Personal Bankruptcy In Bc
British Columbia is among the provinces across Canada that has the most prosperous economic well-being. The economic prosperity equates to the fact that residents from British Columbia are more responsible for paying off debts. In previous years, Canadas consumer debt outgrow its national average rapidly than expected, while earlier in the same year, BC residents were able to yield a significant decrease in their consumer debt.
Regardless of reducing consumer debt, Several BC residents are still struggling to overcome their indebtedness. In fact, BC has an extreme level of consumer debt as compared to other provinces in Canada. Most of the residents in BC are trying to seek certain alternatives to cope up with their debts before it becomes inevitable. These alternatives include debt settlement, debt consolidation, credit counseling, and a consumer proposal. While these options are feasible and less damaging, some Canadian would likely prefer filing bankruptcy in BC to clear their debts.
Bankruptcy Vs Credit Counseling And Debt Consolidation
There can be advantages to doing debt negotiations and consolidations, and there are many companies out there who offer those services.
If you can work out a payment plan that works for you, then great, but here are a few important points to consider and keep in mind:
Doing the above, however, may still not be your best option.
See my article on Bankruptcy and Non-Bankruptcy Debt Solutions for more information.
Bankruptcy Laws In Ontario
- The Ontario Executions Act defines which assets are exempt from bankruptcy, besides those defined under the Bankruptcy and Insolvency Act.
- The Ontario Limitations Act defines the statute of limitations for debts that were sold to a collector. In most cases, the statute expires after two years. If a debt is past the statute of limitations, you may not need to file bankruptcy to deal with that debt.
- The Personal Property Security Actrequires creditors to register their interest in any assets that you put up as collateral. Your bankruptcy trustee will search the PPSA database to make sure no creditors have claims to your assets before they can sell them.
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Can You File For Bankruptcy Multiple Times
There are no limits to how many times you canfile for bankruptcy, even if you have received a discharge before. If you want to file for bankruptcy again, you will need to wait a certain amount of time before you are able to discharge your debts again. If you file for bankruptcy before the time limits have passed, then it is likely you will not receive a full discharge.
Your ability to file another bankruptcy and thus receive a discharge are dependent on these things:
- The type of bankruptcy you have previously filed
- The type of bankruptcy you are seeking to file
- How your previous bankruptcy was finalized: either through discharge, dismissal, or dismissal with prejudice
- When you previously filed.
At Resnik Hayes Moradi LLP , we can evaluate your financial situation and advise whether you are eligible to file bankruptcy under any chapter of the Bankruptcy Code. From our offices in Los Angeles and Sherman Oaks, our attorneys have helped thousands of clients throughout Southern California overcome financial hurdles. We are happy to meet with you in a free consultation and answer all your questions about repeat bankruptcy filings.
The Benefits Of An Automatic Stay Of Proceedings
As soon as the trustee files your paperwork, the Bankruptcy and Insolvency Act guarantees your right to an automatic stay of proceedings. This means that all collection actions and attempts to force repayment are suspended immediately while you go through the legal process of bankruptcy. This includes:
- Collection calls
No new enforcement actions can be started, and even current enforcement actions must cease. For example, if you owe back taxes to the Canada Revenue Agency and they are garnishing your wages, the garnishment will stop once you file.
This can give you some welcome breathing room if your wages are being garnished or if youre dealing with threatening calls from collectors.
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How Much Does It Cost To File Bankruptcy In California
The cost to file Chapter 7 bankruptcy is $335 nationwide, but there is a catch. The $335 only covers the filing fee. If you want an attorney to represent you, which you should, youll have to shell out anywhere between $800 on the low end to $2,000 on the high end. These prices reflect a fairly reasonable range for a somewhat typical case.
If there are complicating factors such as significant assets or business holdings, the fee for a lawyer could easily go up. If you had to pin me down, Id say the average cost to file Chapter 7 in California is about $1,500 for a lawyer, plus the filing fee. Of course, those fees will also vary based on the size of the market you live in, with fees in Los Angeles likely higher than in Fresno.
The Chapter 13 filing fee is $310, but cases themselves may be more expensive as you need to work out repayment plan with the court, which will take more of your attorneys time.
The Risk Of Waiting To File Bankruptcy
The point of the above is to encourage you to gather as much information as possible to enable you to make an informed decision about your problems.
Most people wait far too long before looking into bankruptcy as an option and, as a result of those delays, frequently leave themselves in situations where bankruptcy relief is no longer available to them, or at least much more costly.
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Contact A Licensed Insolvency Trustee
The next step is to seek advice from a professional authorized to administer government-regulated insolvency proceedings. Only a Licensed Insolvency Trustee can stop ongoing and pending legal and collection action, including lawsuits and garnishees. Bankruptcy is just one possible debt solution. An LIT will explain the merits and outcomes of various options available to you. Contact your local MNP LIT for a free consultation to discuss the appropriate life-changing debt solution for your unique situation.
California Code Of Civil Procedure Section 704730 Californias Homestead Exemption Statute
Effective January 1, 2021, California Code of Civil Procedure Section 704.730 now reads:
The amount of the homestead exemption is the greater of the following:
The countywide median sale price for a single-family home in the calendar year prior to the calendar year in which the judgment debtor claims the exemption, not to exceed six hundred thousand dollars .
Three hundred thousand dollars .
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.
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How To Claim A Homestead Exemption In Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy, a trustee is appointed on behalf of the bankruptcy creditors to liquidate the debtors assets. This liquidation is subject to one major exemption: the trustee will only liquidate assets that produce value for the bankruptcy estate and its creditors. As it relates to the homestead, if the trustee cannot produce any value for creditors after paying the debtor / homeowner their homestead exemption in a Chapter 7 bankruptcy, the trustee is effectively prohibited from selling the home because it would produce no value. Related to this concept is that the trustee must also pay the ordinary costs of sale, including a brokers fee, along with escrow and title fees. Even further, the trustee may have a rosy view of the homes value. Many times, debtors threatened with a sale of their house are best advised to contact an experienced bankruptcy attorney to negotiate on their behalf to prevent the sale of the property. This settlement in Chapter 7 bankruptcy means that the creditors will receive the certainty of some payment while forgoing the chance to receive a greater amount.
Under Californias new homestead law, more debtors will be able to walk out of a Chapter 7 bankruptcy paying the trustee nothing in what is known as a no asset case because the equity simply wont cover the homestead exemption.
Californias Bankruptcy Exemption Laws Complicate Matters For Debtors
In California, the exemption laws are slightly more complicated than in other states because there are two sets of exemptions, and California is what is known as an opt-out state, meaning federal exemptions are not available. If youve lived in California for two years or more, youll need to decide between the exemptions outlined in sections 703 and section 704 of the California Code of Civil Procedure.
As you read through Californias exemption laws, keep in mind that claiming property as exempt really means claiming equity as exempt. For example, you may own a car worth $30,000, but if it also has an outstanding loan balance of $40,000, youre underwater and there is nothing there to exempt. Trustees and creditors cant attack negative equity. Your property is only vulnerable to the extent it has value over and above any outstanding loans.
What does it mean when your property is vulnerable in bankruptcy? In a Chapter 7 case, it means that your stuff could be sold as part of a liquidation sale by the trustee. You may have heard Chapter 7 referred to as a liquidation, and this is technically true. In a Chapter 7 case, any property you own that exceeds the applicable exemption limit could be subject to sale by the trustee. As a practical matter, most people keep their stuff through the Chapter 7 process however, now you know what it means when we say your stuff could be vulnerable.
OK, with all that being said, now on to the nitty gritty of the California exemptions.
Complete The Bankruptcy Forms
The bankruptcy forms are the same for everyone that files in the same district as you. Some of thenational forms are pretty self-explanatory and easy to complete by yourself. Others, like the one asking you to list your exempt property, can be a little more technical.
If you hire a bankruptcy attorney, theyâll ask you all the questions that they need answered to prepare the California bankruptcy forms. If youâre using Upsolveâs free app, itâll walk you through all of the questions on the forms, then generate them for you.
Since you are the one signing the bankruptcy forms before they are filed with the court, it’s important for you to carefully review everything. You can learn more about the California bankruptcy process by visiting the courtâs self-help center in San Diego or the self-help desk at the Sacramento courthouse.
How Chapter 7 Bankruptcy Works In California
Many people we speak with care about two things:
When comparing debt-relief options, Chapter 7 bankruptcy often wins in both categories over alternatives such a Chapter 13 bankruptcy, debt negotiation, debt management, and debt payoff planning. Lets explore those variables in greater detail.
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What This Means For Debtors
For debtors, the new homestead exemption is extremely beneficial as sympathy is high for borrowers right now. People with expensive homes who are in a high asset bracket are now potential bankruptcy candidates. For example, those with fixed business costs that they cannot pay due to the coronavirus pandemic may now be able to file for bankruptcy even if they have a lot of equity in their home.
Additionally, borrowers struggling between making their mortgage payments and credit card payments may no longer have to choose. Chapter 7 bankruptcy will discharge credit card debts while borrowers can continue to make mortgage payments.
California Bankruptcy Exemptions And Law
COVID-19 Update: As of December 9, 2020, all bankruptcy courts in California are closed to the public. Some judges are canceling hearings. Others are conducting them via Zoom or another similar online tool. The same rules apply to trustees and 341 meetings. Once courts reopen, expect significant restrictions, like social distancing occupancy limits. Also, expect long security check-in lines.
Telephone and online chat assistance is usually available. For the latest information, see the coronavirus emergency page for the United States Bankruptcy Court, Central District of California. The other three bankruptcy court divisions in California have issued similar orders.
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How The Ontario Executions Act Can Help You Save Your Home
In 2015, the Ontario Executions Act was updated to define how much equity you could have in your home that would qualify for an exemption. If you have $10,000 or less of equity in your home, then you are not at risk of losing your home when you file for bankruptcy.
Equity is defined as the current market value of your home, minus the remaining balance on your mortgage, as well as any tax arrears and liens on the property. Lets say your home is worth $200,000. Your mortgage balance is $190,000 and you owe $1,000 in tax arrears, then you have $9,000 worth of equity. In this case, you would not be at risk of losing your home.
On the other hand, if your home is worth $200,000 and the remaining balance on your mortgage is $150,000 and you have no tax arrears, then you have $50,000 worth of equity. Your home would then be at risk of being seized and sold by the bankruptcy trustee.
Its important to consider your home and its equity before you file for bankruptcy. If you have equity in your home, then you may want to explore other options other than bankruptcy. Its in your best interest to avoid filing if youll lose your home.Explore Options to Avoid Bankruptcy
Median Income Level In California
The median income for the Means Test varies by state and is periodically updated to accurately reflect current income levels. The Means Test median income also varies depending on the number of persons in the household, reflecting the reality of multiple income-earners.
For bankruptcy petitions filed on or after May 1, 2020, the median income in California is as follows:
|Number of People in Household||Monthly Median Income|
Households with additional persons benefit from an increased median income level. Income is calculated by looking at the debtors income for the six-months prior to filing. A debtor who previously had a higher income but has been laid off in the last year, for example, would be able to rely on their most recent income to satisfy the Means Test. Speak with a knowledgeable Chapter 7 bankruptcy attorney to discuss your income, your family, and your finances and find out if you are eligible for Chapter 7 bankruptcy.
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What If You’ve Cosigned A Business Loan
Cosigning a business loan makes you equally responsible for the LLC in repaying the debt. In fact, cosigning is the easiest way to make yourself personally liable for the LLC’s debts.
Since your co-signature is a personal guarantee of your debt obligation, creditors may pursue your personal assets when the LLC defaults on the loan. Many business owners cosign loans when the company is new without many assets. They may even offer collateral to approve the loan, which can place your house or other personal assets at risk.
When a creditor goes after your personal assets, the situation is commonly known as piercing the corporate veil. The corporate veil is pierced if the credit can prove the LLC was created solely to protect its owners from liability.
A court may choose to pierce the corporate veil if:
- The company did not follow certain formalities, such as holding business meetings and keeping minutes.
- Certain LLC members had too much control over the business.
- LLC members used personal funds alongside company funds.
- The LLC did not have sufficient capital when it was formed.
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California Exemption System : Protect Your Personal Property
Section 703 contains Californias second exemption system, otherwise known as the wildcard exemptions. Typically, debtors without much home equity or who dont own real estate at all elect to utilize section 703 because it provides greater protection for personal property. Code Civ. Proc. §703.140
Here are highlights of the 703 exemptions.
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So How Do I Qualify For Chapter 7 Bankruptcy In California
Chapter 7 bankruptcies are intended for people who cannot afford to pay any portion of their debts. However, you must first pass an income evaluation to qualify for a bankruptcy discharge in Chapter 7.
If you pass the California bankruptcy means test , you can erase most unsecured debts through Chapter 7. Unsecured debts discharged in Chapter 7 include medical bills, personal loans, some old income tax debt, old utility bills, credit card debts, and most personal judgments. Unsecured creditors hold debts that are not secured by collateral.