The California Northern Bankruptcy Court is the area or district that our firm covers. California has four bankruptcy court districts – California Central Bankruptcy Court, California Eastern Bankruptcy Court, California Northern Bankruptcy Court, and California Southern Bankruptcy Court. Each district is made up of different divisions. Each division has a different court location and different practices and procedures.

People sometimes ask me if I will go to a different district so I can take their case. This is something that I rarely do because of the additional time that I would have to put into handling the case. It is usually best for me to refer the person to a colleague that works in that district. Not only would I have substantial additional travel time but in most cases I would have to spend time finding out what the local rules require and what practices vary in that district.

Isn’t the Bankruptcy Law the Same in Every Court?

It’s true that the federal law is the same for all bankruptcy courts. But it’s equally true that each district has its own specific procedures. Not only that, but each division within a district has its own local rules and practices. California Northern Bankruptcy Court has an Oakland Division, a San Jose Division, a Santa Rosa Division, and a San Francisco Division. Each of these divisions has its own judge(s) and trustees and its own local practices and policies.

What Counties are in the California Northern Bankruptcy Court District?

California Northern Bankruptcy Court encompasses the following: Alameda and Contra Costa counties are in the Oakland Division. San Benito, Santa Clara, Santa Cruz, and Monterey counties are in the San Jose Division. Del Norte, Humboldt, Lake, Marin, Mendocino, Napa, and Sonoma counties are in the Santa Rosa Division. San Francisco and San Mateo counties are in the San Francisco Division.

If you are considering filing bankruptcy find out what division and district your prospective attorney is familiar with. It is generally best to choose one who has some experience in the court where you need to file.

Other California Divisions can be found at the United States Ninth Circuit Court Locator.

Additional N posts and a place to find bankruptcy attorneys in other areas:

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What is this “Means” Test I Have to Pass?

The means test is used by the courts to determine eligibility for Title 11 of the United States Code Chapter 7, or payments in Chapter 13 bankruptcy. It was designed to prevent debtors who have sufficient financial means to pay a portion of their debts from liquidating them entirely in a chapter 7 bankruptcy.

During the Great Depression, the test was used to screen applicants for such programs as Home Relief in the United States, and starting in the 1960s, for benefits such as those provided by the Food Stamp Program. In 2005, the United States bankruptcy laws changed by adding a means test to purportedly prevent wealthy debtors from filing for Chapter 7 Bankruptcy. This 2005 BAPCPA change is found in 11 U.S.C. § 707(b).

If you are in the military or have a majority of non-consumer debt you are exempt from the means test income guidelines. Non-consumer debts are mainly those incurred for business or profit purposes, tax debt and tort debt.

Is Your Income Less Than the Median?

Debtors whose income is below the state’s median income pass the means test. To check your median income you must first determine your household size. Gross wages, business income, pension, family support, unemployment, regular gifts and other income is included. Social security payments are not included.

The median California incomes as of March 2012 are:

1 person – $47,683

2 persons – $61,539

3 persons – $66,050

4 persons – $74,806

5 persons or more – Add $7,500 for each person in excess of 4.

If your income is below the median you go no farther with the form or the calculations. STOP you are done. You can file for chapter 7 and do not need to complete the rest of the form.

What If My Income is Over the Median?

In Marin County we often see the situation where the income exceeds the median but there is not enough left to pay the creditors. In this case the long form of the means tests must be completed. The long form factors in expenses like mortgage payments, payments for taxes, insurance, costs of education, healthcare costs and insurance costs. Most people who need help find that they pass the means test.

If you pass the means test it means that you can file a chapter 7 bankruptcy. Just because you can file under chapter 7 doesn’t mean it is the best chapter for you to file under. If you are trying to catch up with mortgage payments or have unsecured liens on your property a chapter 13 would likely benefit you more.

Please see the following for more M posts:

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What do you mean “lift the bankruptcy stay?”

The automatic stay is a major advantage to filing for Bankruptcy. After you file no one take any action to collect a debt, enforce a judgment, garnish your wages, take your property or continue with a lawsuit unless they lift the bankruptcy stay. There are some exceptions such as the requirement to keep paying child support.

Who lifts the bankruptcy stay?

A mortgage holder or automobile lender might want to lift the bankruptcy stay so they can take some action to pick up a car or foreclose on a mortgage. In order to lift the stay, a motion must be filed in court and heard by a judge. With this process you get the opportunity to convince the court that the creditor is wrongfully trying to take your property, or you aren’t really behind in your payments, or any other defense you may have to the motion to lift the stay.

Most often happens in a chapter 13 when payments are behind.

This most often happens in a Chapter 13 if you fall behind in your payments to a secured creditor. They want to repossess the automobile or foreclose on the home. If you have been making your payments it is hard for them to do anything.

What can you do?

You may be able to restructure your bankruptcy plan payments to catch up. You may be able to get extra time to pay. If your requests are reasonable a judge will grant them.

If you have received a motion to lift the bankruptcy stay, be sure and talk to your attorney about it. You have to respond to the motion and ask for a hearing or the creditor will get what they ask for.

You’ll want to look at your situation carefully and decide if a change in plan will work or if there really isn’t a workable option. It might be that you can’t afford to keep that property and should consider letting it go.

L is also for:

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K is for 401k

401k Plan – Can I file for bankruptcy if I have a 401k plan?

Certain accounts can’t be touched during a bankruptcy filing and the 401k is one of them. Under the bankruptcy code a 401k is not property of the estate and creditors have limited access to it.

It makes sense if you think about it. The federal government has set up bankruptcy as a way of helping people get back on their feet and recover from financial challenges. If it was required that people first use up all their retirement funds, these same people would likely require government assistance when they reach retirement age.

Warning If Only One Participant

An exception to retirement plans not included in the estate exists for those that have only one participant, such as single employee corporate plans, and some other plans originating in self-employment. These plans may be property of the estate and may be vulnerable to creditors unless subject to an exemption. Get good professional advice if this describes your retirement plan.

Be Careful of Borrowing Against a 401k

Outstanding 401k loans can present a problem in bankruptcy. Since they are not considered debts, they are not dischargeable. They are also not considered special circumstances that are deducted when calculating the long form means test.

In a Chapter 13, the 401k loan can be repaid as part of the plan.

If you are laid off or switch employers the entire loan balance becomes due and must be paid within 90 days to avoid a tax penalty. You can pay this balance with a credit card. If you do it right before filing bankruptcy you’ll have another problem, as the charge will almost certainly be challenged as abuse.

The warning is – do not use 401k funds to pay off dischargeable credit card debt.

Other Lawyers Playing the Bankruptcy Alphabet Game:

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J is for Joint Filing

Is Joint Bankruptcy Filing For Us?

Couples often ask me if they should file separate bankruptcy petitions. “We have our own debts and don’t think we should file together,“ they say.

California is a community property state

Those debts the couples think are separate usually are not. Unless the debt was incurred prior to the marriage it is a community debt even if it is only in one name. In addition, if there is not enough separate property to pay separate debts the community assets can be reached by creditors.

Filing Jointly

If both spouses need the protection of the bankruptcy court it is usually easier, more efficient and more economical to file jointly. A joint filing will only require one filing fee. Separate filings will require two filings fees, one for each party. All community and separate assets and liabilities are listed whether filing jointly or separately. If the couple files separately, they need to list everything anyway so it may make sense to file one time and list everything together.

Separate Households

If a couple has been separated for a while and set up two distinct households it might be easier to file separately. Sometimes the spouses cannot communicate well and one spouse doesn’t have all the information needed on the other spouse’s income and expenses. In that case it would be better to file an individual bankruptcy.

Nothing in the law requires a couple to file jointly. The decision should depend on the specific circumstances of the couple involved.

More Bankruptcy J’s:

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I is for Income

What income do I need to disclose in my bankruptcy?

All of it gets listed one way or another. Your wages, commissions, bonuses, regular contributions to the household by a family member or housemate, retirement and pension income, workers compensation and unemployment. Loans don’t count and one-time contributions also don’t count.

Means Test Income

For purposes of the means test, the U.S. Bankruptcy Code defines current monthly income as including: “any amount paid by any entity other than the debtor (or in a joint case the debtor and the debtor’s spouse), on a regular basis for the household expenses of the debtor or the debtor’s dependents (and in a joint case the debtor’s spouse if not otherwise a dependent)…” Benefits received under the Social Security Act, payments to victims of war crimes or crimes against humanity on account of their status as victims of such crimes, and payments to victims of international terrorism or domestic terrorism on account of their status as victims of such terrorism are excluded from the means test.

The means test looks back at the past six months on income as defined above. If you file a bankruptcy in January, the past six-month (or look back) period is July through December. It is this six-month period that will determine what your average annual income is. You must compare your average annual income based on the past six-month period to the median average for your state to see if you qualify to file a Chapter 7 bankruptcy. If your income is too high to file a Chapter 7 you may still qualify to file a Chapter 13.

Income on Schedules and the Statement of Financial Affairs (SOFA)

There is a Schedule I for Income where you list your monthly income including Social Security payments and other income that might have been excluded form the means test look back income. This schedule will be compared with your expenses that are listed on another schedule. One of the bankruptcy complexities is that income and financial information is listed in more than one way within the same bankruptcy case.

There is also a question on the SOFA that asks for the past several years of income broken down by wages and other types of income. Your answers to these questions can come form your income tax returns.

For another slant see Jay Fleischman’s I is for Income. Also see Cathy Moran’s I is for IRS and Christopher McAvoy, I is for Income Tax Refunds.

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