Latest Event Updates

MEDICAL MALPRACTICE – SHOULD YOU GET SECOND OPINIONS?

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    With regard to potential case evaluation, law is as much about opinion as it is about facts. The good medical malpractice case will have substantial injury as a result of medical services done below the standard of care. Both damages and poor practice are needed. Opinions differ greatly as to what constitutes substantial damages and poor practice.
    Licensed healthcare providers (nurses, physicians, dentists, chiropractors, and anyone else with a healthcare license) must practice with no less than the level of learning and skill ordinarily possessed by others in the same or similar locality and under the same circumstances. To fail to do so breaches the “standard of care.”
    If you suspect that your physician has been negligent, you should get a second medical opinion from another physician. Your insurance plan might even cover the expense of second opinions. Contact your insurance carrier to learn more about your rights to a second opinion. If the second opinion suggests that your initial care was below the standard of care, or if you are not able to get a reliable second opinion, you can consult a medical malpractice attorney.
    When consulting an attorney, be ready to provide dates, times, and names of healthcare providers. Exact dates are needed because there are time limits set by law which must be followed when suing a healthcare provider. Time limits are set by a “statute of limitations.” Thus, if you suspect you are a victim of medical negligence, do not delay in seeking legal advice.
    Your attorney can evaluate your case (sometimes for a fee), and provide you with an opinion as to whether you should sue or not sue. Feel free to disagree with the first attorney’s opinion, should that attorney tell you that you have no case. Get a second and a third opinion, but if all these opinions agree that you have no case, you should seriously consider accepting that you have no case.
    Each lawyer will have different experiences and knowledge bases as to your potential case, and every medical malpractice case is unique. Thus, seeking a few opinions is wise and will provide the broadest level of evaluation for your specific situation.
    The second opinion is valuable in medical care and legal practice. Take advantage of it.

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WHEN IS A SHORT SALE BENEFICIAL?

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    As was covered in another F&M’s post, in California purchase money loans on primary residences are considered non-recourse which means that in certain instances, the only thing a lender can do to a nonpaying borrower is take the home, and that borrower faces no personal liability for the debt. However, many California homeowners have taken cash out of their homes through refinancing and home equity lines of credit. Such cash-out borrowers do not enjoy complete immunity from personal liability.
    California law also provides that, in certain circumstances, a foreclosing lender cannot hold a homeowner personally liable for the debt after foreclosure. A short sale is not a foreclosure. Thus, personal liability for a debt may exist when a home does not foreclose but instead goes to through short sale.
    In a short sale, a homeowner may face personal liability for the difference between the sale price and the sale price. Because brokers and agents get paid only if a sale goes through, these persons may not provide unbiased advice as to whether a short sale is in the best interests of a cash-out borrower. The problem gets more complex when there is are 2 or even 3 loans on a home, or the property is commercial.
    The foreclosure process in California generally takes no less than 6 months from the first missed payment. Thus, a homeowner can potentially be forced to move about 6 months after failing to pay. However, it can take 3, or even 4, months for a lender to approve a short sale. Thus, if a purchase offer is made 5 months into foreclosure, and the lender takes 3 months to approve the sale and another month to close, the nonpaying homeowner may get to stay in their home for a total of 9 months without paying the mortgage, property taxes, or insurance.
    To be clear, lenders get a benefit from short sale as homes sold at short sale often net the lender more than a bank-owned property sale. Bank-owned properties drive down prices in entire neighborhoods because they are often run-down and have brown lawns. Thus, the banks can benefit through short sales as opposed to foreclosure.
    An unbiased opinion as well as solid advice about the advantages and disadvantages of short sale versus foreclosure can be obtained from a knowledgeable and experienced real estate attorney. Because attorneys are paid hourly, their advice can be considered unbiased as opposed to people who are paid only “when the deal closes.” If a foreclosure, but not a short sale, would eliminate personal liability, the homeowner needs such information to make the right choice.
    When dealing with potential liability for hundreds of thousands of dollars, the price of an hourly consultation with a local attorney is a great investment.

CREDIT SCORES – WHY SHOULD YOU CARE?

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    For the last decade the media has pounded into the heads of American consumers that having a high credit score is the key to financial success. It should come as no surprise that the funding for all those commercials and PSA’s came from lenders, both mortgage companies and credit card providers. Of course lenders want people to pay their debts, and by creating a false pride in the “scores,” those debts have a better chance of getting paid.
    When faced with overwhelming debt, a person faces a moral choice about how far to go in trying to pay creditors. Many agree that people should pay their debts, but not if payment means not having food on the table or a roof overhead. Creditors know that many borrowers will default, and the losses are figured into the cost of doing business as a creditor.
    To be sure, scores were very important in the last decade as creditors would lend to anyone with a high score, whether or not that person had the ability to repay. However, to obtain a loan now, the two most important things a borrower must prove are stable income and sufficient assets. Thus, a “good borrower” is someone with a job and assets. The score is no longer the most important qualifying factor.
    Creditors make money by loaning money. If they refuse to loan money to people with jobs and assets just because those people have low scores, they will not be providing many loans. What is important is the reason a score is low. If due to a one-time foreclosure, a lender may be more willing to lend to someone with a job and assets. Likewise, landlords will rent to someone with a job and assets over someone without a job and assets, no matter what the score. Scores are important, but just not that important.

WHEN COUPLES DIVORCE, WHO HAS TO KEEP THE HOUSE?

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    The major battles for divorcing couples used to be custody of children and possession of community assets. That was the rule for as long as people remember. However, in today’s economy, the only valuables in many marriages are children. Prior to the real estate meltdown, divorcing couples would litigate over ownership of the family home, and such a fight was worth every penny spent, because ownership in real estate was a great investment.
    Such courtroom battles are rarely seen today, because the family home is an economic liability; a hot potato that will likely burn whoever is left holding it. When a home is upside down (that is, worth much less than is owed to the lender), neither spouse wants the house. Each spouse’s goal becomes getting off the loan and walking away. The problem is the lenders are not willing to let either spouse off the hook for the debt.
    If a mortgage is barely affordable for both spouses, there is no chance of either spouse qualifying for a loan modification on his or her own. The end result is that neither spouse will get to keep the home. Before spending time and money trying to refinance or modify the mortgage on a family home, divorcing couples should consult with their family lawyers about whether there is any real possibility of keeping the home.
    Out of necessity, many experienced family lawyers have become skilled practitioners of mortgage law and debt law as they guide their clients through loan modification, short sale, foreclosure, and bankruptcy. Though facing life after divorce is extremely stressful in and of itself, facing overwhelming debt at the same time can push one past the breaking point. When starting anew with regard to family and romance, it may be the time to get a fresh financial start. If a family lawyer is uncomfortable with mortgage problems, debt issues, and bankruptcy, that lawyer should work with a lawyer who handles such matters. Filing for Chapter 7 bankruptcy protection has the potential to wipe away unsecured debts such as attorney should be able to determine whether the Chapter 13 plan can be modified to lower the planned payments or converted into a Chapter 7.
    Another reason to specifically seek out legal advice on both bankruptcy and debt issues when considering a divorce is that divorce lawyers are not inexpensive. While lawyer’s fees may be well-earned in a case of large assets, a thorough understanding of what assets are worth protecting and knowledge of debt protection  will save the time and expense of litigating over “nothing.” Legal fees can then be spent on what is important, custody and visitation.
    At Fransen & Molinaro, LLP Marie Gray has been a family lawyer for 19 years and Gregg Eichler has been a bankruptcy attorney for over 30 years. They can work together to provide the fresh start many people need.

YOU ABSOLUTELY CAN’T DISCHARGE TAXES IN BANKRUPTCY! OR CAN YOU?

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    In today’s exceptionally hard economic times nearly everyone has thought about bankruptcy, even those with no intention of filing. We all have at least one friend or acquaintance who has filed bankruptcy. Many local businesses as well as quite a few large corporations have filed for bankruptcy protection.
    Most of us are also aware that in 2005 the banks and credit card companies successfully lobbied Congress to make it harder for individuals and small business owners to file bankruptcy (yes, these lobbyists represented the same banks – JP Morgan-Chase, Citibank and corporations like AIG and Goldman-Sachs that brought you this new economic crisis in the first place and the same banks have now been bailed out with corporate welfare money) by limiting the amount of income a person can make and still file for Chapter 7. Most people that come to our law office already understand that domestic support, student loans and governmental fines cannot be discharged in bankruptcy. But, what about tax debt? Are taxes dischargeable? The traditional answer is that tax obligations to the state and federal government cannot be discharged. However, like many things in the law, there are exceptions. Depending on the type of taxes, when they were assessed and certain other factors, the tax debt may be dischargeable. Bankruptcy tax dischargeability analysis is not only hard to say but a very tricky area of law and even some bankruptcy lawyers have difficulty accurately determining whether tax debts can be discharged.
    During times of massive layoffs and corporate downsizing, many newly unemployed people tap into their 401(k), IRA, or similar tax sheltered retirement vehicle. In some cases the taxes are paid (often as much as 30-40%!) at the time of withdrawal, but when they are not paid at that time, the consequences can be devastating. We have seen clients cash out their 401(k) prematurely, not pay the proper taxes at that time, and find themselves owing the government $50,000 to $100,000 in taxes, penalties, and interest. When a tax debt of that magnitude hits someone without a job and depleted savings, there is really no way to pay the tax debt. Some people will go to their graves owing back taxes and penalties to the IRS. The most important keep in mind thing when significant taxes are owed to the IRS or to the State of California is that there may be some relief.
    Some debtors can get tax debt relief through a Chapter 7 bankruptcy. The facts have to be just right for this type of discharge, but it is not impossible. Another really important and powerful weapon against oppressive and overwhelming tax debt is the Chapter 13 bankruptcy plan. In some cases, a person may be able to treat tax debt as general unsecured debt. If this is the case, then only a percentage of the tax debt gets paid, and the balance is discharged. If the taxes are secured (for example by a tax lien) or the taxes are determined to be priority debt (recent taxes for example), there are still ways to reduce the taxes, or at the very least, to pay only the principal amount of the taxes without interest or penalties. The tax arena is filled with laws and loopholes, and this is why both experience and knowledge are necessities when dealing with “back taxes.”
    When substantial taxes plus other debts are owed, it is prudent to consult a bankruptcy attorney who clearly understands the tax implications of the Bankruptcy Code.

BANKRUPTCY 2010 – CAN MY BUSINESS BE SAVED?

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    Many of us hoped that 2010 would start an economic turnaround that would enable individuals and businesses to keep their heads above water and avoid bankruptcy. While some pockets of the economy show signs of modest improvement, much of Southern California’s economic base has not responded well to the “economic stimulus.” Many small businesses and self-employed persons, have, or are considering, simply throwing in the towel. Is there an alternative to closing the doors or letting everything go? Absolutely!
    When we hear the word “bankruptcy,” the immediate picture that comes to mind is that of a Chapter 7 liquidation which ends the business. If the business has a chance of survival, Chapters 11 or 13 may be the more appropriate way to save the business. When large corporations suffer financial losses, Chapter 11 provides a method of restructuring their debt and allowing them to stay in business. However you don’t have to be GM or Pacific Gas & Electric to file Chapter 11. Small businesses, corporations, partnerships, sole proprietorships, and individual professionals may file Chapter 11, remain in business, and avoid liquidation. There are provisions in the law for a “Small Business Chapter 11,” to speed the process and make it less costly.
    A Chapter 11 is based on a new business plan that you formulate. Under Chapter 11, the debtor may seek an adjustment of debts by reducing the debt, by extending the time for repayment, or seeking a more comprehensive reorganization. There is no debt limit in a Chapter 11.  The only real requirement is that there is some hope of reorganization.
    Chapter 13 is also a debt repayment plan. In contrast to a Chapter 11 plan, the 13 plan is very simple and more structured. Chapter 13 eligibility is limited by a debt ceiling but many small businesses qualify (if not, the small business 11 may be appropriate).  Most people think only an individual can file a Chapter 13. While partnerships and corporations cannot file a Chapter 13, sole proprietorships or individual professionals may be eligible for relief under Chapter 13.
    One important advantage of Chapter 13 is that the plan can include a home mortgage and provide individual debtors with an opportunity to save their homes from foreclosure. Chapter 13 plans allow time to “catch up” on past due payments to the 1st mortgagor, and, in some cases, “lien strip” a junior trust deed. A “lien strip” can treat a junior lien on real property as unsecured for purposes of the Chapter 13 plan. In some cases, when the plan is completed and a discharge entered, the junior lien is completely extinguished.
    If reorganization is not possible, Chapter 7 can provide relief and protection for business’s owners. To qualify for Chapter 7 relief, the debtor may be an individual, a partnership, or a corporation or other business entity. Under Chapter 7, there is no limit to the amount of debt and no consideration of whether the debtor is solvent or insolvent. In 2005, Congress passed legislation making qualification for Chapter 7 more difficult by requiring the use of a “Means Test” which used gross income as a limiting factor. Fortunately, if your debt is primarily business debt, the income limits may not apply.
    Bankruptcy law in 2010 is more complicated than ever, but with highly skilled counsel guiding the process, you and your business can survive this unprecedented downturn. While successful Chapter 7 and 13 bankruptcies require modest experience, a successful Chapter 11 filing is complicated and is nearly impossible without years of experience. The final message here is that there is help for struggling businesses.