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Who Files Bankruptcy In The Face Of Booming Bay Area Economy?

By Cathy Moran

who files bankruptcy

Silicon Valley is booming; our highways are so full of people getting to work that we can’t get to work.

Employment is approaching the level of the dot.com bubble.  Property values are outrageous.

So who files bankruptcy in this pocket of prosperity?

All kinds of people, it turns out.

Let’s look at the people who sought me out last month to explore what bankruptcy could do about their crisis.

I’ve smudged the stories just enough to preserve privacy but still tell their stories.  See if any story resonates with you.

Foreclosure threatens elder

The mortgage mess lingers on around the Bay Area:  this single elder had been advised to miss mortgage payments in order to qualify for a loan modification.

Then, you guessed it, he didn’t get the loan modification and was stuck with a defaulted mortgage.

Chapter 13 will allow another attempt at modification, out from under the foreclosure threat, and a payment plan to get current if no modification is forthcoming.

Lawsuit cripples contractor

A lawsuit by a customer threatened to ruin the business this corporation owned.  Even if the legal defense was successful, the legal fees and the time away from work would sink the business.

While usually a bankruptcy doesn’t do much for a corporation, in this case a Chapter 7 stopped the litigation and freed up the owner of the business to start a new operation in the same field.

Chapter 13 saves businessman from crippling lawsuit

There are contractor licensing issues and cash flow challenges when the existing receivables belong to the entity and the individual needs to start over, but, with planning, it can be done.

Old taxes cloud retirement

Several clients brought tax troubles.  For one couple, it was taxes that one spouse brought to the marriage from a previous life.  The age of the taxes will permit an immediate discharge of the tax in Chapter 7 and only one spouse needs to file.

Another couple came with hundreds of thousands in taxes, some dischargeable and some that will survive Chapter 7.  Wiping out the old taxes makes sure that their payments going forward get applied to the most recent taxes that won’t go away in bankruptcy.

A third couple will be paying the non dischargeable taxes through a Chapter 13, paying off the tax liens that actually attach to value, and eliminating the older taxes at the end of the payment plan.

More on how bankruptcy can deal with taxes

Underemployment and credit cards

Failed self employment efforts and continuing underemployment lead to credit card debt that my last client couldn’t manage.

She hopes for a fresh start next year, free from the collectors that are now hounding her.

Not all are equally lucky

Silicon Valley is world renowned for start ups and technical innovation. The successes are widely heralded.

But for every success, there are far more ideas and efforts that didn’t make it big or failed spectacularly.  The ability to try, fail and start over is one of the strengths of our approach to financial distress.

For individuals, illness, divorce and job loss magnify the economic challenges of living in the Bay Area.

The chance to put the debts of the past behind us fuels creativity, productivity and a good home life.

Bankruptcy can set the stage for good things.

More

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Filed Under: Strictly California, True Stories Tagged With: 2016, Bay Area, Silicon Valley, who files

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

Bankruptcy Basics

About The Soapbox

You’ve arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said “try”).

Here, I allow myself to tell stories and express strong opinions. We dig deeper into how to consider bankruptcy and navigate a bankruptcy case.

Moran Law Group
Bankruptcy specialists for individuals and small businesses in the San Francisco Bay Area

How Bankruptcy Works

What Happens To Your Bank Account in Chapter 13

Those considering filing a Chapter 13 bankruptcy worry about "what happens to my bank account?" Will the trustee take all the money? How do I pay my living expenses after I file? The short answer is: nothing changes. The account remains yours and available for all the expenses of day to day living. Because, … Read more

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