The goal of the means test is to prevent abuse of the bankruptcy process by individuals who can actually repay creditors through a Chapter 13 reorganization plan. There is a debate by bankruptcy attorneys nationwide as to why this has not worked.  Nonetheless, the means test is a requirement to determine if a debtor qualifies for liquidation under Chapter 7 bankruptcy, or a reorganization of debts through a Chapter 13 plan.

The first part of the means test looks at the debtors income six months prior to filing the bankruptcy. If the debtor’s income is less than the state median income, they qualify for Chapter 7 bankruptcy.

If the debtor makes more than state’s median income than the second part of the means test is necessary to complete. If after deducting expenses, the debtors disposable income is high enough to pay unsecured creditors than the debtor can pay through a Chapter 13 reorganization plan.

If you have any questions regarding the means test contact an experienced bankruptcy lawyer at Sky Law Group today!

When many consumers are in desperate need for cash they turn to payday loans or check loans. Many of these payday lenders are located in urban areas and target individuals and minorities who are struggling to make ends meet.

The concept behind a payday loan is simple. Consumers write a check for the amount they want to borrow and the lender gives the consumer the cash value minus a fee. Now perhaps the most egregious part is that the annual percentage rate could be be 500% or higher. That is not a typo, five-hundred percent! While some consumers pay back the face value of the loan with fees, many get caught in a continuous cycle of debt by extending such loans or rolling them over for another period. As fees add up and the stratospheric interest rates accrue, consumers are trapped.

Although these loans could help you overcome an immediate need for cash, their value is only immediate. The long term effects of such loans could have you filing bankruptcy quickly than you may think. A payday loan is dischargeable under a bankruptcy similar to other unsecured debts.

Nonetheless, my advice is to steer clear of payday loans, for the potential long term damage to your financial livelihood far outweighs the immediate need for cash.

If you have questions regarding payday loans contact an experienced Los Angeles bankruptcy lawyer at Sky Law Group today!

The means test is one of the new requirements under BAPCPA for an individual filing bankruptcy. The intent of the means test is to prevent abuse of the bankruptcy system. The means test is determined based on an individuals income and expenses. If a debtor does not qualify under the means test for a Chapter 7 bankruptcy filing, than most debtors typically file a Chapter 13 bankruptcy. Debtors might be aware of the means test, but very few understand what exactly is involved with each step.

We will discuss the means test, step by step, in our upcoming posts so you get a better understanding of the mechanics behind the test.

If you have questions regarding the means test, contact an experienced Los Angeles bankruptcy lawyer at Sky Law Group today!

On this special day, it’s important to reflect on everything to be thankful for. Everyday we are embraced by the love of those close to us. This love brings each of us special moments in our lives that leave indelible memories for us to reflect upon. On behalf of our staff, we want to wish everyone a very special Thanksgiving and holiday weekend!

Happy Thanksgiving from the attorneys and staff of Sky Law Group!

Many people in bankruptcy complain that the reaffirmation agreement paperwork is not straightforward and difficult to fill out. Debtors often complain about an additional court appearance and whether the judge will allow them to keep their vehicle. The frustration is obvious because reaffirmation agreements are not simple for the debtor to complete. This is especially true when many attorneys won’t sign or explain the reaffirmation agreement to the debtor.

If you have filed for bankruptcy and intend on keeping your vehicle, lenders will require you to sign a reaffirmation agreement. However, if you choose not to fill out the reaffirmation agreement paperwork, does it automatically mean you will lose your vehicle? Not necessarily. The reason is that many car lenders will allow the debtor to “ride through” meaning that no repossession activity will be taken as long as the debtor remains current on his or her payments. So if the lender allows you to “ride through” and you remain current on your monthly payments, you can keep your vehicle without  a reaffirmation agreement.

You must remember that even though you won’t get any paper statements from your car lender, the vehicle payment is still due. Hence, make sure your vehicle payments are timely made.

If you have any questions regarding your reaffirmation agreement, contact an experienced Los Angeles bankruptcy lawyer at Sky Law Group today.

Often times prospective clients ask if the judge will approve their case or whether the judge will allow their case to go through without any problems. The reality is that most debtors who file bankruptcy never see the bankruptcy judge.

For Chapter 7 clients, the only appearance is the 341a meeting of creditors which is in front of a bankruptcy trustee, not a judge. Thus, the majority of Chapter 7 bankruptcy clients never see the bankruptcy judge.

For most Chapter 13 clients, they only see the trustee at the 341a meeting of creditors and rarely have to attend the confirmation hearing, where the bankruptcy judge is present. The trustees powers are limited and only the bankruptcy judge can make the ultimate decision regarding your individual case. However, the trustee can file a motion to dismiss your case and makes recommendations as to why your case should or should not go through.

Each bankruptcy case is unique so its important to have an experienced bankruptcy attorney file your case. If you have any questions regarding your Chapter 7 or Chapter 13 bankruptcy, contact an experienced Los Angeles bankruptcy attorney at Sky Law Group today!

Debtors often ask if they can purchase or buy real property in a Los Angeles Chapter 13 bankruptcy. Yes, you can purchase a new residence while in a Chapter 13 bankruptcy but you need the approval of the court. It is important you notify your attorney immediately so the proper motion can filed.

Keep in mind that you have to demonstrate to the lender that your income and expenses have stabilized and most importantly you are in a position to repay your loan. With a deflating housing market, it makes sense for some renters to purchase property when their monthly rent payment could be similar to a mortgage payment.

Typically, lenders like to see an individual in a Chapter 13 bankruptcy for atleast two years making steady and timely payments.

If you have questions regarding purchasing real property in a Chapter 13 bankruptcy contact an experienced bankruptcy lawyer at Sky Law Group today!

When filing bankruptcy you must take 2 courses to get your discharge. As discussed before, the first course is your credit counseling course which you take prior to filing. The second course, however, is the one most debtors forget to complete. This course is called the debtor education course.

If everything goes well at the 341a meeting of creditors, debtors assume its all over. But,  it’s not!  Once completed, file Form 23 coupled with the certificate of completion to get your discharge.

If you fail to take your second course your bankruptcy case will be closed without discharge.  If your case has closed without discharge for failure to take the debtor education course, you do have the option to reopen your bankruptcy case. If your motion to reopen is granted, than you can take the debtor education course and get a discharge.  However, there are costs and filing fees involved when reopening your case.

To discuss your debtor education course or to reopen a closed bankruptcy case consult an experienced Los Angeles bankruptcy lawyer at Sky Law Group today!

How long before i can file Chapter 7 bankruptcy again? This has been a very common question this week. If you have filed a Chapter 7 bankruptcy and got your discharge, you must wait 8 years before filing for another Chapter 7 bankruptcy. On the other hand, if you have filed for Chapter 7 bankruptcy and have obtained a discharge and need to file a Chapter 13 bankruptcy you must wait 4 years from the date you filed Chapter 7 bankruptcy.

Many times, I counsel clients and give them financial strategies to implement to prevent another bankruptcy filing. The entire goal of bankruptcy is to give the debtor a fresh clean start to rebuild their credit and their finances. If you have been an avid reader of our posts you will know that such goals require planning and implementation. It won’t happen on its own. Planning is an important part of financial empowerment.  Being proactive about your finances, as opposed to reactive, is imperative.

So, if you have filed bankruptcy in the past and meet the time line requirements above, you do have bankruptcy as an option. But, planning correctly and outlining your goals can prevent a bankruptcy in the future.

If you have questions or concerns regarding your Chapter 7 or Chapter 13 bankruptcy, contact an experienced Los Angeles bankruptcy lawyer at Sky Law Group today!

A chapter 11 bankruptcy, under the U.S. bankruptcy code,  is typically used by businesses to reorganize and discharge debts over a period of years. Sometimes, situations arise where an individual debtor can file for Chapter 11 bankruptcy protection. For example, if the secured interest on your personal residence is over the debt limit for a Chapter 13 bankruptcy than the debtor must file Chapter 11 to protect his or her residence if behind on payments. Yet, the majority of debtors will quickly realize that Chapter 11 bankruptcy is extremely complex and expensive. Just the cost alone, makes Chapter 11 a remote option for many individuals.

Businesses, typically, have no problem paying for the costs and fees of a Chapter 11 bankruptcy and are able to restructure and reorganize their debts under this chapter. Unlike a Chapter 7 bankruptcy, which requires a business to liquidate its assets, a Chapter 11 bankruptcy would allow a business to keep most of its assets and continue operations.

The goal for most businesses in restructuring under a Chapter 11 bankruptcy is to regain profitability. Moreover, new contractual relationships are created between a business and most of its creditors which makes the road to profitability much easier.

In sum, for many businesses facing financial distress with their creditors, a Chapter 11 bankruptcy makes sense. For most consumers, however, a Chapter 11 bankruptcy is rarely a viable option.

If you have any questions regarding a Chapter 11 bankruptcy, contact an experienced Los Angeles bankruptcy lawyer at Sky Law Group today.