Los Angeles Bankruptcy Blog

I understand how people have a tendency to wait until the very last minute to do something about their debt problems. It’s a normal avoidance reaction. It’s not uncommon at all to have someone contact me regarding a lawsuit or summons or wage garnishment that’s about to kick in. I can save that, stop it, and protect you. Heck, I live for that.

Still, if your house is going to be sold at a foreclosure sale tomorrow morning and you are calling someone at 3PM the day before to do a whole bunch of work…

It’s always surprising to me when someone calls or emails and says, “Sure I make six figures but I really don’t have any money for debt repayment or debt consolidation. Can’t you just wipe it away? I want Chapter 7 bankruptcy.”

Um, not so fast. If you make over the median income for your state, household size and a whole bunch of other factors, it would not be “fair” for your debt to be wiped clean unless you can demonstrate that you truly, really, have no money to do so. This is the Means Test. And explaining how over eight grand a month is something you can barely live off of will be a trick that even Houdini would be proud of.

Technically, no. However, it does cost money to retain the services of an attorney.

Of course, you can always just file bankruptcy on your own. It’s merely a series of forms and procedures.

If you figure that each case takes someone with experience at this sort of thing about 4-6 hours of time per case, and you factor in the amount of money involved, headaches and the peace of mind knowing “it’s being done right” by an expert, some would say that’s money well spent.

A value, even.

I’m constantly amazed what I hear during consultations. No, not that the people who visit me amaze me. Rather, it’s the things they’re told by creditors, their friends, their co-workers and back-alley not-really-a-lawyer (aka paralegals). In other words, the rumors that circulate about bankruptcy law, consumer debt, and what your rights are.

One I heard recently was this: If you file bankruptcy on Cashcall (put that aside for a moment) that their debt will not go away. I even asked to see the Cashcall contract. Sure enough, plain as day, there was the text. Except the text was misleading and confusing to someone who’s not a lawyer. (accelerate… due immediately… event of bankruptcy… and so yawn).

Cashcall can’t keep you on the hook for their debt if you file bankruptcy. No one can. It’s your right to file a bankruptcy, and that federal, constitutional right trumps state contract law. (this is all absent your fraudulent or bad faith behavior, of course).

And another thing. You don’t “go bankruptcy on this loan or that debt.” It’s all or nothing. You must list your debts. All of them. However, some debts (like most student loans and some car loans) survive the bankruptcy.

There is really nothing good about a cash advance. These cute little checks they mail you — spend them however you like! — are just poison. 25% or 29% interest rate, no grace period, and it’s the last thing your payments are applied to… all this makes them almost impossible to pay off.

Easy money that’s just too easy.

Have you taken out out a cash advance in the last 6 months? What’s your experience with these things? I’m curious to see the comments.