What are the Ramifications of Cash Advances

By Donald A. Hayes, Attorney at Law

Section 523(a)(2)(C) of the Bankruptcy Code specifies that cash advances on credit cards aggregating more than $1,000 which are obtained within 60 days prior to the filing of bankruptcy are presumed to be nondischargeable. The creditor can file a complaint to determine dischargeability of that specific transaction in the bankruptcy case. The burden is then shifted to the debtor to produce evidence to rebut the presumption of nondischargeability. Ultimately the burden of persuasion is always upon the credit card company to establish that the debt should not be discharged. The law was enacted to prevent debtors from Aloading up@ or going on buying sprees in anticipation of bankruptcy. Continue reading

What Does > Means Testing = Actually Mean?

By Donald A. Hayes, Attorney at Law



For the third consecutive year, a record number of consumers have filed for bankruptcy protection during 1998. According to the Administrative Office of the U.S. Courts, nearly 1.4 million non business bankruptcies were filed in 1998. When compared to only 44,367 business bankruptcies, it works out to 31.5 consumer filings for every business filing. As usual the Central District of California was the busiest bankruptcy court in the country with 116,194 new filing during 1998. The number of new chapter 7 filings alone increased last year and for the first time set a record of more than 1 million new filings. Continue reading

What Happens to Secured and Unsecured Debts in Bankruptcy?

by Donald A. Hayes, Attorney at Law


When I receive a phone call from someone seeking information concerning the Bankruptcy process the conversation goes something like this. Have you ever filed before, are you in trouble with a home loan, income taxes, a lawsuit, a garnishment, or credit cards? Do you have any equity in your house, do you own any other real estate, and what are your assets? These basic questions tell me a lot about what type of bankruptcy I think you can benefit from most. A Chapter 7 bankruptcy will enable you to discharge all of your secured and unsecured debts with certain exceptions. Personal lines of credit, lawsuits and most all credit cards are unsecured debts which are dischargeable, unless they fall into one of the exceptions to the dischargeability rules.   Continue reading

What Property Can I Keep if I File Bankruptcy?

By Donald A. Hayes, Attorney at Law


A trustee who administers a Chapter 7 Bankruptcy case will seek to take possession of all non-exempt property, sell it and turn it into cash to pay dividends to all unsecured creditors. This sounds very threatening for those of you who are considering filing Chapter 7, however the truth of the matter is very very few chapter 7 cases ever result in a debtor losing any property. In my 20 years of practice, I have not ever handled a case where the debtor lost any of their property by filing Chapter 7. The reason for this is the fact that the Bankruptcy Code provides a well delineated set of exemptions which allows the debtor to exempt and to keep a wide range of property. Continue reading

Reaffirming Debt in Bankruptcy

By Donald A. Hayes, Attorney at Law

Your discharge in bankruptcy relieves you of the legal liability to pay debts that are discharged. You may decide that you voluntarily want to pay a debt that has been discharged and there is no prohibition against your doing this. However, you are not required to reaffirm any debt or sign any agreement regarding a debt that has been or will be discharged in your bankruptcy. If the debt is reaffirmed, about which you can read more here it must be signed by the debtor and his attorney, and approved by the court. Even though the discharge means you do not have to pay the debts that are discharged, in some cases a creditor will have a security interest in some property. This means that the creditor will be able to take it if you do not pay the debt. Continue reading

Point of No Return

By Donald A. Hayes, Attorney at Law


Everyone has a certain amount of credit card debt. In my practice I encounter people with credit card debt anywhere from $10,000 to over $100,000.The minimum payments due on a balance of $20,000 is approximately $600 or 3% of the balance. The minimum payment varies with each card issuer, but 3% is normal. Assuming a 22% interest rate, $366 of the $600 you pay goes toward interest. If your late on your payment, add another $25 or so. So if you do the math, when you are late, making a minimum monthly payment of $600 only reduces the balance by $209! And if you have used the card at all in the last 30 days you may be going into the hole each month even though you are making a payment of $600 a month! It=s easy to see why credit card balances never seem to go down, despite your making regular monthly payments. Continue reading

Don’t Feel Guilty About Filing Bankruptcy?

By Donald A. Hayes, Attorney at Law



Congress has allowed commercial credit card lenders to charge exorbitant interest rates of 21% and higher when at the same time the corporate prime rate, the home loan rate, and the new car rates are all below 10%. If you or I attempted to charge such rates it would be considered usurious and quite illegal. Why is this? The unstated policy of Congress is to allow the free flow of credit to spur the economy thereby maximizing tax revenues and lowering unemployment. As a trade off Congress, by enacting Bankruptcy laws, allows debtors to discharge their credit card, and other debt, so they never have to pay it back. This appears to be a fair trade off until we look closer at who is really making out. Continue reading

Discharging Personal Taxes in Bankruptcy

By Donald A. Hayes, Attorney at Law



Sadly this is tax season and a question often arises: can I discharge taxes in bankruptcy? The answer may surprise you, but yes you can discharge some taxes in bankruptcy depending on the type of taxes owed and other circumstances. Chapters 7 and 13 offer different forms of relief from taxes. The following is a general overview of discharging personal income taxes in Bankruptcy. In order to get a discharge of personal liability for tax obligations in a Chapter 7 Bankruptcy case: Continue reading

Dischargeability and Credit Cards

By Donald A. Hayes, Attorney at Law




Bankruptcy Code ‘523 (a)(2) makes obligations incurred through fraud non-dischargeable. The three basic types of fraud include: (1) fraud other than a statement concerning the debtor=s financial condition in order to procure credit; (2) a written statement respecting the debtor=s financial condition that is materially false, on which the creditor reasonably relies, made with the intent to deceive the creditor; and (3) for obligations incurred for luxury goods and cash advances aggregating more than $925 made within 70 days preceding the bankruptcy. Continue reading

Chapter 13 Bankruptcy – A Lender of Last Resort

By Donald A. Hayes, Attorney at Law


Normally an individual is interested in filing a Chapter 7 Bankruptcy in order to discharge all of their unsecured debts, i.e. credit cards, personal loans, lawsuits etc. However sometimes an individual has become delinquent in mortgage payments, car payments, or taxes and the creditor is threatening to foreclose, repossess, or levy on bank accounts. Filing a Chapter 7 case will temporarily stop the creditor from foreclosing on the mortgage or repossessing the car, but once the bankruptcy case is closed, or if relief from the automatic stay is obtained even sooner, the secured creditor will be allowed to continue with all of its collection remedies and the debtor will lose the property if the default is not cured. By filing a Chapter 13 Bankruptcy, the debtor will be granted protection from the foreclosing secured creditor and will be permitted to file a plan for individual reorganization. Continue reading