Originally Printed: July 23, 2004
Maxine de Villefranche is an attorney and civil general practitioner with 12 years of experience. She moved to Tehachapi in June 2003 and resides in Alpine Forest. She operates her law practice from her home office and also has a satellite office in Lancaster. She will answer legal questions posed to her by the readers, to the best of her abilities.
Q. Last year, I represented myself in a divorce action and I had to sell the house and other items in order to pay my wife her half of the community assets. I seems I was stuck with all the community debts. Now I am broke and cannot meet my financial obligations. What can I do?
A. It appears you did not get a fair deal in family law court. It may have been to your advantage if you had hired a lawyer to represent you. At this point, you may be forced to file for bankruptcy. If you are employed and get a regular paycheck, you may be able to file a Chapter 13, which is also known as “a reorganization of debts”. A trustee will oversee your estate and distribute portion of your income to all of your creditors. In such a case, you may keep all of your assets, or what is left of them and pay your creditors over a period of time, but not more than 60 months. Depending on the amount to be distributed, your creditors may or may not be fully paid. All of your secured creditors, i.e. those who hold collateral sufficient to support the debt, will be fully paid or at least to the extent of the value of the collateral. If you are making monthly payments on your car (often the car is worth less than the balance owed) you may be able to discharge the amount that is not secured, but if you want to keep the car, you must pay the “secured” balance. The unsecured creditors are those you may suffer. If you do not have a regular paycheck, the better alternative is to file a Chapter 7 Bankruptcy, or “straight (liquidation)” bankruptcy. A trustee will be appointed to review your assets, and if he/she finds some assets that are not exempt, these assets will be liquidated and the proceeds will be divided among your creditors. Everyone is entitled to exemptions when it comes to personal assets, such as furniture and furnishings, clothing, kitchen appliances, etc. These assets are exempt in different amounts, depending on which system of exemptions one uses, i.e. California Code of Procedure Sections 703 or 704. CCP Section 704 system is preferable to the 703 system if one has a house to protect. A single person owning a residence is entitled to keeping up to $50,000 in equity, a married couple is entitled to $75,000 in equity and a person over the age of 65 years old, $125,000. In order words, if you do not have this kind of equity in your home, you can keep it through the bankruptcy, as long as you keep making your mortgage payments. The same holds for your car. You are entitled to a certain amount of exemption, again depending on which system you use. Bankruptcy is meant to allow you a fresh new start and does not carry the stigma it once carried. Millions of people have taken advantage of bankruptcy laws, especially through difficult financial times experienced by the entire country.
Forward your questions by e-mail to maxinedev@msn.com or drop questions at the Tehachapi News, 411 N. Mill St., Tehachapi, or send them by mail to P.O. Box 1840, Tehachapi, CA 93581
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