Bankruptcy Debtor Audits to Resume Monday

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, the United States Trustee Program (USTP) established procedures to audit petitions, schedules, and other information in consumer bankruptcy cases filed on or after October 20, 2006. The USTP contracted with independent accounting firms to perform audits in cases designated by the USTP. Click here to read our original story on this issue.

In January 2008, the USTP temporarily suspended its designation of cases subject to audit for budgetary reasons. Beginning on May 12, 2008, the USTP will resume its designation of cases, although random audits will now be conducted in 1 out of 1,000 cases instead of 1 out of 250 cases.

Do I Have Any More Bankruptcy Hearings?

Question: I just got back from the Meeting of Creditors in my bankruptcy. Will there be anymore hearings before I get my discharge?

Answers: In most bankruptcy cases filed by individuals (Chapter 7 or 13), the only hearing is the Meeting of Creditors conducted by the appointed trustee. In Chapter 13 cases, the court might conduct a hearing on whether a proposed repayment plan should be confirmed and you would be notified of the hearing date by your attorney.

In vary rare cases, a creditor or trustee might conduct something called a Rule 2004 Examination. A 2004 exam "may relate only to the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor's estate, or to the debtor's right to a discharge." These rarely occur.

There may be hearings on those matters such as a creditor seeking relief from the automatic stay to complete a foreclosure. But with those and other very limited exceptions, your Meeting of Creditors will be the only hearings in your case prior to receiving a discharge.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning, insurance subrogation and debt collection.

American Dream, Economic Nightmare

Many homeowners are at a financial crossroads. A foreclosure epidemic in San Diego and nationwide is causing more and more people to seek credit counseling, foreclosure prevention services and protection in bankruptcy. Attorney Carl Starrett was recently featured two-part series by KUSI News in San Diego discussing some of the options available to homeowners in financial distress. Click here to see the very informative story as KUSI reporter Ed Lenderman examines the crisis.

Property Tax Relief for California Residents

With housing prices falling all over California, some homeowners are seeking relief to lower their property tax bills. If the current market value of your property (recent comparable sales) falls below the assessed or taxable value as shown on your tax bill, the California law requires Assessor's Office is required to lower the assessment. This type of property tax relief generally applies to recently purchased property. There are two periods during the year in which the taxpayer may appeal their assessed value for a temporary reduction:

(1) Between March through May: During this period, the taxpayer may submit a written request to the Assessor, indicating their opinion of value and providing supporting documentation, such as sales of comparable properties or a recent appraisal. The necessary forms are available from you local Assessor's office. The next deadline to apply for this type of relief is May 30.

(2) Between July 2 and November 30: During this period, the taxpayer must file an application form. Appeal forms can be obtained and must be filed with the Assessment Appeals Board at your local Assessor's office.

If a hearing becomes necessary, the testimony of a real estate professional is recommended. For more information on how to appeal the assessed value of your home and reduce your property tax bill, please contact us for a complimentary consultation.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning, insurance subrogation and debt collection.

Personal Bankrutpcy and Business Ownership

Question: I wonder a small S corporation and I serve as president. Will my personal chapter 7 bankruptcy effect the corporation?

Answer: You must list the shares of stock as an asset on line 13 of Schedule B of your bankruptcy petition. When you file for bankruptcy, a bankruptcy "estate" is created that consists of the property that you own.

There are many state and federal laws that determine what property you can keep and what must be given up in a Chapter 7 bankruptcy. Property that you can keep is called exempt, meaning that it exempt from the rights of the bankruptcy trustee to sell it for the benefit of creditors. The decision to sell nonexempt property is generally made by the trustee based on whether it has enough value to be worth selling.

Small corporations are often not valuable enough for the trustee to sell because of corporate debt and other issues. The trustee may file a Notice of Proposed Abandonment and the shares of stock will revert back to you unless your creditors file a timely objection. If the case closes and the trustee decides not to sell your shares of stock, legal ownership will revert back to you.

Credit applications for corporations often ask if any of the officers, directors or shareholders have filed for bankruptcy. While your personal credit history will not impact the corporation's credit rating, it may influence the decision of someone who has been asked to extend credit to the corporation.

The information provided in this article is general information only and is not intended as legal advice. DO NOT use this information as a substitute for obtaining qualified legal advice or other professional help.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning, insurance subrogation and debt collection.