Chapter 7 Bankruptcy Filings in Orange County, August 2009

September 9, 2009 · Posted by admin

Chapter 7 bankruptcy filings for the month of August 2009 have been most numerous in the following Orange County cities:

Anaheim, Fullerton, Garden Grove, Huntington Beach, Irvine, Laguna Niguel, Lake Forest, Mission Viejo, Orange, and Santa Ana.

Chapter 7 bankruptcy attorneys in Orange County have also seen a high number of bankruptcies filed in Costa Mesa, Rancho Santa Margarita, and Westminster.

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Chapter 7 Bankruptcy Filings in Orange County, June 2009

July 3, 2009 · Posted by Alex

For bankruptcy attorneys in Orange County, the number of Chapter 7 bankruptcies filed at the Santa Ana Bankruptcy Courthouse in June 2009 was high again, just as it was last month.

The ten cities with the most Chapter 7 bankruptcy filings in Orange County for the month of June 2009 were:

Anaheim, Buena Park, Fullerton, Garden Grove, Huntington Beach, Irvine, Mission Viejo, Orange, Santa Ana, and Westminster.  Rancho Santa Margarita and Costa Mesa also had a high number of Chapter 7 bankruptcies filed in June.

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One Reason Why Debt Reduction Plans Aren’t As Good As They Sound

June 13, 2009 · Posted by Alex

Like most people, when I drive to work in Irvine every morning I surf the various local radio stations. I’ve noticed a lot more advertisers for debt reduction plans, sometimes called debt elimination or debt negotiation, lately. The fact that they advertise on the radio tells me that the current financial stress is impacting everyone – whether living in Rancho Santa Margarita, Santa Ana or Newport Beach.

But debt reduction plans are not always as helpful as they might sound. Why? Debt forgiveness doesn’t eliminate as much debt as you might think. The reason: Borrowers must often pay high fees and pay income tax on the forgiveness of debt.

You see, debt forgiveness is usually considered to be a taxable event, because a taxpayer is deemed to have gained something (income) by not having to pay back the debt. So, our U.S. and California tax laws impose a tax on forgiveness of debt “income.”

The taxes are often waived if the forgiveness of debt occurs while the borrower is insolvent or bankrupt (filing a bankruptcy is not required), so it doesn’t always impact every debtor, but here’s an example of how it might affect a typical borrower:

Net Benefit of Debt Reduction Plan

$100,000 Total Debt
$40,000 Reduced Debt (expected payoff)
$15,000 Debt Reduction Fees (attorney/debt consultant fees)
$16,200 Forgiveness of Indebtedness Tax (see below)
$71,200 Total Payments After Debt Reduction

$28,800 Net Benefit After Debt Reduction

Forgiveness of Indebtedness Tax Calculation

$45,000 Taxable Forgiveness of Indebtedness (forgiveness of debt less fees)
$12,600 Federal Tax for Forgiveness of Indebtedness (assumes 28% tax bracket)
$3,600 State Tax for Forgiveness of Indebtedness (assumes CA 8% tax bracket)

In this greatly simplified example, a borrower paying a 15% fee on a $100,000 debt reduction plan and who must pay typical income tax rates on the anticipated 60% forgiveness of indebtedness “income” would only benefit by approximately $28,800. Although it is a benefit, it’s far less than the “60%” reduction amount that most people expect when they hear a radio add promising a reduction of “up to 60%.”

Something to think about before deciding to sign up for a debt reduction plan…

For more info on debt elimination, debt negotiation, or debt consolidation services, or to find out about how these services compare to bankruptcy, visit Curtis Law Group

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Couple That Struck It Rich In Real Estate Files For Bankruptcy

February 11, 2009 · Posted by Alex

Mr. and Mrs. Robert Dyson have been forced into bankruptcy. According to their bankruptcy attorney, the real estate market’s dismal state during this economic crisis was the culprit. As news about record foreclosures and Orange County bankruptcy cases filed (along with other southern California counties), it is not too surprising that the real estate market that had given this couple so much, ended up taking away as much as it gave.

From the North County Times online article:

“A couple who made a name and fortune in high-class coastal real estate have crashed into bankruptcy and are asking a court to erase more than $40 million in debt, including $625,000 that stemmed from alleged misuse of a helicopter loan.

According to court filings, property records and interviews, the couple, Robert and Loraine Dyson, shut down their Solana Beach real estate brokerage, an affiliate of Sotheby’s International Realty, in October. They also filed for personal bankruptcy and have apparently scotched plans to develop an equestrian resort and estates in central Riverside County…

The Dysons’ financial unraveling was as spectacular as their ambition. The couple own a $7 million estate in Rancho Santa Fe and —- until recently —- several other residences in the most exclusive areas of the Southern California coast and the San Jacinto Mountains.

Press releases from their real estate agency reported billions of dollars of annual sales. Their charitable foundation parceled out tens of thousands of dollars.

The Dysons’ slide into bankruptcy followed an attempt to transform themselves from high-end real estate agents into high-end developers at what may have been the worst possible time.

They put some $30 million into property in the foothills of the San Jacinto Mountains starting in late 2005, with plans for equestrian estates that would eventually ramble over nearly 2,500 acres…

They filed for Chapter 7 bankruptcy on Oct. 30, estimating their debts at $50 million to $100 million and their assets at $1 million to $10 million. A debtor who qualifies for Chapter 7 can usually keep a car and other necessities, subject to limits on their value; other assets are sold off to cover portions of the debt, and the remaining debt is wiped away.

The trustee supervising their bankruptcy recommended in December that the couple abandon the Rancho Santa Fe home that they bought in June 2005 because debt and liens account for nearly its entire $7 million value. A later filing by the trustee recommended they give up a $90,000 leased Porsche sports car and their $3.2 million home in Palm Desert, which is in foreclosure…”

Although this couple’s real estate woes lay outside of Orange County, many cities within Orange County such as Santa Ana, Irvine, and Rancho Santa Margarita, are seeing increased foreclosures and Chapter 7 bankruptcies as well.

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Chapter 7 Bankruptcy Filings in Orange County for January 2009

February 4, 2009 · Posted by Alex

The search for an Orange County bankruptcy attorney to file a Chapter 7 bankruptcy was made by hundreds of Orange County residents each and every month in 2008. This year looks like more of the same, and possibly much more of the same. In January 2009, 561 Orange County residents filed for Chapter 7 bankruptcy.

The Orange County cities with the most Chapter 7 bankruptcy filings for January, 2009 are as follows: Anaheim, Buena Park, Costa Mesa, Fullerton, Garden Grove, Huntington Beach, Irvine, Lake Forest, Mission Viejo, and Santa Ana.

Other Orange County cities that also had a high number, especially considering their relative population, include Aliso Viejo, Rancho Santa Margarita, San Clemente.

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