Tag Archives: bankruptcy

Keep Your House, Protect Up To $600,000 In Equity, Discharge All Debts When Filing Bankruptcy in California

By Ryan C. Wood

California is finally about to increase the homestead exemption pursuant California Civil Procedure 704.  This is the exemption under California State law that protects equity in a primary residence when filing for bankruptcy.  It is almost a certainty that on or before September 30, 2020, Governor Newsome will sign into law this change. 

THIS IS WONDERFUL NEWS GIVEN THE HOMESTEAD EXEMPTION HAS NOT INCREASED WITH THE COST OF LIVING OR INFLATION FOR MANY YEARS.  IT WILL ALSO HELP TO PROVIDE RELIEF FOR FAMILIES HIT HARD BY COVID-19 WHILE ALLOWING THEM TO KEEP THEIR HOME.

It apparently is not an “if” but “when” will AB 1885 become law.  AB 1885 will substantially increase the California Homestead exemption pursuant to CCP 704 to the greater of $300,000 or median sales price in the county where the single-family home is located in the prior year, though this cannot exceed $600,000.  Since median sale price in most Bay Area counties is over $1,000,000 Bay Area homeowners will get the full $600,000 exemption to protect equity.  This is great news for bankruptcy attorneys.  We will be able to use the law, the Bankruptcy Code, to obtain permanent relief for more homeowners with a lot of equity in their homes. 

What This Means For Homeowners in California?

It opens the door for so many people in the Bay Area that are cash poor but house rich to seek relief from their creditors under the Bankruptcy Code and not lose their home.  In the Bay Area the median house price in many counties, if not all of them, is above $1.2 million.  That means Bay Area homeowners will be permitted to exempt or protect up to $600,000  in equity in their home while still discharging 100% of their credit card debts or other general unsecured claims like medical debts or personal loans.

For Example

A homeowner in San Mateo County owns a home that is worth $1.4 million with a first mortgage that is owed $750,000.  The homeowner is struggling with various real world bills such as credit card payments, a vehicle loan and other normal living expenses.  They are current with their mortgage payments, property tax and property insurance though so there are no issue with the house.  Unfortunately due to COVID-19 or some other circumstance outside of their control their income decreased and things are too tight to continue each month.  Given the homestead exemption in their county, San Mateo County, is $600,000, the could file chapter 7 or chapter 13 bankruptcy and  their house is entirely safe.  $1.4 million – $750,000 = $$650,000.  Then you have to deduct the cost of sale of the house too, approximately $70,000, leaving $580,000 to the seller if they chose to sell/liquidate the house.  Again, we will now have a homestead exemption of $600,000 to protect the $580,000 so there is no issue under this example.  You can plug in your numbers to see how things might look like for you.  Also taxes on the gain should be also taken into account.

Issues to Consider Under CCP 704 In California

The single most troubling part of the California Homestead exemption to protect equity in a primary residence or dwelling is the reinvestment provision of CCP 704.720(b).  CCP 704.720(b) requires any exempted amount obtained from the sale of the property must be $been all kinds of litigation regarding this issue and if you want to hang your hat on reading between the lines or gambling with as much as $600,000 in equity in your home after you sell be  my guest.  I will not be part of that scenario.  As an experienced bankruptcy attorney I counsel clients to go down the road we know there is a bridge over the river that is solid so we can safely get across.  That does not mean there will not be bumps in the road.  Just that I rarely have clients that can afford to pay me to strengthen a flimsy bridge or build a bridge entirely so they can cross safely (argue for a different interpretation of the law or create new law).  We generally want to go down the road that is safe even if that road is longer, bumpier and there may be some other parts of that road that are unpleasant.  It just will not be the road to losing $600,000 in equity in a sold house.  To read more about this issue go to:

https://www.courtlistener.com/pdf/2016/08/08/in_re_jesus_bencomo.pdf

Another Example

You have $90,000 in various general unsecured such as credit cards, personal loans and medical debts.  Your gross monthly income is around $16,000 between yourself and your spouse.  You also have two children under the age of 18 for a total household of 4 people in San Mateo County.  Your house is worth $1.4 million and you owe $1,160,000 on the first and only mortgage.  Your monthly mortgage payment plus property tax and insurance is about $6,200 a month or 38% of your gross income.  The median income for a household of 4 people in the State of California is currently a gross of $101,315 for the year.  Your gross income is over the median income $90,685 a year.  That is okay; you just need to pass the means test to qualify for a Chapter 7 bankruptcy and discharge the $90,000 or in Chapter 13 determine if there is any obligation to general unsecured creditors, the $90,000, in the Chapter 13 Statement of Monthly Disposable Income.  After taking into account taxes, monthly mortgage payment it is highly likely someone with these general set of facts can discharge the entire $90,000 in general unsecured debt, keep their home and life will go on unchanged.  This is the law and filing for bankruptcy is just following the law to legally discharge debts and lead a happier life.

Will I Lose My Car In Chapter 7?

By Ryan C. Wood

In most chapter 7 bankruptcy cases your vehicles are protected or exempted from the bankruptcy estate created at the time the bankruptcy petition for relief is filed.  Each state has exemptions to protect your property, including your vehicles, so you will not lose your car in chapter 7.  If your car is worth a lot of money though the applicable exemption may not protect the entire value of the vehicle.  If you have a vehicle loan you need to continue to make the normal monthly loan payment so you will not lose your car in chapter 7.

State or Federal Exemptions Protect Assets

There are state and federal exemptions to protect your stuff like a car.  Depending upon your jurisdiction you may have to your state’s exemptions or choose the federal exemptions.  There are limits to the dollar amount of the different categories of exemptions though.  So if you have a vehicle with a loan and still have a lot of equity in the car the car exemption in your jurisdiction may not protect or exempt the entire value of the car.  For example the vehicle exemptions under the California set of exemptions, CCP 703 is a total of $5,850.  It can be applied to any number of vehicles.  In California under CCP 703 exemptions we also have what is called the Wildcard Exemption totaling $30,825 to apply to any asset if none of it is used to protect equity in real property or a burial plot.  So between the vehicle exemption of $5,850 and $30,825 your vehicle or vehicles can be pretty valuable and still be entirely exempted or protect so you will not lose your car in chapter 7.  Make sure you accurately disclose the vehicles you own and then discuss the value of your vehicles with your bankruptcy attorney prior to ever filing a petition under chapter 7 of the Bankruptcy Code.    

Deduct Vehicle Loan From Value of Car

Something that you may not initially remember is to deduct the amount of the loan from the value of your vehicles.  If your vehicle is worth $10,000 with a loan of $9,000 then there is only $1,000 of value or equity to be protected by the exemptions discussed above.  So you could have five cars all with loans and the amount of value or equity to protect could be very little after deducting the loans.

Vehicle Loans

In 2005, the last major reform of the Bankruptcy Code, the treatment of vehicles loans was supposed to change.  You are supposed to be able to only do three things: reaffirm the loan and continue to make the loan payments and keep the vehicle, or redeem the vehicle for its fair market value, or surrender the vehicle and any balance owed on the loan is discharged in the bankruptcy case along with your other dischargeable debts.  In the real world this is not exactly happening depending upon your jurisdiction.  Reaffirming the loan means signing a new loan agreement after the chapter 7 is filed agreeing to the same loan terms or better terms.  You will then be liable for the loan again and in the event you miss payments and the vehicle is repossessed you may owe the loan company money on the loan.  Traditionally and prior to 2005 you could just continue to make your normal loan payment each month and life goes on.  If you do not make the loan payment the loan company can repossess the vehicle.  This is true whether you reaffirm the loan or not.

The reality is most Courts, or good judges, do not believe the reaffirmation of the vehicle loan is in your best interests and they would prefer you to just continue to make the normal monthly vehicle loan payment without reaffirming the loan.  The catch is the Bankruptcy Code was changed in 2005 to allow a vehicle loan lender to repossess the vehicle even if you are current on the loan payments when filing a chapter 7 bankruptcy case.  This quandary puts us bankruptcy attorneys in a tough spot on what advice to give clients.  Most Courts and judges believe as long as you pay the monthly vehicle loan payment the lender will not repossess the vehicle.  The problem is the Court or judge will not be the party having to clean up that mess and generally chapter  7 clients do not have the funds to pay for such services.  If you do choose to reaffirm a vehicle loan there should be a hearing on the reaffirmation agreement and be prepared to tell the judge why you believe it is in your best interest to reaffirm this debt.  The leading reasons are for the monthly payments to be reported to the credit bureaus to help rebuild credit after filing the chapter 7.  The vehicle may be worth a lot more than what the loan balance is so you do not want to any chances with the vehicle being repossesses and possibly losing out on the equity you have in the car.  You have a co-signor and you want to make sure nothing bad can happen to the person that was nice enough to help you get the loan and co-signed with you.  You were able to negotiate better loan terms as part of the reaffirmation agreement so you are paying a lower interest rate, lower principal balance or both and therefore the monthly vehicle loan payment is less.

Voluntary Surrender of Car

If you want to get rid of your vehicle loan and car then you may voluntarily surrender the vehicle and then you are choosing to lose your car in chapter 7.  If you can no longer afford the monthly vehicle loan payment or it is a struggle each month you may file chapter 7 and surrender the vehicle or vehicles back to the lenders.  Any balance owed on the loans after surrender is discharged along with you other dischargeable debts in the chapter 7 bankruptcy case.

The bottom line is generally it is very rare to lose your vehicle when filing a chapter 7 case unless it is you choosing to surrender the vehicle to the lender.

Paradox of The Coronavirus and Severe Economic Consequences

By Ryan C. Wood

So far the response to the Coronavirus is a paradox. Look it up. There is no question the reaction is hysteria. The evidence of this hysteria is the hoarding of toilet paper. That is hysteria. Look it up. It is impossible to know what has happened or what will happen regarding the Coronavirus at this point. What I do know is the response will absolutely cause severe financial hardship for those who can least afford it regardless of the severity of the Coronavirus. Seems like if you have just followed common sense about how not to get sick and if you have a normal immune system you will be just fine. But of course why take the risk. Our leaders are at the damned if you do damned if you don’t and being proactive is about all that can be done now. Bankruptcy attorneys like me will sadly see a spike in bankruptcy filings as a result. I really doubt the proposed government relief will actually prevent an increase in bankruptcy filings as a result of the Coronavirus response. I hope is helpful, but history says otherwise.

Is This Response Worth the Severe Economic Consequences?

The point is there are far more deadly and statistically more deadly issues facing all of us each day that existed yesterday, today and will continue to exist tomorrow. I am trying to shed light on the big picture and ask if the severe economic consequences of what is taking place are on balance with the clear economic consequences. The response is arguably unprecedented in recent times but is the Coronavirus really unprecedented?

I will continue to provide updates regarding what I am experiencing as a professional on the frontline of relief for people caught up in the real economic consequences of what takes place in the world.

Reactions Seems To Be Disingenuous Given The Leading Causes of Death

What about the leading causes of death? For example many of the current restrictions are aimed to safeguard the health and well-being of all. At the same time there are countless other perfectly fine things that are very much not to safeguard the health and well-being of all. So the following may seem a little much. Is it not true though?

Heart Disease, the leading cause of death in the United States, kills 636,000 people each year or 53,000 a month or 1,767 people a day. If you add in the second and third leading causes of death in the United States we are talking about approximately 1,428,000 deaths per year or 119,000 deaths per month or 3,967 deaths per day.

Here is what I know. The leading cause of death in the United States is heart disease. Will society no longer serve deadly food and beverages? Are you really committed to safeguard the health and well-being of all? Will there be a ban on all artery clogging foods served at countless arenas THAT HAVE FOR YEARS AND YEARS contributed to the 53,000 deaths per month of United States citizens? That is 1,709 death each day due to heart disease. Or are you going to disingenuously talk about the public health while continuing to contribute and profit from serving food that contributes to the leading cause of death in the United States?

Wow, the Federal Reserve slashed its benchmark interest rate to near zero on today and said it would buy $700 billion in treasury and mortgage-backed securities in an aggressive bid to prevent market disruptions from aggravating what is likely to be a severe slowdown from the coronavirus pandemic. What about the quiet pandemics that have existed already that kill far more people each day?The point is are all of these private and public entities being disingenuous given the leading causes of death? It sure seems so. There is an entire isle at the grocery store dedicated to CHIPS and SODA. Things that make you go hmmmmmmm. There are at least 6 different burger joints, with drive-throughs, in almost each and every city in the United States. Hmmmmmm.

Are establishments that serve alcohol going to breathalyzer each person before they leave to ensure no one drives a little drunk? Or are you going to disingenuously talk about the public health while continuing to contribute and profit from the leading cause of death in the United States? Statistically over the years how many people have been killed as a result of drunk driving after leaving a restaurant or arena?

Are various arenas going to remove hotdogs, nachos and burgers and all other artery clogging foods from the menu at all arenas to help combat the number one cause of death in the United States, heart disease? Or are you going to disingenuously talk about the public health while continuing to contribute and profit from the leading cause of death in the United States?

If The Leading Causes of Death in the United States Are Heart Disease and Cancer Why Are There Not Free Tests and Better Healthcare

Heart disease and cancer kill about 100,000 Americans each month. Cancer has devastated my personal family yet I could not even get my healthcare provider to conduct any type of test or scan to see if I had any cancer or cancer markers or cancer period given I had no symptoms. I have healthcare and was refused preventative precautionary tests. Crazy. Legislation will be passed for free Coronavirus tests though? Billions of dollars will be spent to combat the economic consequences of a hysterical response to a virus that is actually not new and not as deadly and what we face each day? All this will take place without any substantive change regarding the actually leading causes of death in the United States? Are you okay with this?

Are you okay with severe economic consequences and the no doubt increase in bankruptcy filings as a result? These opinions and commentary hopefully will make you think about what is taking place and are those of Ryan C. Wood. Please take every precaution to ensure your continued health and that of the public.

Hype and Hysteria About The Coronavirus Has Already Caused Bankruptcy Filings

By Ryan C. Wood

The following provides real facts and commentary about how people die each year. I do not want anyone to get sick and die from the Coronavirus though. I do have empathy and do not support the spread the Coronavirus. Please keep reading about the leading causes of death in the United States and worldwide that existed yesterday, today and will exist tomorrow.

Update Number 9 – April 29, 2020

Facts: 320,000 people die each year worldwide from accidental drowning. Total worldwide deaths from Coronavirus as of this writing 218,000. Hospitals get paid more to treat people if they allegedly have the coronavirus. 2,195 children die each day from diarrhea.

Update Number 8 – March 29, 2020 – Preface

Can you hear that? Mother Earth breathed a huge sigh of relief. Mother Earth said to herself: “They are finally taking a break from hurting me. I can recharge and cleanse some of the hundreds of years of damage humankind has inflicted upon me.” In 2020 the world took a pause from normal activity due to the Coronavirus and humankind saw the benefits of truly cleansing their world of their own damaging activity. The world as a result was more clean for benefit of the environment and health of all life on Earth. Surfaces that were supposed to be clean were actually continually cleaned properly. Humans had a greater respect for their shared space. Year 2020 marked a turning point in global total health for the benefit of all living beings.

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It is unbelievable how social media and the media in general can influence the world today. Please keep reading for statistics about the leading causes of death and what you should be worried about once the coronavirus passes. But yes, of course the Coronavirus is not good.  At the same time there are concerning real threats to our lives we all should be concerned about just as much if not more.  How is there not a cure for cancer yet?  The flu is not good. According to the CDC 80,000 people in the United States died from the flu last year alone.  Vehicle deaths per day are not good.  Pneumonia is not good.  Heart attacks are not good.  Gun violence in the United States is atrocious.  The fact is the Coronavirus is just new and no worse or scary than what we all face each and every day of our life already.  So why are people changing their normal behavior because of the dreaded Coronavirus? Fear sells and it sells like nothing else. How will the fear now created be used?

I am all for warning about health issues. I have read and heard nothing that provides any of us should be worried. There seems to be an explanation for everything even though the mortality rate being reported is 1% or 2%. If new factual information comes out I will modify this article to say how wrong I was to even question any of this and all of the hype was well-founded. I am confident heart disease, cancer, gun violence and vehicle deaths will be far more likely to continue to be real concerns that need our undivided attention once this passes.

Center for Disease Control: “Both MERS-CoV and SARS-CoV have been known to cause severe illness in people. The complete clinical picture with regard to COVID-19 is not fully understood. Reported illnesses have ranged from mild to severe, including illness resulting in death. While information so far suggests that most COVID-19 illness is mild, out of China suggests serious illness occurs in 16% of cases. Older people and people with certain underlying health conditions like heart disease, lung disease and diabetes, for example, seem to be at greater risk of serious illness.”

OMG, you should always regularly wash your hands.  OMG, people should always just cover their mouth when coughing or sneezing. OMG, yeah give people some personal space when standing in line or in a crowd. OMG, if you have a healthy immune system you should be just fine.  OMG, stop wearing a face mask, hoarding hand sanitizer and toilet paper? OMG, if you are sick do not go to work and infect others. HAVE WE LOST ALL COMMON SENSE? NONE OF THIS IS FUNNY.  IT IS HAVING EXTREMELY HARMFUL CONSEQUENCES ON REAL PEOPLE AND THEIR LIVES. Wil all of the deaths that result from the economic fallout be reported? There will be thousands worldwide. These types of deaths are just lumped together in categories such as stroke, suicide or heart attacks. The underlying cause and contributing factor is economic stress though.

Hype, Hysteria and Information Have Already Caused Bankruptcy Filings

Unfortunately people are changing their daily behavior due to information about the Coronavirus whether accurate or not.  I have bankruptcy clients due to an entire company shutting down due to market changes caused by the Coronavirus hysteria.  The entire staff is being laid off at no fault of their own.  As a bankruptcy attorney I know all too well how circumstances that are not in control of my clients determine outcome good or bad.  It is sad that hysteria and misinformation over a not so deadly virus is and will continue to cause financial hardship outside the control of those who will feel the consequences.  I do not know the specifics about this company but the fact is hype and hysteria regarding the Coronavirus is the direct cause of the business no longer being viable.

What about the leading causes of death?  

How sad given the American Cancer Society reports 50,543 people on average die each month in the United States alone from Cancer.

How sad given the Center for Disease Control reports 5,083 people on average die each month in the United States alone from influenza. 

How sad given the Center for Disease Control estimates 4,167 people die each month in the United States alone from pneumonia.

How sad given the Center for Disease Control estimates 53,917 people die each month in the United States alone from heart disease.

How sad given the Highway Traffic Safety Administration estimates 3,054 people die each month in the United States alone in vehicle accidents.

How sad given the Center for Disease Control estimates 3,000 people die each month in the United States alone due to firearms.

How sad given according to the World Health Organization reports the top ten causes of death for the entire world are:

  1. Ischemic heart disease
  2. Stroke
  3. Lower respiratory infections
  4. Chronic obstructive pulmonary disease
  5. Diarrhoeal diseases; 2,195 children alone die each day, CDC provides that is 32 school buses of children dying each day from diarrhea ……… think about that
  6. Tuberculosis
  7. HIV/Aids
  8. Preterm birth complications
  9. Trachea, bronchus, lung cancers
  10. Road Injury

How sad given according to the Center for Disease Control reports the top ten causes of death for the United States are:

  1. Heart disease: 647,457 a year or 53,955 a month
    1. I read a cruise ship cannot enter a San Francisco port until all of the passengers are tested for the Coronavirus yet the food being served on the ship is far more harmful to society; hello heart disease
    1. Should you be more concerned about a burger joint every four blocks?
    1. Should you be more concerned about your lack of exercise ?
  2. Cancer: 599,108 or 49,926 a month
  3. Accidents (unintentional injuries): 169,936 or 14,161 a month
    • Happenstance of life is how many times more likely to kill you then the Coronavirus?  Wrong place wrong time is more likely to kill you.
  4. Chronic lower respiratory diseases: 160,201 or 13,351 a month
  5. Stroke (cerebrovascular diseases): 146,383 or 12,198 a month
  6. Alzheimer’s disease: 121,404 or 10,117 a month
  7. Diabetes: 83,564 or 6,694 a month
    • You should be more concerned about your consumption of soda
  8. Influenza and pneumonia: 55,672 or 4,639 a month
  9. Nephritis, nephrotic syndrome, and nephrosis: 50,633 a year
  10. Intentional self-harm (suicide): 47,173 a year
    • You should be more concerned about mental health and life in general for society and your fellow human

I just read that San Mateo County, where I live, declared an emergency regarding the Coronavirus.  Why do we not have an emergency declaration regarding the leading causes of death that are known? It seems disingenuous.

The Media and Social Media is Out of Control    

At this point I do not believe there is any going back.  The number of influencers and followers of other humans is here to stay.  When it comes to health and something like the Coronavirus the firestorm created by the media is not helpful and full of misinformation. You can form your own opinion of course.   

Rachel Clamp, PhD Candidate in History, Durham University, reports the Coronavirus has killed total globally about 3,000 people.  https://www.yahoo.com/news/coronavirus-black-death-spread-misinformation-143713853.html h

I highly recommend you read this excellent article about historical plagues and public reaction.  The world today seems to never be able to learn from history.  Nothing is new and if we cannot learn from history we are doomed to repeat horrible wrongs.  Horrible discrimination is taking place.    

Tangent: Hype About Bankruptcy Is Wrong Too

I repeatedly communicate that the Bankruptcy Code is the law.  Do not hate the player but hate the game.  Stop believing the hype and hysteria regarding bankruptcy. it is like suffering an illness and not choosing the a cure that exists. You can suffer for years treating the illness or cure your debt problems.  There is way too much hype regarding bankruptcy. If you do not like people filing for bankruptcy protection to seek relief from their creditors the law provides please vote for different politicians and advocate for a change in our laws.  Do not condemn bankruptcy lawyers or bankruptcy filers for merely following the law to obtain a legal discharge of debts.  Can we not all agree that life is short, nothing is perfect and generally we all are doing the best we can and circumstances outside of our control are far more powerful than any single humans’ choices?  A lifetime of hard work and dedication can be wiped out in a blink of an eye?  Hype and unfound hysteria about a virus can lead to behavioral changes that wipe out entire companies overnight?  We all need second chances given we are all imperfect beings.  Whether you file for bankruptcy protection or fail at something you must keep swinging the bat to try and hit a homerun.  Luckily we have laws that allow an orderly and legal method to clean up the mess so the game can continue.

Update Number 1 – March 11, 2020

I have received additional calls from people seeking bankruptcy due to the fallout over the Coronavirus. I file bankruptcy and earn a living doing so but I truly do not like the reality I will get more business as this saga continues. Also today the NBA announced the suspension of the NBA season until further notice. The Coronavirus is not an unprecedented virus but the suspension of the NBA season is unprecedented. This response is unprecedented. Those who work in sport arenas will not be able to pay their bills. They are not rich and are living paycheck to paycheck. Will government aid reach them or bankruptcy attorneys like me be the solution to their bad luck? I wish the world would take gun violence this serious. I wish people would drive safer each day. Why do people drive like maniacs right after getting through a traffic jam caused by a car accident? Will people exercise more and take their health more serious now?

Update Number 2 – March 15, 2020

So at this point there is no going back. Misinformation about elections/politics, health risks and what is going on in the world generally is here to stay. Regardless of the reality of risk the Coronavirus actually posed or poises the response will be the reality of whatever comes next. Deaths from Coronavirus will not be substantial and all the talking heads will cite the response as the reason and we will never actually know what the true risk poised. Do not mistake my tone for lack of empathy or wanting anyone to get sick. I do not. I have to wonder if everyone realizes that the Coronavirus is not going to go away? Are you always going to live in fear from this one way to get sick even though statistically just driving around and living life kills about 11,000 people each month in the United States alone? Wrong place wrong time; 11,000 people a month in the United States. Please research the leading causes of death in the United States versus the entire World. Diarrhea is the 5th leading cause of death worldwide killing approximately 2,195 children each DAY alone. By comparison even if the Coronavirus killed 500 people a day worldwide that would be nothing compared to what humans face everyday to stay alive.

The Federal government is passing legislation to deal with the Coronavirus hype and hysteria. Will that economic relief reach my potential clients and prevent increased bankruptcy filings? What about the top three leading causes of death in the United States: Hearth Disease, Cancer and then Accidental Deaths? Kind of seems like gun deaths in the United States is an emergency as compared to other developed countries in the world.

Update Number 3 – March 16, 2020

So the stock market dropped the most since 1987 today. Let us speculate that there are 5,000 worldwide deaths because by the coronavirus so far or 10 days worth of accidental deaths in the United States alone. Or about two and a half days of heart disease deaths in the United States alone. This is very serious. The Coronavirus. The response and the consequences of the response.

I just heard from the world media (this is a parody/joke) that all sporting event centers will no longer serve artery clogging food given they care about the public health and welfare in an effort to help combat the leading cause of death in the United States; heart disease.

I just heard from the world media (this is a parody/joke) that we will all share the world’s fresh water equally so every person on Earth has fresh water to drink from the moment they are born into this world because the world cares about public health and welfare. It is called “No Human Left Behind.” It will help prevent 2,195 daily child deaths due to diarrhea.

Update Number 4 – March 16, 2020

So this is as far from funny as it can get. In the Bay Area we now have a shelter in place order issued for the six county region that makes up the Bay Area. So does that mean that creditors will stop garnishing my clients wages given my clients have seemingly been told to not come to my office to obtain legal relief from their debts? Uh no!!!

Update Number 5 – March 17, 2020

Hopefully the shelter in place REQUEST will save the lives of the 90 people that die in car accidents each day in the United States. That is about 2,700 people each month. You are more likely to die because of the trash driving so close to you that you cannot see their license plate in your rearview mirror. You know, that person that is in such a hurry to get to the next red light so fast. So after the hype and hysteria passes are you going to drive more safe and help prevent the 2,700 deaths EACH MONTH from car accidents? Are you not going eat artery clogging foods and soda that cause heart disease and diabetes? Are will you have learned nothing from this experience?

Update Number 6 – March 22, 2020

Cannot play basketball at my local park given boards have been bolted to the tops of the basketball rims. Can I not shoot baskets by myself and get exercise?

Can let my dog poop on someone’s lawn, pick up poop, but their kids will get the residue poop on them when they go out and play in their yard next.

Can go to 7-Eleven and buy each and every item that leads to the 1st and 2nd leading causes of death in the United States. Cannot sit down in a restaurant and eat. Can hoard clean water while 2,195 children die each day from diarrhea worldwide.

Can still be one of the 1,314 murders that take place in the United States each month. Total worldwide coronavirus deaths 14,200 or 6.5 days of children diarrhea deaths. How can we share fresh water when toilet paper gets hoarded?

Please research the big picture. Who will get the $3 trillion of economic aid even though the GDP will be less in the United States and the United States is already running a budget deficit? National debt as the writing of this is $23.6 trillion or 108.8 % of GDP. What is the world GDP? $80 trillion or so. United States total population 323 million people. Those that pay taxes 123 million people.

See https://www.usdebtclock.org/

Update Number 7 – March 23, 2020

Can get killed from speeding tailgating drivers with no regard for human life contributing to the 90 people that die in car accidents each day in the United States. Seems the coronavirus scare has not helped people drive safely. Why social distance or take precautions only to drive like a manioc? That is 32,850 people per year die in car accidents in the United States.

Can run over family of eight killing mom for not social distancing contributing to thousands of pedestrians killed each year in the United States. This happened in New York. 17 pedestrians plus cyclists die each day in the United States or 6,205 a year.

Another Victim of the Title Presumption vs. Community Property Presumption

By Ryan C. Wood

While we wait for the California Supreme Court to weigh in on the legal effect of a married couple purchasing real property during marriage but taking title to the property as joint tenants sad cases continue to pile up.  Under California law two parties, whether married or not, may take title to real property as joint tenants.  The main feature or benefit of taking title as a joint tenant is the right of survivorship that comes along with it.  This is particularly beneficial to married couples as it allows them to avoid going through probate upon the death of a spouse.  The real property just passes to the surviving spouse.  California law also provides that when title is as joint tenants the one half interest in the property is the person’s separate property and not community property.  Here is where it gets crazy though.  The real property being separate property is only true under certain circumstances and not all circumstances?  In comes the community property presumption regarding property acquired during marriage.  So far various courts, not the Supreme Court of California, have held in the bankruptcy context the community property presumption wins, not how the actually legal recorded title is taken at the time of purchase.  The actual legal title is not sufficient evidence to show the married couples intent that the real property acquired during marriage be each spouses separate property. 

When married couples get divorced in community property states the community property is supposed to be divided 50/50 unless the spouses agree otherwise or there has been a transmutation of the property from being community property to the separate property of one of the spouses.  Simply put, transmutation laws cannot apply to a piece of real property acquired during marriage.  Spouses are not transferring anything when purchasing a house during marriage.  They are acquiring it and taking title as joint tenants evidencing their intent for the house to be separate property……..  Also, how is a piece of real property titled as joint tenants where each spouse owns a 50 percent interest not consistent with community property law and dividing the community property 50/50 upon divorce?  Seems like it is consistent so what is the problem?  Oh wait, this is only applicable in a divorce and not under other circumstances like filing bankruptcy?       

On November 8, 2018, the Ninth Circuit Court of Appeals entered an order certifying question to the Supreme Court of California as follows:

“Does the form of title presumption set forth in section 662 of the California Evidence Code overcome the community property presumption set forth in section 760 of the California Family Code in Chapter 7 bankruptcy cases where: (1) the debtor husband and non-debtor wife acquire property from a third party as joint tenants; (2) the deed to that property conveys the property at issue to the debtor husband and non-debtor wife as joint tenants; and (3) the interests of the debtor and non-debtor spouse are aligned against the trustee of the bankruptcy estate?”

In the meantime cases are still being decided that provide the community property presumption is what matters and not the clear and convincing evidence of a recorded title as joint tenants giving each spouse a separate property interest in the purchased home.  In a prior blog article I provide all the different cases regarding this issue.  I have listed them again at the end of this article.  A recent Ninth Circuit Bankruptcy Appellate Panel cases provides some additional feedback on this issue a couple interesting twists.  Unfortunately the same result was found; the legal taking of title as joint tenants was trumped by the community property presumption.

Why Do Bankruptcy Attorneys Care So Much About This Issue?

Each spouse has the right to file for bankruptcy protection even if married.  When one spouse files all community property and the separate property of the filing spouse is part of the bankruptcy estate.  The separate property of the non-filing spouse is not part of the assets that must be listed.  If a house of a married couple has equity of $200,000 and the title is held as joint tenants we should only have to list the filing spouse’s portion or $100,000.  Ignoring the title of the house as joint tenants and calling the house community property requires us to schedule the equity in the house as the entire $200,000 interest even though taking title as joint tenants is supposed to provide each spouse has a separate property interest.  As of right now a married couple is only entitled to a homestead exemption to protect equity in a primary residence of $100,000 pursuant to California law.  So an interpretation of the law that says the community property presumption wins instead of the title presumption creates a bankruptcy estate twice as large, not exemptable/protectable under the example above.  This creates a large obligation to creditors that would not exist if the title presumption was properly followed given title as joint tenants under California law provides the spouses interest is their separate property…

Recent Ninth Circuit Bankruptcy Appellate Panel Case

In an unpublished opinion by the Ninth Circuit Bankruptcy Panel a couple in Southern California seemingly did everything to provide the real property they acquired during marriage be held as joint tenants, separate property and not community property.  They even had a post-nuptial agreement providing additional language to strengthen their intent to have the real property be deemed separate property.  The problem is a bankruptcy case under chapter 7 of the Bankruptcy Code was filed and what a family law attorney or estate planning attorney would believe to be true simply is not the case in the context of filing bankruptcy.  There were also some cracks in the documents of this married couple and that is what makes this particular case interesting.

Facts of the Chapter 7 Bankruptcy Case Appealed

The lower bankruptcy court held regarding the character of real property owned by the debtor at the time the bankruptcy case was filed as; (1) the properties were presumed to be community property despite the fact that they were held by the couple as joint tenants, and (2) Non-filing spouse did not produce evidence sufficient to raise a genuine issue of material fact regarding the character of the ownership of the properties.  The Ninth Circuit Bankruptcy Appellate Panel affirmed the decision and agreed with the lower bankruptcy court.

The specific issues that are part of this current appeal involve a postnuptial agreement between the spouses and evidence of third party family members of the filing spouse providing down payments for the properties acquired during the marriage.  While I believe the taking and recording of title as joint tenants is clear and convincing evidence of a married couples’ intent to take the real property acquired during marriage as separate property that is not the current interpretation. 

In this chapter 7 case there were actually two different properties purchased during marriage that added complications.  The couple also entered into the postnuptial agreement after purchasing one property and not before purchasing both properties.  Unfortunately the postnuptial agreement did not include language addressing the purchase of the first property prior to the postnuptial agreement.  If the postnuptial agreement did say the purchase of the first property was to be held as separate property maybe things would have been different.  The postnuptial agreement provided the amounts paid by third party relatives would be part of the equation to determine the spouses interest in the purchased properties.  Again, there was no mention of the first purchased property though…..  The bankruptcy case was originally filed as a chapter 11 reorganization and later converted to a chapter 7 case.  This also is significant but I will not get into that other than the bankruptcy case becomes a liquidation of not exempt/protectable assets such as the two pieces of real property/houses.

Naturally the chapter 7 trustee assigned to the bankruptcy case properly sought to liquidate the bankruptcy estate and the question arose as to what is part of the bankruptcy estate.  The lower bankruptcy court held that the homes were part of the bankruptcy estate and the evidence presented did not overcome the presumption of the community property.  What is a new wrinkle from most cases like this was the postnuptial agreement.  The lower bankruptcy court held and the Ninth Circuit Bankruptcy Appellate Panel agreed that the postnuptial agreement did not apply given it was not recorded pursuant to California Family Code Section 852(b), transmutation law of assets acquired during marriage, and under California Civil Code Section 1217, that unrecorded instruments are only valid between the parties to the instrument and those have notice of it.  So the chapter 7 trustee was not bound by the postnuptial agreement and the spouses intent to hold property as separate property.  Again I argue this is a misapplication of California transmutation laws given these properties are acquired during marriage and the title is taken as joint tenants, separate property, and the recorded title is clear and convincing evidence of their intent.  This of course is not how the law is being interpreted.  So the recorded title as joint tenants does not provide notice of the spouses intent to third parties and the taking of title as joint tenants is not a valid transmutation……..

As a bankruptcy attorney I hope the Supreme Court of California comes to a different conclusion on this issue soon.  As of right now there is no such thing as taking title to property as joint tenants that creates a separate property interest in the property without creating additional documentation as to the spouses intent.  There are also not clear answers to exactly what the documentation should be for a court to hold the property title as joint tenants is separate property.  Whatever that documentation is should be notarized and recorded so that all third parties have notice of the spouses’ intent the hold the property as joint tenants and be entitled to separate property status under any and all circumstances; including filing for bankruptcy protection.    

Brace v. Speier (In re Brace), 566 B.R. 13 (9th Cir. BAP 2017)

Valli v. Valli (In re Marriage of Valli), 58 Cal. 4th 1396, 1400 (2014)

In re Obedian, 546 B.R. 409, 422 (Bankr. C.D. Cal. 2016)

Hanf v. Summers (In re Summers), 332 F.3d 1240, 1243 (9th Cir. 2003)