Category Archives: CA Bankruptcy Lawyer

Where Does State of California Lottery Money Go?

By Ryan C. Wood

Howdy humans.  Let us discuss the California State Lottery and answer questions like where does all the California Lottery money go?  How much revenue is there each month and how is it spent?  Who are the winners and losers regarding the California State Lottery?  Can we get rid of the California State Lottery at this point?  Can the State of California live without a lottery?  If no, what does that say?  Does playing the lottery lead to filing bankruptcy, lol?

California State Lottery gross revenue is about $550 million a month.  As a percentage of gross revenue only about $116 million goes to education on a monthly basis or 21% of the total gross revenue.  Is this what you voted for?

For 2020-2021 the State of California lottery had total revenue of approximately $7.120 billion.  The California Department of Education estimates $1.5 billion will go to education.  During the last 35 years, 1985 – 2020, only about $1.07 billion a year of State of California lottery revenue went to K-12 education.  As of 2022, that represents 0.0088% (less than a percent of the total) of the total yearly budget for the State of California for K-12.     

For perspective if your gross income is $75,000 a year; 0.0088% equals a paltry $660.00.

For perspective if your gross income is $75,000 a year; 1.24% equals a paltry $930.00.

Now education receives about $1.5 billion from the State of California lottery or 1.24% of the total California education budget. 

Gaming costs are about $575 million with pure administrative expenses such as salaries are about $215 million each year.  So approximately $800 million goes to operating expenses each year while about $1.5 billion goes to education each year. 

If the total revenue was $7.2 billion for 2020-2021 and 87% or $6.264 billion

In 2020 about 66% of gross revenue was paid in the form of prizes/awards to the public.

Who Gets the California State Lottery Money?

Prior to 2010 only 50% of the money brought in by the California State Lottery had to be returned, or redistributed, to the public in the form of winnings/prizes.  A law was passed changing the payouts to 87 (of net revenue, not gross) percent to the public in the form of prizes and contributions to education and cap of 13 percent for California Lottery operating expenses. 

Prior to 2010 the money was redistributed as follows: 50 percent to public in prizes, 34 percent to public education, and no more than 16 percent to administrative expenses. 

So here you go.  Below is how lottery revenue was distributed between 1985 and 2020.

Entity                                                                                           Amount Allocated in Millions

K-12                                                                                             $1,194,705,385

Community Colleges                                                                $218,861,585

California State University                                                      $60,423,474

University of California                                                            $42,667,362

Hastings College of the Law                                                    $144,161

Department of Education – State Special Schools               $116,496

Juvenile Justice                                                                         $49,381

Department of Developmental Services                              $41,669

Total                                                                                           $1,517,009,513

Employees and Offices of the California State Lottery

In 2020 the California Lottery Commission employed 909 humans in nine district offices and two distribution centers.     

Distribution to Education 1985 – 2020

K-12 Education received about $30 billion over 35 years.  For perspective the State of California budget for 2022 is $119 billion – $124 billion.  According to the California Department of Education the total budget for 2021-2022 for K-12 programs is $124.3 billion.  Per pupil spending is up from $16,881 in 2020-2021 to $23,089 for 2021-2022.  So let us talk about $121 billion and how much money that is and where does it go.

Does Playing California State Lottery Lead to Bankruptcy?

No, I am just joking about this.  As a bankruptcy attorney in the Bay Area I regularly encourage my bankruptcy clients to buy one ticket each week or when the jackpots get huge.  Hopefully they will crack off a piece of that cheese for me.  I cannot ethically treat humans in the requisite way our system requires to obtain/earn/steal millions of dollars.  I could never sell my services as a bankruptcy attorney at 10 times the amount other bankruptcy attorneys charge regardless of how superior the services are.  This is not true of cellphones.  Apple can markup a cellphone to $1,200.00 and we all call it capitalism versus some other manufacturers cellphone selling for $100.00.  As an attorney that would be unethical even if the client chose to pay over 10 times more.  I, like most humans, will have to have blind luck to get that amount of money and that is where the California State Lottery comes in.  Do not fool yourself.  The only way to get rich is at the expense of many other human beings one way or another.  It is to capitalize. 

Foreclosure and What are the Tax Consequences, Do You Have to File For Bankruptcy?

By Ryan C. Wood

These past couple years have been very hard on homeowners.  Homes are being foreclosed on left and right.  If you have been caught in this crisis as well you may need to know what your options are after your home is foreclosed and whether one of those options includes bankruptcy.

Many bankruptcy attorneys ran into all kinds of scenarios regarding foreclosure and potential resulting debts during the mortgage meltdown.  For many homeowners the foreclosure was not their only problem with debts and credit card debts were also a major problem.  Luckily there is the Bankruptcy Code that provides a legal discharge of personal liability for all debts incurred prior to filing.  

If your residential property was foreclosed and you only had one mortgage on the property then you may not need to file for bankruptcy since the creditors cannot go after you for any deficiencies due to the One Action Rule.  However, under normal circumstances, even if the creditors do not go after you for the deficiency you may still owe a hefty chunk to the taxing authorities, the Internal Revenue Service (“IRS”) and California’s Franchise Tax Board (“FTB”).  That is because the taxing authorities could treat the cancellation of debt as a taxable event since you did not have to pay the deficiency to the mortgage creditor, and thus the money you did not have to pay them is considered income in the form of a 1099-C.  This is a harsh double whammy for homeowners who have lost their home and now they have a hefty bill they need to pay the taxing authorities.  Hopefully if your CPA did not identify your tax debt is related to your foreclosure the bankruptcy attorney you consult with will.  Not all 1099-C income is a taxable event that must be added to income.

Since the foreclosure rates have been so high in the most recent years the federal and state governments have created temporary laws that would help ease the financial hardship of homeowners who have lost their homes.  IRS created the Mortgage Forgiveness Act of 2007 which forgives up to $1 million in debt for the deficiencies related to the foreclosure of a primary home for a single or married filing separate taxpayer and up to $2 million for a married couple.  The debt has to be related to the house, either building, improving or maintaining it.  There could be multiple mortgages on the house, and as long as they were all used for the property, you would not have to pay taxes on the cancellation of that debt.  The trouble that a lot of homeowners run into is the fact that sometimes the second mortgages are taken out to pay off their credit card debt or buy new cars which have nothing to do with the house.  If that is the case the deficiencies on that debt are still a taxable event to the IRS.

California has a similar program that protects homeowners who have lost their homes in a foreclosure.  They exclude up to $250,000 of debt for deficiencies related to foreclosure of a primary residential property for a single or married filing separate taxpayer and up to $500,000 for a married couple.

Since both the federal and state governments are protecting only primary residences, if you have a rental property, or business property, or even second mortgages that were taken out to pay off debt that is not related to your home, the cancellation of such debt are still considered taxable events.  Be sure to seek the consultation from an  experienced bankruptcy attorney and not an attorney just jumping on the band wagon when the economy turns sour.  

CA Bankruptcy Lawyer

By Ryan C. Wood, Attorney at Law

The process of filing for bankruptcy really should not be attempted without the counsel of an experienced CA bankruptcy lawyer.  Like any area of the law it is best to let someone who has done in hundreds of times help you.  We have filed hundreds of bankruptcy cases for residents of the Bay Area successfully time and time again.  We did not start practicing bankruptcy law as extra income.  This is all we do.

If a chapter 7 bankruptcy is not filed properly you could lose some of your assets like a car or other valuable item.  Worse, your case could be dismissed without receiving a discharge.  This would be terrible given that the whole point in filing for bankruptcy is to get rid of (discharge) your unmanageable debts.  There are certain requirements that must be completed when filing for bankruptcy protection.  You must take the required courses ($14.99 total for a single person) and provide documents to the trustee assigned to your case.  Some chapter 7 bankruptcy cases are somewhat routine, but if anything goes wrong you will seek out an attorney to help you get out of it.  It is prudent to start the process and end the process with the counsel of an experienced bankruptcy attorney.

Filing a chapter 13 bankruptcy case is even more complex and there are almost no chapter 13 bankruptcy cases that are successfully without the assistance of an attorney.  The first issue is the trustee’s offices do not want to deal with bankruptcy filers that do not have attorneys.  It is not their job to make sure you represent yourself correctly or file the necessary documents on time and accurately.  The trustee’s job is to administer the bankruptcy estate.  Formulating a chapter 13 bankruptcy plan of reorganization is challenging even for some attorneys.  If the chapter 13 plan is not correct the trustee’s office will not recommend approval of the plan.

Even if you are successful in having the chapter 13 plan confirmed, what will you do when something comes up during the second year of the plan or reorganization?  You can longer afford to make the chapter 13 plan payment each month?  You have lost your job?  Now what?  Or you won the lottery.  Now what?  What you should have done is retained a bankruptcy lawyer.  Retaining our services will answer each of these questions.  We have the experience you can depend on when an issue arises.

For more information about whether bankruptcy is right for you, contact our Fremont bankruptcy lawyers.  You may also contact our Union City bankruptcy lawyers for additional information about obtaining a fresh start through bankruptcy.