How Filing Bankruptcy in 2013 Provides Enhanced Asset-Protection

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Happy New Year! New Year New Life

Many individuals will start the New Year resolving to improve their financial affairs. Though bankruptcy is a great tool, which generally includes benefits such as the discharge of credit card and medical debt, a new exemption scheme, effective January 1, 2013, will give potential filers even more to be excited about.

Exemption Basics

A key protection offered by the Bankruptcy Code is found in Section 522. This section details a debtor’s rights regarding exempt property—property that is shielded from liquidation.

Exemptions are statutory provisions that generally protect individual assets from liquidation based on an assigned dollar value. For example, pursuant to CCP § 703.140(b)(3), debtors are permitted to shield up to $600 per “household” item.  In other words, you can prevent creditors from seizing any of your appliances or furnishings if they are worth less than $600/item.  Under CCP § 703.140(b)(2), you can shield up to $4,800 of the fair market value of your motor vehicle.  There are numerous exemptions that apply in different contexts and can even apply in conjunction with each other.  A vehicle that is valued at $6,000 can be fully protected by combining the Motor Vehicle (b)(2) exemption with the “Grubstake” (b)(5) exemption (see below).

The bottom line is that a careful application of the exemption statutes can often allow debtors to retain their assets during and after a bankruptcy filing.

The 2013 Exemptions

The assigned exemption values change every three years to account for inflation. On January 1, 2013 a new exemption scheme became effective allowing debtors to take advantage of even stronger protections. Whereas a person filing for bankruptcy protection in California on December 20, 2012 would have been able to exempt up to $23,250 in “any property” under CCP § 703.140(b)(5) & (1), a debtor that filed on January 15, 2013 would have been able to exempt up to $25,340 under the same statutes—a $2,090 difference!

More Than a “Fresh Start”

The Bankruptcy Code and the attendant exemptions were created to give filers a “fresh start.”  They were designed with the idea that a person free from burdensome debt would be a more productive member of society.  But the protections offered by the exemptions, particularly the new valuations, provide more than a fresh start—they provide an invaluable tool and an opportunity.  Instead of rewinding and requiring individuals to begin their lives anew, the exemption scheme allows debtors to carry on—without the worry of losing invaluable possessions.

-Caroline M. Reebs, Attorney-at-Law

Financial Crisis and Bankruptcy: Don’t Fear “Fear Itself”

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BOO!! It’s that time of year again — when the days get shorter and darker, the leaves fall, a cold wind blows, and our thoughts might turn to mortality as we reflect upon another summer come and gone. In fact, … Continue reading →

Debunking Myths About Bankruptcy and Retirement

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Happy Seniors’ Day! Debunking Myths About Bankruptcy and Retirement Recent reports highlight an alarming trend:  an increasing number of seniors are burdened by credit card debt and are facing foreclosure.  In fact, according to a University of Michigan Law School … Continue reading →

Facebook Privacy Rights when it Comes to Employment

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Social Media Information as Part of the Employment Process

Aunt Marge just posted pictures of her vacation to Las Vegas, my brother just checked in that he was at a concert in San Francisco, and my status today is reminiscent of the serenity prayer. So what does this have to do with my job? For a growing number of employers, it could make the difference between hiring me and sending me the “Thanks, we’ll call you” letter.

When deciding if an applicant is a good fit for their organization, employers increasingly use a prospective employee’s social media information as an effective source. It raises serious issues, however, to demand that a prospective employee provide a password, or to “shoulder surf” an applicant’s social media website during the interview process. To begin with, such information is arguably private — and it could be an invasion of that privacy to require access. Second, social media sites could provide a prospective employer with information (race, marital status, sexual orientation, etc.) that would violate employment law if it were demanded during the interview process. Third, the prospective employee’s consent is insufficient to protect the employer, because in the context of an employment situation the consent may result from coercion or duress (for those interested in a relevant court case, see Pietrylo v. Hillstone Restaurant Group 2009 WL 3128420 (D.N.J. 2009)).

While no current case law in California exists banning the practice of requiring prospective employees to provide their social media information, both the state and the federal government have proposed legislation to address this issue. The Federal Password Protection Act of 2012 (S. 3074, 112th Cong., 2d Sess. (May 9, 2012)), would prohibit employers from requiring or requesting job applicants to provide their social media accounts as a condition of employment; similarly, the Social Networking Online Protection Act (H.R. 5050, 112th Cong., 2d Sess. (Apr. 27, 2012)), introduced in the House of Representatives, would prohibit employers from requesting user names, passwords, or other access to online content, and would prohibit employers from using information obtained through social media sites to discipline, discriminate against, or deny employment to current or potential employees. In California, AB 1844, amended July 2, 2012, would enact similar protections for employees and prohibit employers from accessing employees’ social media information in making employment decisions.

Social media sites that are specifically related to an individual’s professional career (LinkedIn for example) can arguably be fair game for employers; but it’s a stretch to argue the same for, say, using Facebook to assist in evaluating prospective or current employees’ suitability for employment. And even from an employer’s perspective: why provide fodder for discrimination complaints by individuals who for legitimate reasons were terminated or never hired? Moreover, employers should respect the privacy of their employees. Employers have a number of tools at their disposal to make informed decisions about their employees without resorting to “Facebook Stalking.” Individuals have the right to privacy in their personal lives. Demanding they provide information that is unrelated to their professional careers digs too deep to be anything but an invasion of that privacy. The California constitution codifies that individuals have a right to privacy. If an employer violates your privacy to either deny you employment, or as the basis for some form of adverse employment action then you may have a right to sue your employer for damages.

- Aro Ebenhahn, Employment Law Intern

 

California Homeowner Bill of Rights Signed Into Law

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!NEWSFLASH!

On July 11, 2012, Governor Brown signed the Homeowner Bill of Rights. This important bill extends reforms to help homeowners who are having trouble with their residential mortgage. The most significant aspects of the bill follow:

1. The bill prevents lenders from “dual-tracking” borrowers. This means that when a homeowner is negotiating new terms for a modification with a residential loan borrower, the lender is prohibited from pursuing a foreclosure simultaneously.

2. The bill imposes civil penalties of up to $7,500 for auto-signing foreclosure documents (this process is frequently referred to as “robo-signing”, meaning that lenders file testimony about their possession of original documents and their review of business records without checking the accuracy of their statements).

3. The bill also requires lenders and loan servicers to establish a simple point of contact for borrowers. If you contact the lender, you will be able to reach someone with knowledge of your residential loan who has direct access to a decision maker. This means no more runaround from the lender when you call to check on the status of your modification request.

This Bill is going to protect many Californian residents who are in default, as well as many more who are or will be in the modification process.

If you have questions about how this bill will impact you, or questions about real estate or mortgage law issues, you are welcome to contact real estate attorney Elena Franz at (408) 919-0088 or elena@mlnariklaw.com

-Elena Franz, Real Estate Litigation Attorney

I’m buying a house – should I hire a real estate attorney?

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A real estate attorney is your advocate when it comes to purchasing a home

For most people, their house is their biggest investment. It makes sense to hire a real estate attorney to ensure that you understand all aspects of your transaction with the seller and any regulations related to the purchase.

Homeowner Associations (HOAs)

Review of your covenants, conditions and restrictions (CC&Rs) by an attorney can alert you to items you might be unfamiliar with. More important, it can keep you from buying a property that is already violating a CC&R — thus avoiding liability toward the association or a neighbor later on. There may be restrictions (for example on flooring types, or pets, or turning your property into a rental unit) that you will wish you had known about!

Short Sales & Foreclosures

If you’re selling or buying a property as part of a short sale or foreclosure, additional assistance from an attorney may be beneficial in guiding you through the process. If you’re buying a property that was foreclosed on by the lender, you may need assistance with an unlawful detainer (eviction) action.

Litigation

Sometimes, real estate transactions just don’t work out. For instance, there may be title disputes, or a failure to disclose property defects, or problems with the transaction itself. You will need a real estate attorney to alert you to your rights, and help you enforce them.

Transaction Review

Sometimes you need a real estate attorney to assist with reviewing or drafting contracts. These can range from lease-to-own option agreements, rental documents, to documents memorializing agreements regarding property ownership to documents prepared by another party.

As always, if you have any questions regarding real estate law, please don’t hesitate to contact me.

Elena Rivkin Franz, Real Estate Litigation Attorney

elena@mlnariklaw.com or by phone (408) 919-0088

5 Practical Reasons to Get a Prenuptial Agreement

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1)      Limit Personal Liability for a Spouse’s Business

Just about any business activity entails a certain amount of liability. In some professions, depending upon the potential damages that a would-be Plaintiff might incur, such liability could be enormous. If a business is a community asset, the community may ultimately be responsible for the cost of any damages caused by the business. By defining a business as your spouse’s sole property (instead of the community’s), you can help insulate yourself from any liability.

2)      Prevent a Personal Business from Being Liquidated Upon Dissolution

Many people invest their entire adult lives in developing a business, or inherit family businesses that have been operating for generations.  Without a prenuptial agreement, it is possible for a personal (pre-marital) business to become owned by the marriage. If this happens, the spouses would be entitled to a buyout for their portions of the business upon divorce. Moreover, if one spouse can afford to buy out the other, the Court may be forced to order the business sold.

3)      Control the Amount of Potential Spousal Support

One of the primary reasons for entering into a prenuptial agreement is to minimize the amount of spousal support that one party has to pay the other after divorce.  A spousal-support order can financially cripple a divorcee for years, as a large percentage of earnings are paid to the prior spouse.  Should your marriage end in divorce, proper planning before marriage can help insure that you will be able to move on with your life without having to make years of financially crippling payments.

4) Protect Your Assets from a Spouse’s Creditors

Under California law, debts incurred for the benefit of the community or for the benefit of a community asset are jointly owed by both parties to a marriage.  In certain circumstances, a spouse’s separate property can be sought by creditors to satisfy a debt incurred during marriage.  A prenuptial agreement can help protect your separate property assets, or even your share of what would be community property, from your spouse’s creditors.

5) Minimize Conflicts Over Finances During Marriage

One of the most cited reasons for divorce is disputes over money and finances.  Many couples have different priorities and views on how money should be spent. Under California law, the standard presumption is that income earned through a spouse’s time, skill, or labor during the marriage belongs to the marriage. A prenuptial agreement can change this presumption and allow a spouse to have complete control over his or her finances. When you and your spouse have very different spending habits, maintaining control over your own income and allowing your spouse to control theirs can actually decrease conflict and provide for a healthier relationship.

-James J. Steinle, Family Law Attorney