LOCKHART & BRITTON Attorneys at Law, specializing in representing individuals and small businesses in bankruptcy proceedings. Picture Thomas M. Lockhart, Sr. Admitted to the California Bar - 1975 University of San Diego School of Law Juris Doctor 1974 University of California at Los Angeles (UCLA) Bachelor of Arts 1968 Picture David E. Britton Admitted to the California Bar - 1977 Western State University College of Law Juris Doctor 1977 San Diego State College Bachelor of Arts 1971 Certified Specialist Personal and Small Business Bankruptcy State Bar of California Board of Specialization Professional Affiliations San Diego County Bar Association National Association of Consumer Bankruptcy Attorneys Professional Experience Each of the attorney/partners has over 24 years bankruptcy experience filing Chapter 7 debt cancellation cases and Chapter 13 repayment plans. The attorneys have lectured to professional groups, conducted legal education seminars and taught undergraduate law classes.
THREE CONVENIENT OFFICE LOCATIONS: FREE CONSULTATION CALL (619) 698-6800 FOR AN APPOINTMENT 1. The Allied Plaza Building in La Mesa - our main office: Map 7777 Alvarado Road Suite # 422 La Mesa, CA 91941 (I-8 at Fletcher Parkway) Appointments are available Monday through Friday 8:30 a.m. to 5:00 p.m. and Saturday (except holiday weekends) 9:00 a.m. to 12:00 p.m. 2. Cabrillo Plaza in Old Town: Map 3990 Old Town Avenue Building A, Suite 201 San Diego, CA 92110 (Corner of Congress and Old Town Avenue) Appointments are available on Monday and Thursday 12:00 p.m. to 5:00 p.m. 3. Third Avenue Plaza in Chula Vista: Map 765 Third Avenue Suite 300K Chula Vista, CA 91910 (across from U.S. Post Office) Appointments available most weekdays Monday through Friday 9:00 a.m. to 4:00 p.m. ABOUT OUR SERVICES: We have two attorneys and a friendly, professional staff to assist you. We have filed several thousand bankruptcies over the past 20 years. We are not a clinic. We pride ourselves on the personal attention that we give our clients. All scheduled appointments are with one of the two attorneys, who will personally represent you throughout your entire bankruptcy. The majority of our cases are referred to us by prior satisfied clients and attorneys/cpa's who have previously referred clients to us.
1. What is a Chapter 7? COMMON QUESTIONS ABOUT BANKRUPTCY A Chapter 7 is commonly referred to as a "straight" or "total" bankruptcy. It is designed for individuals or corporations who cannot pay their debts. It cancels or discharges most of your debts. The most common debts discharged in a Chapter 7 are credit card bills, finance company loans, medical/hospital bills, automobile repossession debts, foreclosure debts, and judgments from lawsuits. There are some debts that cannot be discharged in Chapter 7 cases, such as child/spousal support obligations, student loans, most taxes, court fines and restitution orders, debts for damages caused while driving under the influences of alcohol or drugs, and fraudulent debts. Certain taxes and some student loans can be discharged in bankruptcy; however, the standards for discharge are quite complex and require a review by one of our attorneys. Immediately upon the filing of a bankruptcy Petition (either Chapter 7 or Chapter 13) the Court issues a restraining order called an "Automatic Stay," which prohibits all creditors from contacting you or proceeding with any collection action against you, including foreclosures, levies, and wage garnishments. Any such actions that may have already begun prior to the filing of your case are immediately halted. The Chapter 7 process takes about 4 months. There is usually only one required hearing about a month after your case is filed (called the First Meeting of Creditors). This hearing is very quick and informal-- usually less than 5 minutes. It is not held in a courtroom, but rather in the office of the U.S. Trustee. Everything else is handled by our office. Approximately four months after the filing of your Bankruptcy Petition, the Court will mail the Discharge directly to you. This signifies the end of your case and is a permanent order prohibiting creditors from taking any collection actions against you. 2. What is a Chapter 13? A Chapter 13 Plan, commonly called a "debt repayment plan," consolidates all of your monthly bills. You pay one monthly payment to a court-appointed administrator known as the Trustee. The Trustee disburses payments to the creditors based on the provisions of your plan. Only individuals with regular income may file Chapter 13 cases. Chapter 13 Plans must commit all of your net disposable income for at least 3 years; however, most plans run for 5 years--the maximum time allowed. The Chapter 13 offers you a great deal of protection from creditor actions. Immediately upon the filing of your Chapter 13 case, all of your creditors are restrained by a Bankruptcy Court Order from harassing you or taking any actions against you such as wage garnishments, lawsuits, foreclosures and repossessions. A Chapter 13 Plan can consolidate all of your debts, including real estate arrearages, automobile payments, past-due taxes, student loans, and past-due support obligations. The monthly plan payment is determined by your income, your monthly living expenses (rent, utilities, food, etc.), and the amount of debt that is to be paid back within the allotted five-year plan. In many cases, if you cannot pay all of your debts, a plan can be worked out to pay your unsecured creditors
less than the total amount owed. The following are a couple of examples of families that can benefit from a Chapter 13 plan of reorganization: Example 1: The Jones family has two automobiles on which they owe a total of $15,000.00. The vehicles have a combined value of $10,000.00. They also have credit card debts, finance company loans, and medical bills totaling $9,000.00. Currently, their monthly payments on the vehicles ($550.00 per month) and other debts total $1,000.00 per month. They can't seem to make ends meet and are consistently falling behind in their payments. How can a Chapter 13 help them? In the example above, based on their monthly living expenses and their income, the Jones family can only afford to pay $400.00 per month. A proposed 70% plan would pay unsecured creditors 70% of the total amount owed, but pay the automobile loans in full, with interest only on the value of the vehicles. The plan payments could be reduced even lower by paying the unsecured creditors a smaller percentage. In the example above, a payment of 40% to unsecured creditors would result in a plan payment of approximately $330.00 per month for 60 months. In each example, the value of the automobiles is paid in full. If the vehicles are worth less than $10,000.00, then the payments would be even less. Bottom line: If the Jones file a Chapter 13 plan, their monthly payment for all of their debts would be less than what they are currenlty paying for just their cars! Example 2: The Smiths own one vehicle that is worth $4,000.00, but $7,000.00 is due on the loan. They owe income taxes to the Internal Revenue Service and to the Franchise Tax Board (California) in the total amount of $10,000.00. They also owe $15,000.00 in various unsecured credit card debts, medical bills and signature loans. Mr. Smith has lost his job and is on permanent disability. How can a Chapter 13 help this family? In this situation, based on their income and living expenses, the Smiths can propose a 0% Chapter 13 Plan, which would pay the value of the vehicle (with interest) and the taxes, but eliminate the unsecured debt and the unsecured portion of the vehicle loan (the amount greater than the value.) Their plan payment would be approximately $285.00 per month for 60 months. Bottom line: The Smiths are eliminating $15,000.00 in unsecured debt and a great deal of the interest and penalties associated with overdue taxes. They get to keep their car and wipe out $3,000.00 on the loan. These are just two case scenarios in which a Chapter 13 plan can make a dramatic improvement
in a family's financial situation. Remember, because there are so many variables related to income, living expenses, and debt to be repaid, every case is different and must be specifically calculated by the attorney at your consultation. Most taxes, child support, and student loans must be paid in full during the 5-year plan period. Your plan payment must be at least as much as your monthly net disposable income, which is defined as the amount of money remaining after you pay all of your living expenses (excluding your debts). About two weeks after your Chapter 13 case is filed, you will receive a notice informing you of the first meeting of creditors. All of your creditors receive the same notice at this time. Although they are all invited to appear, most do not. The hearing takes place about six weeks after your case is filed. Your first plan payment is due thirty days after your Plan is filed (prior to the hearing). The Trustee wants to verify your ability to make plan payments. The hearing is informal. It is not held in a courtroom and there is no judge present. The purpose of the hearing is to allow creditors and the trustee to ask questions about your debts, assets, income, and Chapter 13 Plan. In a very few cases, a creditor will object to the Chapter 13 Plan. If a creditor does object, the case will then be set for a hearing before a Bankruptcy Judge to review your case. If your Chapter 13 Plan complies with the law and you have made all of your Plan payments, the judge will normally approve your plan despite the creditor objection. An attorney will be present with you at all hearings. When your Chapter 13 Plan has been approved, the Trustee will begin paying the creditors the amounts called for in the plan. It is the responsibility of the creditors to file a claim and prove the amount owed to them. The Trustee will only pay creditors who file claims within the time allowed. The debt to any unsecured creditor who fails to file a timely claim will be discharged (cancelled), provided you complete the Chapter 13 plan. At the conclusion of your Chapter 13 Plan (no more than 5 years after the petition was filed), the Court will issue a Discharge. The effect of the Discharge is that your debts are considered either paid or cancelled. Creditors in your plan are forbidden from collecting any more money from you. In the case of an automobile creditor which has been paid through the plan, you will receive the "pink slip" or other ownership document to the vehicle. 3. Do I have to give up my house or my car or personal property if I file a Chapter 7 or Chapter 13? Almost never. The law provides for a great deal of exempt property to be retained after filing. In fact, most individuals are allowed to keep all of their property. Any questions regarding the possible loss of property will be fully addressed prior to the filing of your case. You will be aware of any potential problems - no surprises! To the extent that you have creditors with a security interest in some of your property (homes, automobiles, furniture, etc.) you can still retain these items, but in a Chapter 7 you must pay for them by continuing regular payments or (in the case of furniture and appliances) by signing a Reaffirmation Agreement that usually reduces the amount of the debt and lowers the monthly payment. In a Chapter 13, secured debts can be paid through the plan, usually on terms more favorable than in the original contract.
4. What is the difference between a secured and unsecured debt? Simply explained, secured debts are debts in which the item purchased has been pledged as collateral for the repayment of the debt. If there has been a default in payments, the creditor may be able to repossess the property. Examples of this type of debt are automobile loans in which the bank or finance company holds the "pink slip" to the vehicle, and loans for the purchase of furniture, jewelry, computers, stereos, and appliances. The creditors for these debts possess a purchase-money security interest in the items purchased. In a Chapter 7 case, you have the option of keeping the merchandise and paying the debt or returning the merchandize and paying nothing. In a Chapter 13 case you can keep these items and repay them through the Chapter 13 plan. The Court will generally allow the creditor only 10% interest on the value of the merchandise, not the 18% to 20% you are probably being charged under the contract. If the value of the item is less than the amount of the loan, the excess amount of the loan (amount of loan less the value of the collateral) is paid under the plan as an unsecured debt, without interest. 5. How will a Chapter 7 or 13 effect my credit? It is a common misconception that once you file bankruptcy you can never again get credit. How a Chapter 7 or 13 will effect you in the future depends upon many factors -- each creditor uses its own criteria to determine future creditworthiness. Income and job stability are key factors that creditors will look at in determining future credit. They will also review how you have handled credit since your Chapter 7 or 13 case was filed. Remember that anytime a creditor is not being paid under a contract, a negative comment can be placed on your credit record. Repossessions, foreclosures, slow payment, and nonpayment all have a negative effect upon your credit record. A Chapter 13 and a Chapter 7 also have a negative effect, but that alone will not prevent you from re-establishing your credit and obtaining credit in the future. Bankruptcies remain on your credit report for 7 to 10 years, depending on the credit reporting agency. However, many people receive solicitations for new cards immediately following a bankruptcy. While credit may have been the problem that got you into financial difficulties in the first place, there is an old adage, "It takes credit to get credit." 6. How can I re-establish credit after filing a bankruptcy? There are many institutions that offer secured Mastercard and Visa accounts. They require a nominal deposit (usually less than $500.00) and allow you a credit line based on the amount of money on deposit. If you use these credit cards regularly and make prompt payments, your credit report will state "paying as agreed," which is acceptable to future creditors. As to home and automobile loans, you will have to shop around. Some creditors may deny you credit, but others will finance your house or automobile. Supply and demand often dictate a creditor's policies. Therefore, if a creditor wants to make a sale, it will finance the purchase. However, there is one word of caution: some lenders or finance companies will tell you they can "make the loan" and then charge you a higher interest rate -- that's why it is very important to shop around for credit. If you are turned down, try another bank or finance company. Frequently buyers with a prior bankruptcy are only concerned with getting approved for the loan and fail to get the best possible interest rate on the loan. Remember, loan
companies make their profit writing loans and charging high interest notes. 7. Can I lose my job because I file? Section 525 of the Bankruptcy Code prohibits your employer from firing you. The filing of a bankruptcy prohibits creditors from calling you at home or at work and immediately stops any wage garnishments with the exception of current child/spousal support. 8. How would a bankruptcy effect a co-signor? In a Chapter 7 proceeding, unless both parties to the contract file bankruptcy, the creditor may pursue collection against the non-filing party. If the filing party reaffirms the debt and maintains current payments, the co-signor should not be effected. A Chapter 13 Plan can be structured so that the co-signed debt is paid in full through the plan and the creditor is prohibited from taking action against the non-filing co-signor. 9. How do I get started? What's my first step? You have already taken the first step - you have obtained general information about Chapter 7 bankruptcy and Chapter 13 reorganization. If you still think bankruptcy or Chapter 13 may be the answer to your financial problems, call (619) 698-6800 for an appointment with an attorney. Remember that we have offices in three convenient locations and have appointments available every day except Sundays and holidays. The consultation is free and takes about 45 minutes. 10. How much does it cost to file? We file our bankruptcy cases on a flat-rate basis rather than on an hourly basis, which means the quoted fee for attorney's fees covers the necessary consultations, preparation and filing of the schedules, maintenance of a creditor line with your case information available to your creditors 24 hours a day 7 days a week, appearance by an attorney at the creditor hearing, and subsequent dealings with your creditors. The attorney's fees for a Chapter 7 vary depending on the number of creditors you have and the type of debts involved. At the conclusion of your first consultation, the attorney will quote you a fee for your case. Payment plans are available for the attorney's fees. The Court's filing fee at this time is $200.00 and must be paid when you file your case. Attorney's fees for a Chapter 13 are usually paid through the plan. The Court has regulated the Chapter 13 fees. The filing fee at this time is $185.00 and must be paid when your case is filed.