for Some California Renters

        Further, California renters still have hope. A renter can submit a declaration that they’re unable to pay the full rent. City of Los Angeles renters can apply for relief of 100% of rent and utilities owed. Statewide, beginning Oct 1 and going through March 31, 2022, renters earning 80% of the area median income will be protected by a process through the courts . If facing eviction in state court, renters will need to show evidence they applied for rental assistance, so this is a key step.

        Bankruptcy Can Protect Renters in Some Cases

        Finally, if there’s the ability to make some sort of monthly payment on back-rent, a Chapter 13 bankruptcy can maybe be an option. Because landlords are sacred cows in bankruptcy, renter protections are thin. But it could mean working out a deal if you have enough income to make normal rent payments, cover living expenses, and still have money left over for catching up quickly.

        In short, while not perfect, it seems the best shot for CA renters with the looming end of the California eviction moratorium is the state program. This is not a guarantee that this will protect renters from a future eviction if taken to court. However, it’s at least one measure California renters can take to try to have a defense.

        cdcbaa logo

        cdcbaa Moderator Hale Antico Hosts Chapter 13 Trustee Panel

        Posted by Hale Andrew Antico on

        cdcbaa Moderator Hale Antico Hosts Panel for Chapter 13 Trustees

        Program focuses on Variances, Particularly in the Age of Covid

        Post-Seminar Update: It was a fun, two-hour cdcbaa program, and the Chapter 13 trustees’ attorneys were very open with their policies. For instance, the panel shared a lot of information in an engaging format. Also, one of the trustee lawyers said it helped to have them share information; they learned a more efficient way to do things. Finally, the bankruptcy lawyer attendees were very involved, asking questions and even bantering with the Chapter 13 trustees’ lawyers.

        chapter 13 antico
        Chapter 13 Trustees’ Counsel Share A Lighter Moment with cdcbaa President Attorney Antico

        Hale Andrew Antico has been keeping busy being a cdcbaa moderator or host of the bankruptcy association programs. On 9/18/2021, cdcbaa President Hale Andrew Antico will moderate a panel with attorneys for Los Angeles bankruptcy Chapter 13 trustees. The two-hour talk will focus on policy changes during the COVID-19 pandemic. Further, the focus will be ontrustee variances between the offices. This will help bankruptcy attorneys know how to best work with each respective office.

        The cdcbaa is the largest local association of bankruptcy attorneys representing debtors in the nation. Mr. Antico is Chair of the Chapter 13 Committee for the cdcbaa.

        Chapter 13 Trustees and cdcbaa Coordination

        In March 2020, the coronavirus pandemic started causing quarantines and lockdowns. Many people in Chapter 13 bankruptcies couldn’t continue making their payments. This caused a lot of concern. This caused the Chapter 13 trustees to have to adjust their policies. The trustees’ offices started developing policies about suspending payments, or keeping tax refunds. That’s the good news.

        The challenge came from each trustee’s office doing things differently. The policies were difficult to track. So, one benefit of a free-ranging panel discussion is to learn which office expects what. Consequently, This will allow attorneys to better anticipate what’s needed or expected. Also, it will make the trustee’s offices operate more efficiently.

        During the two years as president of the group of Los Angeles bankruptcy attorneys, Hale Antico has hosted over a dozen webinars. These information sessions have featured prominent bankruptcy lawyers, trustees, and judges. As cdcbaa moderator, Mr. Antico also takes questions from the group’s members, and tries to stir helpful discussion.

        If you’re not a member of cdcbaa, you can buy tickets for Saturday’s program from the lawyers’ association website.

        cdcbaa president's message fall 2021

        President of CDCBAA’s Message from Hale Andrew Antico for Fall 2021

        Posted by Hale Andrew Antico on

        CDCBAA President’s Message for Fall 2021

        The following was provided to the newsletter of the cdcbaa, the largest organization of Los Angeles bankruptcy attorneys serving consumer debtors, by its two-term President, Hale Andrew Antico.

        We’re approaching autumn. That means the start of school, football, pumpkin spice everything, and this: welcome to our final cdcbaa newsletter of 2021, and the last of my second term as President of cdcbaa. We thought we were turning the corner against the pandemic. But, the dreaded Delta variant has affected many people, causing a new wave of cautions. With it, we as a society, and yes, attorneys helping people, have become somewhat accustomed to a new normal. This means embracing doing business remotely while trying to balance with safely connecting in-person.

        Membership Total Increases

        With that, the cdcbaa is proud to announce that our membership total continues to increase to over 215 members, despite the fact that the year is almost three-quarters over. The cdcbaa hasn’t seen membership levels this high seen since the Great Recession almost ten years ago. Much credit for our growth goes to Membership Chair David Shevitz, the cdcbaa board members on his committee, and their stalwart outreach efforts.

        2021 Central District of California bankruptcy filings statistics

        We’re almost two years into a global pandemic. One would think that with rising membership in a bankruptcy organization, consumer filings would be spiking with an anticipated surge. Yet, filing numbers continue to surprise expectations. In 2021, filings for all chapters in the Central District are down about 13% from lockdown year 2020. And that year showed a total 27% lower than 2019. Thus far in 2021, only two months have broken 2,000 Chapter 7 filings. In contrast, during the 2020 pandemic, eight months last year surpassed that benchmark.

        Changing Legal Landscape

        The California eviction moratorium, which has protected so many renters, is set to expire on September 30, 2021. Mortgage forbearance programs are set to also end on that day. September 30th is also the expiration of student loan forbearance. If not extended, any one of these events may impact consumers and filings, and we must be ready to help those who need it with compassion and skilled expertise.

        There’s some promising news which could help college graduates in the U.S. Senate. Two senators introduced a bipartisan bill which would make many student loans dischargeable in bankruptcy by amending 11 USC 523(a)(8). This potential student loan reform through bankruptcy is long overdue. The Fresh Start Through Bankruptcy Act is still in committee. However, it’s our hope that this bill will become law to help millions of struggling people discharge their school debt, so stay tuned.

        Educational cdcbaa MCLE Programs

        One way to keep informed in this fast-changing world is the cdcbaa’s very popular MCLE programs. This month, I’ll be moderating a panel of Chapter 13 trustees’ staff attorneys. We’ll be discussing their offices’ measures in response to the pandemic such as the CARES Act. We’ll also take a look at their standard procedures, and where there is variance and agreement among the divisions to better help Chapter 13 bankruptcy attorneys.

        Under the leadership of M. Jonathan Hayes and Roksana Moradi-Brovia, the cdcbaa continues to put on timely, informative, and popular programs to inform its members about developments in the law in an everchanging landscape. In May this year, Judge Mark S Wallace and Judge Wayne Johnson led a discussion of lien-stripping and family law-bankruptcy crossover with CDCA.

        In June, we had fantastic programs on the developing issue of 706(b) conversions, as well as state court litigation. July saw two panels: one presenting on postpetition sales and another on nonattorney professionals in bankruptcy. A judge in attendance remarked both hours formed the best program they ever attended! The cdcbaa is appreciative to all those who give their time to present and help keep our members informed with the latest and best information.

        Calvin Ashland Awards Dinner And Honoring Chief Judge Maureen Tighe

        Under the leadership of cdcbaa board member Keith Higginbotham (who also serves on the Bar Advisory Board), the cdcbaa is looking forward to gathering to host our annual Calvin Ashland Awards Dinner this November. We’ll be the awarding the honor of Judge of the Year to a deserving Chief Judge Maureen Tighe. This gala will be held in a ballroom atop the Universal Sheraton with a spectacular view overlooking the San Fernando Valley and Hollywood Hills, so you won’t want to miss out this November.

        The Tremendous Board of Directors

        As always, I’m appreciative of the cdcbaa board of directors. Together, we accomplished so much these past two years. Marcus Tiggs led us on a migration of our popular listserv and added our recorded programs to our upgraded website. Under the stewardship of Treasurer Jeff Hagen, the cdcbaa is financially healthy and strong. Hard-working Daniela Romero edited this newsletter, and many others the past two years. And of course, my vice-president Lucy Mavyan has been key in helping out with numerous projects. She and Tamar Terzian have reached outside of our district to partner with consumer groups in other states.

        And all this doesn’t even mention how tremendous the cdcbaa board of directors was in adapting to sudden change. Responding to pandemic measures and social distancing, we went from an educational organization that presented primarily in person, to one that pivoted to be transformed overnight to online-only, with eight webinars a year, each attended by hundreds of people. The feedback gathered by board member Gary Wallace shows that all this was done by providing outstanding customer service. And for that, I can only give enormous credit to the longtime heart and soul of our organization, celebrating her 10th year helping people, our skilled and talented administrator, Linda.

        Closing Statement: A Strong Organization Poised for Growth and Success

        It’s been an exciting two years, and the cdcbaa is in fantastic shape to face a future that’s as unpredictable as life since 2020 has been. It’s been my honor serve cdcbaa and its members while working shoulder-to-shoulder with our many stakeholders and partners as we weathered through a devastating global pandemic. I’m humbled by our members and board to have been provided this honor, and I look forward to continuing to support the cdcbaa in the years ahead.

        Hale Andrew Antico is President of the cdcbaa and practices bankruptcy law in Palmdale and Santa Clarita for almost 20 years.

        eviction moratorium california

        Eviction Moratorium 2021, California, and Supreme Court

        Posted by Hale Andrew Antico on

        Eviction Moratorium 2021, the Supreme Court, and California

        Supreme Court Rules on Eviction Moratorium

        Sept 30 Update: There are still some renter protections now that the California eviction moratorium ends today. Click for more details.

        In 2021, eviction moratorium by the CDC has been in place since for about a year-and-a-half. It’s been protecting people and keeping them in their homes during a global pandemic. You probably heard that the Supreme Court ruled on the eviction moratorium, ending the protection. What does the Supreme Court ruling mean, and especially to California renters?

        The Supreme Court ruled in a 6-3 opinion that the eviction moratorium was not constitutional, with the three liberal justices dissenting. A key part of the ruling said

        “It would be one thing if Congress had specifically authorized the action that the CDC has taken. But that has not happened. Instead, the CDC has imposed a nationwide moratorium on evictions in reliance on a decades-old statute that authorizes it to implement measures like fumigation and pest extermination. It strains credulity to believe that this statute grants the CDC the sweeping authority that it asserts.”

        Bottom line is that the Supreme Court said that if the eviction ban were to continue, the right way to do it would’ve been through Congress, not the CDC.

        What about the Eviction Ban and California?

        The good news is that the eviction moratorium in California is still in place, for now. Back in June, California governor Gavin Newsom extended the existing California eviction ban until September 30, 2021.

        After yesterday’s ruling , the California governor wrote, “California renters will NOT be impacted by this news, the state’s eviction moratorium remains in effect. We’re focused on ensuring tenants and small landlords get the rent relief they need under California’s renter assistance program, the largest in the country.”

        As a result, despite the Supreme Court ruling, the California eviction moratorium protects Californians until September 30, 2021. Given Governor Newsom’s statement yesterday, it seems that he’s ready to extend protections for California renters into October and beyond.

        READ MORE: Successful court ruling for Los Angeles eviction moratorium

        Bankruptcy and Evictions

        When the California eviction moratorium ends, it’s not clear if bankruptcy can provide much help. In some cases, a Chapter 13 bankruptcy could help cure rental arrears. However, debtors must repay the arrearages for executory contracts and unexpired leases “promptly” in the Chapter 13, per 11 USC 365(b)(1).

        Here’s where it gets interesting. Most Chapter 13 cases are 5-year terms. That doesn’t seem very “prompt.” Given the nature of rental agreements, five years isn’t a reasonable time to cure a one-year lease. Experience shows that it sometimes can be done in six months.

        Most landlords don’t want vacant property, or to have to go find a new renter. Sometimes some money is better than none. A 6-month period has worked in some Los Angeles bankruptcy cases, but it needs to get the consent of the landlord. Unfortunately, there’s nothing to compel the landlord to be reasonable. Each case is different, so it may be worth contacting a local bankruptcy attorney for a consultation.

        fresh start through bankruptcy act of 2021 bankruptcy for student loans

        Fresh Start Through Bankruptcy Act of 2021: Student Loan Reform

        Posted by Hale Andrew Antico on

        Fresh Start Through Bankruptcy Act of 2021: Bankruptcy for Student Loans

        Student Loan forgiveness may be an option soon in bankruptcy

        2022 update: Fresh Start Through Bankruptcy Act of 2021 is still in committee, and nothing appears to be happening with it. However, the Biden administration just gave the Justice Department and Department of Education guidance to make it easier to discharge student loans in bankruptcy. Unlike the FSTBA, the Biden plan doesn’t require anything of the new Congress.

        The Fresh Start Through Bankruptcy Act of 2021 was introduced into the Senate this week. What’s startling about this is that it’s a bipartisan bill, helping its future. The impact of the Fresh Start bill (or FSTBA) is that it would provide student loan forgiveness in bankruptcy. Bankruptcy for student loans hasn’t been an option for decades now, being a massive burden. This student loan bankruptcy reform would change that.

        Bill Summary

        If the Fresh Start bill becomes law, it would eliminate student loan debt in bankruptcy for those student loans that were first due ten years prior. The undue burden test would apply for those newer than ten years. It’s still going to be tied to the means test, making a Chapter 13 a good solution for those who can afford to pay some, but not all.

        In short, bankruptcy for student loans is on the table. But as of August 2021, student loan reform is still in the future. Write or call your senator and if/when it passes, contact your member of Congress. The Fresh Start bill still needs to become enacted into law. Now that student loan forbearance is set to end in 2022, perhaps Congress can get busy on this.

        Deeper Dive into FSTBA

        If you’re interested to learn more about the text of this student loan forgiveness bill and more precise information how it would work, I did a much more detailed write-up on the Fresh Start Through Bankruptcy Act of 2021 here.

        california median income

        California Median Income Hits New High

        Posted by Hale Andrew Antico on

        California Median Income Reaches Historic Milestones

        The California median income is a good guide to how well residents in the Golden State are doing financially. The California economy (until the pandemic) was sitting pretty, and its citizens are earning income. The numbers used to qualify for a “straight bankruptcy” have broken some very notable milestones.

        2023 Update: The 2023 median income numbers were just released, to take effect on November 1, 2022. The California median income for a one-person household is now $69,660, almost $10,000 higher than when this article was written two years ago. Read the updated median income piece.

        Recent California Median Income

        Starting on April 1, 2020, median income for a household of one in Calif has broken the magic $60,000 threshold. The median income for a household of one in the Golden State is now $60,360.

        Even more amazing, a family of four has a California median income of $101,315. This is the first time in recent memory, if ever, that a median household of four in Calif has earned six figures.

        The significance of these numbers — $60,000 and $100,000 — applies to bankruptcy. The Department of Justice uses numbers from the Census as a preliminary measuring stick. They’re used to assess whether a debtor or debtors qualify for Chapter 7 bankruptcy. Not everyone is eligible, with the alternative being debt repayment with high income. In theory, people earning $60,000 and $100,000 would ave a relatively easy time doing a bankruptcy and not repaying their debt.

        See our median income article for a more thorough explanation. Also, you’ll find updated numbers, and the median income amounts used for other household sizes. The values change frequently, and by the time you read this page may have gone down due to COVID-19’s impact on the economy, so check that link for the latest amounts.