We are honored to share that our founding attorney, John Mlnarik, was installed last week as President of the Santa Clara County Bar Association, which represents approximately 3,400 attorneys in Santa Clara County.
The Mlnarik Law Group is giving away 2 tickets to an Oakland A’s game this season! To enter our raffle, interact with us on social media between now and April 30th for your chance to win. Interactions will be worth one to three raffle entries. See below for full contest details:
Contest ends Wednesday, April 30, 2014. Winners will be announced and contacted by TMLG on Friday, May 2, 2014.
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.
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
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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
My favorite holiday is here again: the weekend when Daylight Saving Time returns and, suddenly, the sun is up an extra hour every evening.
What? It’s NOT a holiday? Well, as far as I’m concerned it is. After the dreariness of winter’s long nights (peaking on December 5th, when the sun sets the earliest by our clocks, though if you use a sundial it’s December 21st), the gradual increase in the day’s length isn’t fast enough for me. I truly celebrate the day when, as if by magic, it’s still light out an hour later than it was the day before.
Sometimes, alas, you reach a point in your life when it seems like Fall Back, Fall Back — even in brightest sunshine. For example, maybe illness, unemployment, an underwater mortgage, or something else has led you to run up debts you’re never going to be able to pay off. Interest keeps accruing, collectors keep calling, monthly bills keep arriving.
If so, don’t despair; the law allows you to Spring Forward again and force the debt collectors to Fall Back while you receive a fresh start:
Yes, the word sounds a little scary, and yes the benefits of bankruptcy are partly offset by the requirement to give full disclosure of one’s financial position (and perhaps by a period of bad credit). But other than that, it couldn’t be better; and even though there are some debts that don’t go away (some student loans, some income taxes, unpaid spousal and child support, to name a few), getting rid of all the rest makes it much easier to finally pay everything off.
What are some of the other benefits?
For most people, bankruptcy takes one of two forms: Chapter 7 or Chapter 13. Chances are, if someone has few assets and not much income, Chapter 7 will be the appropriate route; for those who can count on a good future income and/or own valuable assets, Chapter 13 is more likely. For the most part, it’s up to the debtor, but Chapter 7 is unavailable to those who have too much income (which varies depending on the case), and Chapter 13 is off-limits for those who have too much debt (more than $360,000 unsecured or $1,080,000 secured debt).
Chapter 7 allows people to rid themselves of all debt, except a few categories such as those mentioned above. Debtors agree to liquidate almost all their assets, but in California they’re allowed to choose $23,000 of assets to keep — even if that’s all they have. In some cases, debtors can use gifts from friends and family to keep more than $23,000-worth by “paying” (in effect) for the surplus. They’re protected in the meantime by the automatic “stay” until the discharge is entered, so creditors can’t bother them. These provisions help debtors hold onto their car and remain in their home while they look for less expensive alternatives.
Chapter 13 provides protection from creditors as long as the debtor sticks to a payment plan during a period ranging from three to five years. Debtors are excused from almost all unsecured debt (that means credit cards, for one thing). However, they are obliged to settle up with creditors who hold secured debt (usually, that’s the debt for a house or car). Like Chapter 7, Chapter 13 in California allows debtors to keep $23,000 of their property while liquidating the rest. However, they don’t have to liquidate everything: in effect they’re allowed to “buy” their property from the estate. If, say, the debtor’s two cars together are worth more than $23,000, the Chapter 13 plan can provide that unsecured creditors will be paid what they would otherwise have received in a Chapter 7 liquidation.
If this is the season for you to Spring Forward after too long Falling Back, regain this weekend’s missing hour by spending it in an initial consultation with the Mlnarik Law Group. We’ll be there to help you let a lot more sunshine into your life.
- Jim Erickson, Associate Attorney
England passed the first modern bankruptcy law during the reign of that lovable old curmudgeon, Henry VIII. The law’s purpose? Make sure no one could ever fail to pay back a loan without severe consequences. In other words, only one social purpose was served: repayment of creditors — or else.
Although several American colonies and later states experimented with a more rational and humane approach (at a time when bankruptcy was still punishable by death in Merry Olde England), not until 1841 did the USA (or any nation) pass a bankruptcy law whose intent included an equitable system for discharge of debt. Although England in 1705 began to allow discharge, the central purpose was still relief for creditors; in no way did the law reflect any humanitarian concern (or even sound social policy) regarding debtors.
The 1841 law was short-lived, but both the federal government and individual states kept experimenting, now and then, with variations. Finally, following the catastrophic Depression of the mid-1890s, in 1898 a modern federal bankruptcy law was passed, and there’s been one (but not the same one) ever since.
In a way, that’s surprising. One hundred and fourteen years is a long time for laws with the same basic premise to survive without serious opposition. Obviously, it is the “common sense” of our nation that society as a whole benefits from allowing individuals to get a fresh start, rather than spend the rest of their lives paying off creditors.
But it’s even more surprising, in retrospect, that it took an entrepreneurial nation like ours more than a century before finally putting the law in place. After all, the United States is built on the idea of encouraging individual risk, i.e., experimentation in launching businesses with the sober knowledge that a majority of new small businesses fail. Without bankruptcy laws, far fewer Americans would be willing to take the risks and invest the personal savings that, combined, have given us the most dynamic and innovative business environment in history.
And even with respect to those (like me) who have no entrepreneurial talent, the existence of the bankruptcy code benefits society as a whole. Think about it: how motivated would individual workers be if, due to some financial disaster, they had to spend the rest of their lives working only to hand the paycheck over to creditors? That’s far worse than even indentured servitude, which at least was limited to periods of about seven years. We value an incentivized work force because it’s more productive and it’s healthier, psychologically, than the alternative.
In this respect, consider the recent housing bubble and the cataclysm of September 2008 through March 2009. Without the option of bankruptcy, untold numbers would be stuck paying off their underwater mortgages (while no longer living in their old houses) for, possibly, the rest of their lives. An entire generation of productive citizens would be reduced to conduits for the transfer of paychecks to creditors. Instead, all of us benefit by allowing these people a way OUT so that they are motivated to remain IN a productive workforce. It’s good for the few and good for the many.
Obviously, we’ve come a long way since Henry VIII (who perhaps inspired British poet Rudyard Kipling to write, “If you can keep your head when all about you / Are losing theirs and blaming it on you …”). And we’re talking about losing your shirt, not your head. But to sentence the risk-taking part of the workforce to a lifetime of mindless, motivationless labor, with no inspiration and innovation, is effectively to decapitate the economy. Fortunately, back in 1898 a lot of congressmen had a good head on their shoulders — and regarding debtors, our nation no longer has collectively lost its mind.
by Jim Erickson, Associate Attorney
Policy descriptions by John Mlnarik
(Photo courtesy of ExcutedToday.com)
This holiday season do yourself a favor and focus on what matters most. Time with family far away from the crowds at Costco are what I enjoy. Sure you can buy your Christmas cookies but why not spend time with the kids baking them instead!
Tip #1: Cook for yourself- Eating out is expensive and with the average price of eating at a restaurant at $55, you can feast at home and have leftovers the next day.
Tip #2: Shop the thrift and consignment stores- When our daughter recently turned four, we bought her birthday gifts from the dollar store. She was happy as could be and told us that it was her best birthday ever! There are great deals at Goodwill and if you haven’t been in one lately you should check it out. Many merchandise are lightlyused and as good as new.
Tip #3: Make your gifts- Some of the best holiday cards we get are from our friends who have taken the time to make a card for us. And if you think art supplies are expensive,
take a look at some of the packaging and things you already have and find a creative way to use them in your project. I like to think of this as taking the middleman out of recycling.
Tip #4: Watch movies at home- We must have 200 movies at home and have watched most of them only once. Except for the animated kids movies, of course, which we watch over and over again! I like to pull out one of my favorite “adult film”, Jerry McGuire and pretend I’m seeing it again for the first time. What does it mean when Bob Sugar says “It’s not “show friends.” It’s show *business*”? And it gets me every time
when the late great Dicky Fox points to his heart and says “If this is empty”
then bonks his head on the palm of his hand saying “this doesn’t matter”.
Tip #5: Enjoy Saving Money- Instead of rushing out to spend your hard earned cash this Christmas put the money away. The thrill of purchasing something fizzles fast but the security of money in the bank lasts. When you really need something you won’t need to worry about how to afford whatever it might be.
As a young parent I often feel caught up in working longer and harder so that I can provide my family with more things, a bigger house ora better education. But the truth is, happiness isn’t for sale and real learning takes hard work and not high tuition.
So, WAKE UP this Holiday and see things for what they are. Don’t let life pass you by chasing a bigger home, nicer car or faster toys. What you need is right before you and it is FREE!
Merry Christmas Everybody!
- The Mlnarik Law Group staff
Giving thanks is more difficult than it has been in years for so many Americans. As banks foreclose the economic crisis hits home and has become about more than money. Families overextended themselves when professionals told them they would fall behind if they didn’t BUY NOW. Students, young and old took out mountains of loans when shown statistics of graduates obtaining high paying jobs upon graduation. Insight into the phrase “Buyer beware” is at an all-time high as consumer confidence hits record lows.
This Thanksgiving, imagine the executive salesmen of the country far off in their ivory tower while those of us who labor focus on the fundamentals and give thanks for the basic necessities we have that others do not.
We are thankful for our families who love us, for the food we have to nourish us and for our communities that support us. Law firms in your community can help you learn about your rights as a consumer, form a business to provide you work when jobs are scarce and identify protections in the law that you were unaware of.
Join us as we post articles here to answer many of the questions we receive every day. Please comment at your leisure and suggest topics of interest. If you have a specific question, call and set up at time to come in and talk about your problem.
This Thanksgiving, I am thankful for family, friends, food, football but also the opportunity to give back to my community by advocating for them at a time when the sound of their voice may be the most important thing they have left.
- John Mlnarik, Founder/Principal Bankruptcy Attorney