Bankruptcy Blog

Bankruptcy Concerns

Written on: August 14th, 2013

It is not uncommon for potential bankruptcy clients to come in for a consultation with their own pre-conceived ideas that are not always fact.  It is always our goal to get these concerns out in the open so we can try and relieve some of the burden  and get down to the facts. Below I have listed a few of the most widely held concerns that I have been asked about:

1)      That once a bankruptcy is filed, I can not keep any assets- that the home, cars and dog will have to go- this is not the case- actually, in most cases, we are able to protect all of the clients property and all of the debt is wiped out in the bankruptcy filing.

2)      That once a bankruptcy filing takes place that they will not be able to get any credit for next 7-10 years- not true- in many cases, once the bankruptcy has been completed and the debt discharged, most individuals receive offers of new credit right away- low balances to start, but generally decent interest rates- this allows individuals the ability to begin rebuilding their credit right away.

3)      That once a bankruptcy is filed, I can not keep my financed home or car(s)- also not true- as long as your payments are current on your financed assets,  you can keep them and continue to pay the lenders- this will allow the individual to continue rebuilding their credit post bankruptcy.

4)      That once a bankruptcy is filed, I will not be able to buy a house for 7-10 years- not true- it is a common rule of thumb that once a bankruptcy has been discharged, after two years, individuals would be eligible for FHA insured loans with competitive interest rates.

5)      That if an individual is married, they can only file bankruptcy if their spouse files- this is also not true- individuals have the right to file a bankruptcy singly even if they are married- community assets held by the married couple must be considered in the bankruptcy filing to ensure the assets are protected and then the individual can achieve debt relief. It is , in most cases, best to file jointly, but it possible for married individuals to file singly.

It is our goal at the Law Office of Thomas Hogan to get all the facts and concerns from our potential clients and do our very best to put them at ease during this difficult time- no one ever wants to have to proceed with a Bankruptcy filing, but in some cases it may very well be the best decision for getting a clean start.

San Jose, CA –After the bankruptcy filing, officials will be investigating the allegations of falsified financial reports that were raised by City Attorney James Penman. This is in connection with the city’s diminished reserved funds that were used to cover up the city’s budget.

The anomaly was discovered by the interim city manager, Andrea Travis-Miller. It was discovered that money was diverted by city officials from the general fund to the liability insurance and workers compensation to balance the city’s budget. The officials were borrowing money from the general fund but were unable to repay it. But Travis-Miller is unable to confirm if there was any intentional wrongdoing.

The city is being probed by the San Bernardino sheriff’s office for several months now and is being followed up by the police department and the district attorney’s office. City Mayor Pat Morris is surprised that such allegations arose. It is widely known that City Mayor Pat Morris and City Attorney James Penman have been feuding for quite some time and the law officials are handling the situation with care to make sure that the allegations are based on actual facts and not just an accusation hurled by one politician to another. Penman had run for mayor but was never able to meet Morris during the election.

City Attorney James Penman raised the issue of falsified budget reports during the city hall meeting. According to him that city officials had been doing this for 16 years but refused to name the guilty officials. He claimed that the city has been covering up the true extent of the fiscal problems. On top of that he stated that he had already alerted an “outside governmental agency” and turned over all necessary evidence. But the strange thing is that he refused to name any official and the exact irregularities that he discovered. In his accusation he also claimed that he only discovered the wrongdoing last February. Sour-graping of a bitter rival?

Going back to the discovery of interim city manager Andrea Travis-Miller and new director of finance, Jason Simpson; they unearthed that the city’s reserves has dropped to $127,000 and as a result compromising its June 15 payroll which requires a fund of about $4 million.

A day before the disclosure of the law enforcement probe came out, a spokesperson for Gov. Brown stated they had no comment pertaining to the legality transfers of funds. What further complicated the fiscal problems was the eradication of the Economic Development Agency which removed a source of revenue for the city.

Since the city will not be able to meet payroll for the coming 60 days, San Bernardino will possibly be the first California city to not go through the mandated mediation before filing for bankruptcy. This will be voted upon by the city council. The 60-day neutral evaluation process is a mandate by Governor Jerry Brown for municipalities that are contemplating on filing for bankruptcy. In the mediation process, the city officials have to hold sessions with the creditors and come up with concessions or compromises. It is considered a slowed death. It was a mandate urged by labor unions and creditors after the Vallejo bankruptcy which voided its labor contracts when it sought the protection of bankruptcy.

San Bernardino’s woes just keeps on piling up…

The impending bankruptcy has sent the city of San Bernardino locals into facing an uncertain future. During its heyday, the city had the Norton Air Force Base and the Kaiser Steel Mill as major employers but when these sources of income closed down, San Bernardino’s economy went downhill.

The city where the very first McDonald’s restaurant was founded in 1940 is just coming to grips with the reality that the municipality is seeking the protection of Chapter 9 bankruptcy reorganization to save itself from enormous debts.
On top of the enormous fiscal and financial problems, the city officials are squabbling with each other trying to find someone to blame for everything that has happened. The public’s interest does not become the top priority because the city leaders are busy trying to push their agendas and politicking for the next election. A public feud has been going on for years between City Attorney James Penman and City Mayor Patrick Morris.

When the bankruptcy issue came up, City Attorney Penman addressed the city council and alleged that 13 of the 16 city budgets had been falsified. So far no word yet if an independent investigation will be conducted either the Sheriff’s Office, District Attorney’s Office or the State Controller’s Office.

It seems that no one in San Bernardino’s local government agree on anything without a fight. It has even been rumored that City Manager Charles McNeely that he will leave his position before his contract even ends because he is unable to convince the reorganized city council to go with his vision on how to rebuild the city. But McNeely denied that he will give up his post but he also did not confirm if he will finish his contract.

Sacramento, CA — With the presidential election coming up along with the ballot voting for the new tax hike in November and the overwhelming budget deficit,  Governor Jerry Brown and his Democratic Party lawmakers have been inundated with threats and warnings on what will happen if the proposed tax hike to cut the deficit should fail come November.

California's New Budget -- Sink or SwimA $91.3 billion state budget has been created and on the other hand  $6 billion worth of cuts has been signed by the lawmakers and Governor Brown in case their initiative fails. That would mean less funding for the local police, shorter school years, and potential tuition fee increases in the California State University systems and the University of California.

The new state budget has been designed so that the people will vote for the tax initiative or else  it or else the consequences will be pretty much catastrophic. These budget cuts will impact the public education system a whole lot and the public school districts are already struggling despite accounting for more than half of the state’s expenses. In the new proposed plan,  the school year could be reduced from the current 175 days to 160 days (of course, there will be some happy students when they hear this). If in case this goes through, California will be 20 days behind from the national average of the 180 days school year.

This new budget plan did not also sit  well with the Republican Party. State Sen. Anthony Canella, R-Ceres, questioned why the budget for education must be reduced to $5.4 billion when the state revenue for this year is higher than that of last year’s. He further added, “maybe you’ll let the kids out of school but the teachers will still be employed and in addition to that, they’ll get their full retirement for the year.

Connie Conway, Assemblyman Republican Leader has this to say, “It’s a disgrace that Democrats  are playing politics with the budget to sweeten the appeal  for ill-fated  taxes at the ballot box.”

Despite the rabid comments of the Republicans based on the recent polls, Governor Brown’s initiative was leading with 52% in favor of the tax initiative and 35% opposing it but the scary part is that the voting is still in November and opinions might change.

Part of the initiative is to provide additional funding to the public universities provided that the tax initiative passes voting and that the schools do not increase their tuition fees. Schools like the University of California are agreeing with Governor Brown’s plan and has agreed to not pursue the 6 percent tuition increase this fall.

According to UC spokesperson Dianne Klein, ” We do think that it’s a positive step toward bringing stability to funding for the University of California but it’s going to take some extraordinary measures to balance our budget without a fee increase.” But if the initiative fails come election day, the California State University and University of California school systems will end up $250 million short of funding from the state which will then create a situation for a mid-year tuition fee hike.

California is almost in dire straits, with Stockton going belly up and being gang banged by economic problems, it is not hard to imagine that the entire state of California might as well end up filing for bankruptcy one of these days. With the new California budget, people are caught between the devil and the deep blue see in their choices. It’s damned if you do, damned if you don’t.

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