Monthly Archives: February 2012

If I File Bankruptcy Will Everyone Find Out?

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If I file bankruptcy will everyone find out?  The quick answer is no, but like all legal matters, bankruptcy is part of the public record.  The catch is for the public at large to view bankruptcy filings they must have a Public Access to Court Electronic Records (PACER) account and pay $0.08 per page to view the records.  I have never heard of a private individual with a PACER account.  For the most part only attorneys or other legal professionals have PACER accounts.

So who does find out?  The most obvious people that find out are the people or companies that you owe money to.  The underlying goal of bankruptcy is to treat the people you owe money the same depending upon the type of debt that is owed.  All creditors must be listed in the bankruptcy petition schedules to be treated properly.  They will all receive notice of your bankruptcy case directly from the Bankruptcy Court via United States mail.

The next obvious people that find out are those who you give permission to run your credit report after the case is filed or you may have previously given them permission to run your credit prior to filing the bankruptcy case.  Anyone you have given permission for them to obtain your credit report could possibly find out if and when they check your credit.  If you try to purchase a vehicle, apply for credit or purchase a home your credit report will be obtained.

So who else could find out?  In a Chapter 13 bankruptcy you can choose to have the monthly Chapter 13 Plan payment deducted directly from your paycheck each month.  This requires a Wage Order from the Bankruptcy Court and then the order is served on your payroll department.  Whoever handles deductions and making changes to your pay in your payroll department will then know you filed bankruptcy.  Them and everyone they tell.  I in a large company this would probably not matter, but in a small company expect loose lips to pass along that you filed for bankruptcy.

Then there is the long answer.  It depends upon how hard someone searches the internet given how good Google is at their job.  I do not think most bankruptcy lawyers are aware of this, but the Bankruptcy for the Northern District of California posts the Section 341 Meeting of the Creditors calendars on their website.  The calendar lists the name of the person filing bankruptcy, the case number and other information about the date and time of the meeting of the creditors.  The Court’s website only posts these calendars for a limited period of time though.  Once the Section 341 Meeting of the Creditors is complete the Court posts new calendars with the recent cases filed.  The fact remains that Google does find the calendar and if someone Googles your name they could find out you filed bankruptcy.  The Google results showing your name would most likely be buried on page 5 or more of the search results though.

The bottom line is that very few people will ever find out that you have filed bankruptcy unless you tell them, owe them money or they have some reason to deeply search Google results for your name.

Gary Busey Completes the Filing of his Chapter 7 Bankruptcy Schedules and Statements

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William Gary Busey filed the rest of his bankruptcy petition, Bankruptcy Case No. 12-11182, on February 15, 2012.  The section 341 meeting of the creditors is scheduled for March 12, 2012.  Mr. Busey’s bankruptcy petition provides information about his assets, income and expenses.

Surprisingly Mr. Busey’s assets are limited to some personal property with an approximate total value of $26,225.  At the time the bankruptcy case was filed Busey alleges a total of $1,200 in funds in deposit account.  Busy owns no property and alleges his largest single assets is his right to residual income from several television shows and movie parts.

The single largest debt and probable reason why Busey filed for bankruptcy protection is his unpaid taxes.  Busey owes the Internal Revenue Service and Franchise Tax Board a total of $451,297.33 from the years beginning in 1998 to 2009.  The good news for Busy is that around $379,389.33 of the taxes owed is not a priority debt and therefore eligible to be discharged in his bankruptcy.  The remaining $71,908 is a priority debt given that the taxes were not paid for the year 2009 and therefore eligible to be discharged.

Busey’s income is primarily derived from his acting ($14,808.08 a month) and pensions from the Screen Actors Guild and the American Federation of Television & Radio Artists ($4,021 a month).  Busey also receives social security income each month totaling $770 and some residual income each month totaling $131.63.  His income seems to have been pretty consistent from 2010 to present.  The problem is due to the amount of taxes he owes his monthly income is not large enough to make a dent in repaying the taxes.

You may wonder how an actor who is making over $18,000 a month can qualify to file Chapter 7 bankruptcy and discharge his unsecured debts nonpriority debts.  It is not about how much Busey makes each month but how much he spends.  Busey’s expenses exceed his income by about $2,939 each month.  One of the largest monthly expenses other than his various business expenses is his rent totaling $3,595 each month.  Busey spends another $1,680 in childcare, $763 life insurance, $4,500 in taxes, $700 storage unit, it appears $1,158 for his seventeen old daughter and $7,574 in business expenses.

It is unfortunate to hear about an individual who has made millions of dollars during a lengthy show business career seek bankruptcy protection.  Hopefully Busey can recover from his financial woes and provide some stability for his 23 month old son.

Underwater Second Mortgages, Third Mortgages or Equity Lines of Credit and Bankruptcy

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Are you struggling with paying your first mortgage, second mortgage or even third mortgage each month?  Is your house worth thousands less than what you owe?  You are not alone.  Millions of Americans have watched the value of their homes decrease month after month the last four or five years.

Many homebuyers purchased their homes with an 80% first mortgage and 20% second mortgage.  This allowed the homebuyer to avoid private mortgage insurance and put 20% down on the home.  To make matters worse either one or both loans could have been interest only loans.  Interest only loans allow the home buyer to only pay the interest for a period of time.

So you have a home that is worth less than what you owe and you are only making the minimum interest only payment each month on the first and second mortgage.  Any little financial problem will send you into a financial tailspin.  The good news is that bankruptcy can help.

In Chapter 13 and Chapter 11 unsecured liens or loans can be stripped off the property in the plan of reorganization.  How can you get rid of a mortgage in bankruptcy?  Well, if the value of your house is less than what is owed on the first mortgage, then the second mortgage is completely unsecured or underwater.  If the house was sold or foreclosed on the second mortgage company would get nothing, and that is how they are treated when reorganizing your debts in a Chapter 13 or Chapter 11 bankruptcy case.

The key is the value of the house.  The first thing that needs to be completed is a valuation of the house by the bankruptcy court.  A motion is filed with the bankruptcy court asking the bankruptcy court to value your home based upon comparable sales in your neighborhood.  If the second mortgage company accepts the value you believe to be true there will be very little more to do.  If the second mortgage company objects to the valuation an evidentiary hearing or mini-trial as to the value of the house will be scheduled.  Of course the second mortgage company is trying to prove that your house is worth more than is owed on the first mortgage.  If they are successful then the second mortgage is not completely underwater and not removable.  If it is held that your house is in fact worth less than the first mortgage you will be able to strip off the underwater second mortgage or equity line of credit.  You will only have to pay the first mortgage and the lien securing the second mortgage will be reconveyed once the Chapter 13 plan or reorganization is completed.

For more information about underwater mortgages from our bankruptcy lawyers or how bankruptcy can help you, please call our experienced bankruptcy attorneys at 1-877-963-9543.

Bankruptcy Can Happen to Anyone, Even William Gary Busey

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On February 7, 2012, Gary Busey, the well-known actor and television personality filed for bankruptcy protection under Chapter 7 of the Bankruptcy Code.  Mr. Busey filed bankruptcy in the Central District of California, Bankruptcy Case No. 12-11182.  A common statement our clients make almost daily is, “I never thought I would be filing for bankruptcy.”  Well, I am here to tell you it can happen to anyone, just ask Gary Busey.

How many high profile celebrities or athletes that have made millions of dollars in earnings and filed for bankruptcy protection?  I have no idea, but every year there are a few of them.  Mr. Busey’s bankruptcy filing is the first of 2012.  Mr. Busey filed what is called a skeleton petition.  A skeleton petition includes the basic forms necessary to initiate the bankruptcy process.  A skeleton petition does not include schedules A – J, which list the bankruptcy filers assets, income, expenses and debts.  Mr. Busey has until February 13, 2012, to complete the bankruptcy petition or the bankruptcy case could be dismissed.  Mr. Busey owes money to the following people or entities: Carla Loffler, Cary W. Goldstein, Franchise Tax Board, Glen Alpert, Internal Revenue Service, Law Offices of Barry Fisher, Los Angeles County, Progressive Management System, Robert E. Young, Santa Monica UCLA Medical, Waste Management, Wells Fargo and Westside Storage.

The voluntary petition lists a range in value of assets from $1 – $50,000 and debts totaling from $500,000 – $1 million.  It appears Mr. Busey has a no asset Chapter 7 Bankruptcy.  A no asset bankruptcy exists when all assets can be protected by California exemptions and therefore there are no assets transferred to the bankruptcy estate for the benefit of those who are owed money.  Exemptions protect assets like vehicles, your stuff and even your home if it has equity.  Most of the exemptions have caps or limits as to how much can be protected.  Most individual Chapter 7 bankruptcy filings are no asset cases.  It is hard to believe that someone like Mr. Busey has less than $50,000 in assets after all the movies and television shows he has appeared in.

Again, bankruptcy can happen to anyone.  It does not matter how much money you make, but how much money you spend.  Many athletes have high monthly expenses.  Having to pay for multiple vehicles and homes throughout the country adds up quick.  Just ask Antoine Walker, formerly a star basketball player for the Boston Celtics.  When the checks stop coming in each month upon retirement or a slow year or two in the movies the bills pile up.  Nobody really understands until it happens to them though.

For more information about how bankruptcy can help you become debt free please contact one of our experienced bankruptcy lawyers or bankruptcy attorneys in Oakland today.