Bankruptcy and the California Homestead Exemption

Question: Can I file for Chapter 7 and still keep my primary residence?

Answer: You need to provide your attorney with more information, namely whether you're behind on your mortgage payments and the amount of equity in your home. There are applicable exemptions for equity up to a certain point. You may be able to keep your primary residence in a Chapter 7, but it depends on many factors that you need to discuss with your bankruptcy attorney.

California's homestead exemption law dictates the amount of equity in your home that you can protect from creditors in a bankruptcy. The exemption amount depends on the several factors, including your age and marital status. If the equity in your home is equal to or less than the allowable homestead exemption and you keep up your mortgage payments, you should be able to keep your home.

The equity in your home is determined by subtracting the value of any liens from the fair market value of the home. Fair market value can be assessed online at websites such as Zillow.com and Yahoo! Real Estate.

Under California law, the default homestead exemption amount is $50,000. The exemption amount increases to $75,000 for a married couple. The exemption amount is $150,000 for people who met any of the following criteria: (1) aged 65 or older; (2) unable to engage in meaningful employment due to physical or mental incapacity; or (3) are 55 or older and meet certain low income requirements.

If you have a large amount of equity in your home, you might lose your home in a Chapter 7 if the trustee decides to sell it. In that case, a Chapter 13 repayment plan might be better for you.

You need to see a local bankruptcy attorney because it is impossible to give you more specific advice without more information about your particular situation.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Home Foreclosures Rise 36 Percent In August

Month's Total More Than Doubles From Year Before

LOS ANGELES -- Signaling deepening trouble for homeowners, the number of foreclosure filings reported in the U.S. last month more than doubled from the year before and jumped 36 percent from July.

Experts said the trend suggests many homeowners are increasingly unable to make timely payments on their mortgages or sell their homes amid a national housing slump and credit crunch.

The California-based company, RealtyTrac, said August's total represents the highest number of foreclosure filings reported in a single month since the company began tracking monthly filings two years ago.

Consumer Internet Alert: vtexperts.com

The Department of Corporations has been notified that Vehicle Trade Experts (www.vtexperts.com) is offering escrow services over the internet and is falsely advertising at its website that it holds California Department of Corporations license 9521467. This is not a valid license number. vtexperts.com, which states its head office is at 1440 Skymark Ave, Toronto, ON, is not licensed by the California Department of Corporations.

Disposition of Excess Foreclosure Proceeds

Question: I lost my home to foreclosure and they sold my house for more than I owe. Do I get any of the excess money? The bank sold my house for $50k more than I owed, even with the finance charges.

Answer: The bank is only entitled to retain the amount owed on the loans plus any legally authorized costs of the foreclosure sale. Any exceed proceeds could go to you or to creditors that have priority over you.

Suppose you had a second mortgage for $75,000. California Civil Code § 2924k(a)(3) requires that surplus funds be paid to "to satisfy the outstanding balance of obligations secured by any junior liens or encumbrances in the order of their priority." The second mortgage holder would make a claim to the $50,000 above what was necessary to satisfy your obligation under the first mortgage. You might also have judgment creditors who have put a lien on your home that would have priority over you.

If there are no other creditors with a legal entitlement to the money, you can retrieve the excess proceeds from the foreclosure trustee. Feel free to contact us if you need further assistance.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Deadline to Sue on a Personal Loan

Question: I made a personal loan to a friend of $3000 to help save their business. In the loan agreement, it stated that the money (plus interest) was to be repaid in six months. The due date has passed by eleven months, and I have not received one cent towards repayment. How much time do I have before I loss my right to sue for the money?

Answer: It sounds like you had a written promissory note. If the loan was made under a written agreement, you must sue within 4 years of the date that your friend breached the agreement. Your friend breached the agreement when the loan became due.

If the loan was a verbal agreement, then you have two years from the due date to file a lawsuit.

For $3000, you should sue in small claims court rather than hire an attorney.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Business Travelers Beware: Free Wi-Fi Scam Strikes at Airports

This Better Business Bureau consumer bulletin is sponsored by San Diego Gas & Electric, a Sempra Energy utility.

In order to keep up in today’s world, a business needs to make sure its employees stay connected, even on the road. Many airports and other public spaces offer free wireless, or Wi-Fi, connections for the public to log onto the Internet from their laptop computers. The Better Business Bureau (BBB) warns that hackers are now taking advantage of this convenience and setting up fake Wi-Fi connections designed to steal your personal information and files without you even knowing.

How it works:

Although hackers can and have set up fake Wi-Fi connections in a number of venues, usually they will target consumers at airports. When searching for connections, consumers may see a network connection available that could be simply named “Free Wi-Fi.” Thinking it’s the free connection offered by the establishment, they’ll log on. Unfortunately, the network may actually be an “ad-hoc” network, or a peer-to-peer connection. The user will be able to surf the Internet, but they’re doing it through the hacker’s computer. And the whole time, the hacker is stealing information like passwords, credit card and bank account numbers, and social security numbers. Beyond simply stealing keystroke information as the user enters various types of data, if the PC is set to share files, the hacker could even steal whole documents from the computer.

Airports across the nation continue to report on Wi-Fi security issues. Officials in Atlanta, New York LaGuardia and Los Angeles airports have all reported the existence of ad-hoc networks advertised as free Wi-Fi connections. An investigation revealed that Chicago O’Hare had 20 ad-hoc networks present that were potentially designed with the intent of hacking into unsuspecting user’s computers and networks.

The BBB offers the following advice on how to keep yourself safe when you go wireless:

• Never connect to an unfamiliar ad-hoc network, even if the name sounds genuine. A hacker can change the name of his network to anything he wants, including the name of the legitimate Internet connection offered by the airport. Just because it has the same name as the Wi-Fi advertised in the airport, don’t believe it. For more information on how to distinguish between an ad-hoc network and a normal Wi-Fi network with Windows Vista or XP visit http://support.microsoft.com/.
• Make sure that your computer is not set up to automatically connect to non-preferred networks. Otherwise your computer could automatically connect to the hacker’s network without your knowledge.
• Turn off file sharing when you’re on the road to prevent hackers from stealing entire documents, files and unencrypted e-mail from your computer.
• Create a Virtual Private Network (VPN) for your business. A VPN establishes a private network across the public network by creating a tunnel between the two endpoints so that nobody in between can intercept the data. Many companies allow remote users to connect to corporate networks as long as they use VPN. This keeps the users' communications just as secure as if they were sitting at a desk in the building.

The BBB is here to help with advice you can trust. For more information on identity theft, fraud prevention, and keeping your company secure online, visit http://www.sd.bbb.org/.