Practice Areas and Legal Definitions

Every year, more than 1,000,000 Americans file for protection under federal bankruptcy laws. Although some bankruptcy claimants are deemed credit abusers and/or considered financially irresponsible, many hardworking individuals and businesses can succumb to financial difficulty and face irreparable economic crisis. Bankruptcy is designed as a legal option to help resolve such a crisis and to act as a financial life preserver for those drowning in debt. To discuss your bankruptcy options, or other areas of recourse that might be available to you, contact a qualified bankruptcy attorney who can advise you of your legal rights provided by the Bankruptcy Code and federal bankruptcy courts.

New Bankruptcy Laws:
Bankruptcy is a federal court process designed to help individuals and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as liquidation or reorganization. Under a liquidation bankruptcy (Chapter 7), a claimant files to eliminate debt through the bankruptcy court. Under a reorganization bankruptcy (Chapter 11 or Chapter 13), a claimant files a plan with the bankruptcy court proposing how to repay creditors.

As of October 17, 2005, the requirements under which a debtor may file Chapter 7 bankruptcy changed with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act. Debtors are now required to seek budget and credit counseling within six months prior to filing their bankruptcy case, financial “testing” is required to determine the debtor’s capacity for debt repayment, Chapter 7 cannot be filed if the household income is greater than the median household income of the state the debtor lives in, and state exemptions cannot be applied unless the debtor has resided at his current residence for over two years.

Due to the requirements for Chapter 7 bankruptcy under the new laws some debtors who formerly would have been eligible to file under Chapter 7 will now have to file under Chapter 13. Chapter 13 provides for a court-approved plan which requires some or all debts be repaid over a three to five year period, with an appointed trustee assigned to monitor the repayment process. Bankruptcy filings will continue to be recorded on an individual’s credit report for seven years in the case of Chapter 13 and up to ten years for Chapter 7.

Chapter 7:
Chapter 7 cases are commonly referred to as straight bankruptcy or liquidation cases and may be filed by an individual, corporation, or a partnership. A Chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in Chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets (if any) and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages/trust deeds which pledge the property to a secured creditor. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property, which is often all the debtor’s property, but the trustee will liquidate the debtor's remaining assets. Accordingly, potential debtors should realize that the filing of a petition under Chapter 7 may result in the loss of property.

Chapter 11:
Chapter 11 is typically used for business bankruptcies and restructuring. It is not commonly used by individual consumers since it is far more complex and expensive to pursue. It allows businesses to reorganize themselves, giving them an opportunity to restructure debt and get out from under certain burdensome leases and contracts. Typically a business is allowed to continue to operate while it is in Chapter 11, although it does so under the supervision of the Bankruptcy Court.

Chapter 13:
A Chapter 13 bankruptcy is also called a wage earner's plan and it enables individuals with income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over a three to five year period. Chapter 13 permits individuals to keep their property by repaying creditors out of their future income. It is not available to corporations or partnerships. After completion of payments under the plan Chapter 13 debtors are generally relieved from repaying any remaining debts, with a few exceptions.

Foreclosure:
Foreclosure is the legal proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property, usually due to the owner's failure to make loan payments under a promissory note secured by a mortgage or trust deed. When the process is complete, it is typically said that "the lender has foreclosed its mortgage or trust deed".

A foreclosure by sale includes the posting of a sign and recording (with the County Recorder) of a notice of sale advertising the auction of your home on the sale date. Two common ways to stop a foreclosure are full payment of the arrearage or the filing of a Chapter 13 bankruptcy. Full Payment: If you are able to obtain and tender the full amount of your arrearage, including fees and costs, you can stop the foreclosure of a standard residential mortgage. Most people lack the money to make full payment. Filing Chapter 13: This process stops the foreclosure and allows you to repay your arrearage over a three-to-five year period. The arrearage is paid through your Chapter 13 Plan while you resume your regular monthly payments to the bank in order to keep your home. A Chapter 13 can be filed at any time prior to the foreclosure sale date and it is often the best avenue to save your home.

Debt Consolidation:
Contrary to popular belief, debt consolidation is not a loan. Debt consolidation is a process in which debt is restructured into one low monthly payment. It further enables a consumer to reduce the amount owed and thereby eliminate interest. Very often a consumer can detect warning signs of being in too much debt long before any collection notices are received. If more than two of the following signs apply to you, you are probably in too much debt:

• You have begun charging to your credit card essential expenses like food and daily expenditures
• You are making only the minimum payments on your credit cards each month
• You are near the limit of your credit cards
• You have too many credit cards
• You are unsure how much money you owe creditors

Bankruptcy Fraud:
Bankruptcy fraud is a business crime of filing for bankruptcy with criminal intent, such as filing with the intention of evading payment for goods even though the buyer has non-exempt funds that could be used to pay for them, or accepting payment for goods or services but not supplying them. Common types of bankruptcy fraud include concealment of assets and fraudulent conveyance of property. Multiple bankruptcy filings are not per se fraudulent - as with all things in the law, it depends on the circumstances.

Real Estate Negotiations:
In major financial transactions, especially those involving real estate properties, it is important to have a knowledgeable negotiator working for you, one who knows the law and whose loyalty to you is undivided. Real estate brokers and agents depend on sales commissions for their livelihood. If the sale does not occur they receive nothing for their time and energy, and this can create a conflict of interest. You need someone representing you who is less concerned about a particular sale going through than with making certain your legal rights are protected.

Title Clearance Issues:
When the title search discloses problems the seller is then faced with the problem of clearing the title defects. The buyer must also be concerned with the terms of the title policy. As with any other insurance policy, title insurance documents are usually packed with disclaimers of one kind or another, all in highly technical real estate jargon and legalese, and all set forth in the tiniest of fine print. Failure to fully understand the import of a particular clause or disclaimer in the policy can result in financial consequences at some later date, when it may be too late to do anything about it. If you find things in the title report or policy that you don’t understand your real estate attorney can explain them to you and can also point out to you any items that need to be challenged and resolved. Given the amount of money involved in modern real estate transactions, it is critical to make certain that title problems are not going to make the deal a disaster.

Quiet Title Matters:
Sometimes a particular piece of real property has title defects of such significance that no sale or other transfer of ownership can occur until they are resolved. A frequent method of clearing title defects is a lawsuit called a “Quiet Title” action. In the quiet title action, the court would receive and consider evidence on the issue and, if satisfied that the claim or position had been discharged or found to be without merit, it would issue an order dissolving (removing) the claim.

Mechanic’s Liens:
When doing building construction or repairs, building contractors often utilize a legal device called a “mechanics lien” as a means of making certain they will be paid for their labor and materials. The creation of a mechanic’s lien requires written notice to the owner of the property and other formal requirements, and its enforcement is subject to strict statutory rules. Once a valid mechanic’s lien attaches to the property, however, it operates as a claim against the property which, if it remains unpaid, can ultimately result in foreclosure proceedings.

Real Estate Document Preparation:
Whatever may be verbally said during real estate negotiations, whatever verbal promises may have been made, it is the final written documents that will control what happens. Many of the closing documents involve the completion of pre-printed forms, but sometimes the details of a particular transaction require modification of a form to provide adequate protection. Your real estate attorney can either prepare all of the documents, or can review the documents that have been prepared, explain them to you and suggest changes, as needed, for your benefit.

Sales Breach Issues:
Once a written agreement has been executed by both parties to a real estate transaction its provisions are legally binding. Which judicial remedies, if any, may be available for any breach of the agreement depends on a variety of factors. There may, for example, be remedies available to the buyer if the seller breaches that are not available to the seller if the buyer is the breaching party.

Land Development Issues:
Land development projects grow more difficult and complex with each passing year. Your real estate lawyer can guide you through the labyrinth of zoning regulations, environmental agency requirements, building, fire and safety codes and the various other requirements for doing business in this complicated field of real estate.

Landlord/Tenant Issues:
As with any other agreement, if one side fails to perform obligations under a lease the other side may bring a lawsuit to enforce the obligations. The most common cause of litigation between landlord and tenant involves the non-payment of rent. California law tries to provide a speedy legal remedy for landlords, featuring a sharp reduction in the time permitted for a defendant to respond, and giving the case preference over most other types of cases on the court calendar for an early hearing date.

In many ways, unlawful detainer actions are tilted, procedurally, in favor of the landlord over the tenant. Because of this, courts are extremely strict in the enforcement of the landlord’s procedural obligations. A very slight technical violation on the part of the landlord can cause an unlawful detainer action to be dismissed by the court – it can be re-filed, of course, but the unpaid rent continues to mount while that is being done.

Eminent Domain Proceedings:
Eminent domain proceedings are used by governmental agencies to acquire real property (even when the owner doesn’t want to sell it) for use in a project of some kind for the general public benefit. A recent decision by the United States Supreme Court has greatly expanded the discretion of state and local governments to seize property, even when they do so for the benefit of a private company, if they feel the project contemplated by the private company will benefit the public. In mounting a defense to an eminent domain action the property owner can resist the seizure itself and can also challenge the dollar amount the agency is willing to pay for the property. The property owner in an eminent domain proceeding is entitled to the fair market value of the seized property.

1031 Exchanges:
Internal Revenue Service Code §1031 provides a means for deferring the capital gains tax consequences of a real estate transaction when the proceeds of sale from one transaction are to be promptly reinvested in another similar type property. The key word here is “deferral". What happens is that the tax basis of the old property is transferred to the new, so that when the new property is ultimately sold, the tax will be due. Of course, if the second property is also sold under a 1031 exchange, the tax will be deferred yet again.

Zoning & Land Use Issues:
Zoning and land use laws come into play in every real estate development, whether large or small. Before buying real estate property or making major improvements to property you currently own, it is absolutely essential that you know about and understand the existing zoning and land use restrictions.

As a general rule, allowed land uses are compatible with each other. You cannot, for example, put in a dairy herd, a shopping mall or an office building on land zoned for residential use. It is sometimes possible to persuade local authorities to change the zoning for a particular area, but it can be very difficult, very expensive, and it can take a long time. In some cases it is possible to secure a zoning variance. A variance is in the nature of an “exemption” for the particular parcel of real property from a particular zoning requirement. Zoning changes and variances both involve extremely complex and difficult legal and political skills and often require public hearings before governmental agencies.

Condominium Conversions:
The upsurge in land values in recent years has contributed to the growing popularity of condominium living. More and more people, especially first time home buyers and new real estate investors, have turned to condominiums for their first real estate investment. As the cost of building materials and construction labor has increased so has the interest in the conversion of mobile home parks and apartment buildings into condominiums or cooperative corporations. Condominium conversions can be extremely profitable but they are long-term projects which are sharply regulated by state and local legislation.

Condominium Association Matters Including Common Area Fee Recovery:
While condominium associations are somewhat self-governing they must comply with state and federal law and with the provisions of their own bylaws. A qualified real estate lawyer can provide timely and useful advice to condominium associations so that they may accomplish this purpose. Association officers can be held individually responsible if the Association fails to comply with the law. A condominium association should be managed by professional managers and not dependent on persons with little experience. >

If you or someone you know in Southern California needs the assistance of an experienced San Diego bankruptcy attorney, please call Bruce Babcock today at 866-633-5115, or complete the contact form provided on this site to schedule your free consultation.

Professional Profile

If you or someone you know in Southern California needs the assistance of an experienced San Diego bankruptcy attorney please call Bruce Babcock today at 866-633-5115, or complete the contact form provided on this site to schedule your free consultation.

ADDRESS OF THE FIRM:
Bruce R. Babcock
4808 Santa Monica Ave.
San Diego, CA 92107
Telephone: 866-633-5115
Fax: 619-222-2310

MEMBERS OF THE FIRM:

Bruce R. Babcock

EDUCATION:

• Syracuse University, 1974
• Western State University School of Law, San Diego, 1978  

• State of California, all courts
• United States District Court

• California Bar Association
• National Association of Consumer Bankruptcy Attorneys
• California Real Estate Broker
• National Association of Realtors
• California Association of Realtors
• Northern San Diego County Association of Realtors