Vehicles – Your Options

You can keep your case through Reaffirmation, or a Redemption or Pay and Retain. Or you may choose to surrender your vehicle and not owe any of the remaining loan.

Option 1 – Reaffirmation:

You keep your vehicle and you stay liable for that payment until it is paid completely off – just like it was before you filed bankruptcy. You are not taking advantage of the opportunity to eliminate the debt – you are instead choosing to stay responsible for the debt. Advantages to you are that you can improve your credit score with a reaffirmation and the company will not foreclose as quickly if you occasionally get behind on your payment. Disadvantage to you is that if you cannot make your payments in the future, tough luck, you remain liable on the debt and the bankruptcy will not help you.

The Reaffirmation Process: Reaffirmation agreements on secured loans are required by the Bankruptcy. To be valid, a reaffirmation agreement must be filed with the court before your case is discharged. Additionally, the agreement must not impose an undue burden on you or your dependents, and it must be in your best interest. If the monthly budget in your bankruptcy petition reflects a negative balance (which most do) you will need to review schedules I and J of your petition and submit documentation showing how you plan to make these payments (ie new job, raise, reducing monthly expenses, etc). If your plan is to reduce your monthly expenses, we need to know which expenses specifically will change. We will review Schedules I and J of your bankruptcy petition together to prepare the reaffirmation for court review. Your payments must be up-to-date prior to submitting the reaffirmation agreement.

Option 2 – Redemption:

You may owe far more on your car than it is really worth. You want to keep your car, even after you have filed for bankruptcy. Normally, lenders do let you keep your car, but demand and impose full payment on your current loan. A redemption allows you to finance your current vehicle through a new loan company and pay only what the car is worth. If your vehicle’s value is far less than the loan balance, then you may want to consider applying for a redemption loan.

The Redemption Process: To see if you qualify for either program, you may call any lending company. Some companies specifically work with people in bankruptcy. You should do your own research to find the best interest rates, but you may start by calling 722 Redemption. The phone number is (888) 721-2800 ext 222. Please tell her that you are working with our office and have the make, model, miles and VIN number of your current vehicle available. If you like the deal they are proposing, and wish to redeem, please contact us immediately. We will file a motion to redeem with the court, our fees will be included in the new auto loan, so you do not have to pay us directly for the additional legal work (approx. $700). Often your existing lender will dispute the fair market value we present to the court and the court will review the evidence each side submitted and decide whose value will be accepted. If approved, you will make your new lower payments to the new lender after the bankruptcy.

Option 3 – Pay and Retain:

(Keep your current car, do not sign reaffirmation and keep making monthly payments).

Most secured lenders will continue to accept your monthly payments and allow you to keep the collateral even if you haven’t indicated intent to reaffirm your debt. This is known as the “pay and retain” option. It is an informal option not specifically recognized by the Bankruptcy Code. Retain and Pay is an attractive option if the lender will accept it. However, debtor’s choosing this option must be comfortable with a lack of certainty or predictability. The lender has the legal right to repossess the vehicle at any time even if the payments are current. You will not, however, be responsible for a deficiency balance if they exercise this right.

There is an increasing trend for finance companies including specifically Ford Motor Credit and Chrysler to repossess vehicles unless you agree to a reaffirmation. Other lenders like Toyota typically feel that it is better to receive monthly payments under the informal “pay and retain” option rather than lose money by selling repossessed vehicles at auction prices. It is possible, however, that you think your lender has decided to continue to accept your payments only to wake up one morning and find your vehicle gone. Therefore, you must call the lender to confirm that the “pay and retain” option is acceptable to them. The advantage to “pay and retain” is that if you ever want to give up your vehicle in the future, you will not be liable for the loan balance. A disadvantage is that if you are ever late with a monthly payment they will likely repossess the vehicle quickly. Another disadvantage is that the lender will not report your continued payments on your credit reports. However, it is often the wisest choice and you reduce your future financial risk, and is especially smart with older car that might break down in the next few years.

Option 4 – Surrender:

(Turn car over to lender and debt will be discharged in bankruptcy)

Your vehicle may be surrendered back to the lender and any deficiency balance owed on the property will be eliminated in the bankruptcy. This is a good option if you are unsure you will be able to make the payments moving forward, or if your vehicle is damaged, or the payments are too high or you owe more than the vehicle is worth. You do not have to return the vehicle until 45-60 days after your 341(a) hearing. Often we can help you find a new vehicle lender if you want to finance a newer vehicle.

We have given you a lot to consider, and we have not discussed your particular situation so this is not legal advice. Please email us or call us for a free consultation.

Stop Creditor Harassment

Creditor calls create stress calling you at home, on the job, and calling your relatives. It can be even more stressful, when you really can not afford to make any more payments or you will not have enough money to pay your rent or car payment or food. We can help you regain control of the situation.

How can you possibly afford to pay a bankruptcy attorney if you are still making your debt payments? The answer is usually fairly simple, when you hire our firm, we will start handling the creditor calls for you right away. You will stop making payments to the creditors immediately. We will then help you with a payment plan that is affordable, because our goal is not to increase your stress but relieve it right away. Stopping the creditor calls and those payments will provide you that peace and stress relief right away.

Wage Garnishment

Next Steps…

Our firm is available seven days a week by phone, email, text message and video conference and by appointment at our Point Loma office. We are always available to answer questions and we answer all of our own phone calls. Contact Alzate Varley, APC, to schedule a free initial phone consultation at 619-800-8804.

Tax Debt

We Are Often Asked If Tax Debt Can Be Discharged In Bankruptcy.

If The IRS Already Filed A Substituted Tax Return For You Then The Answer Is NO. But If They Have Not Then Read On.

There Are Three Main Rules At Play: The 3-Year Rule, The 2-Year Rule, And The 240-Day Rule. You Have To Meet All Three Rules To Discharge The Taxes.

3-Year Rule: Is It 3 Years From The Day The Tax Return Was Due?
2-Year Rule: Is 2-Years After The Return Was Actually Filed?
240-Day Rule: Is It 240 Days Since The IRS “Assessed” The Tax?

We Have Clients Use The IRS’s Online “Get A Transcript” Service And Download A Copy Of The “Tax Account Transcript” (NOT A Tax “Return” Transcript). The Transcript Is The Official Record Of The Filing Date, Due Date, Assessment Date, And Some Other Important Info That Could Affect Dischargeability.

If You Can Get This Transcript We Can Let You Know Whether Your Taxes Will Be Dischargeable

Call Us At 619-800-8804 Or Email Us At [email protected]

Divorce Debt

Many people suffer financial difficulties directly caused by a divorce. It’s difficult to survive a divorce financially and financial pressures can make it impossible to get back on your feet. Often the cost of the legal fees to the family law attorney can by itself cause financial disaster. Many times credit card debt is God specifically from the divorce it’s not always from overspending. Divorce is a stressful enough time don’t let the financial damage make it impossible we can help you get a fresh start.

6 Ways to Deal With Debt

When debt from credit cards, medical bills, mortgages and other
sources pile up, it can be difficult to know what to do and how to
resolve your financial issues. There are basically six ways that you
can deal with your debts:

  1. Find a way to pay off all of the debts by
    yourself. Unfortunately, for many people, this is not a viable option,
    especially after a job loss, divorce or other life changing event.
    Some people take to desperate measures of wiping out 401(k) plans and other retirement accounts to pay off their debts.
  2. Go to a credit counseling agency. While you may be able to get a reduced interest rate this way, you are still paying the debt, and this may have an adverse effect on your credit score. Most credit counseling agencies are partially funded by credit card companies. The credit card companies agree to “kickback” a fee to the counseling agency equal to a percentage of the payments sent to them each month. These agencies are thus working for the credit card companies more than for you.
  3. Debt settlement and debt negotiation companies. These are the companies who can do the greatest disservice, and the most damage, to people in debt. While a person is still making monthly payments, he or she is usually not represented by an attorney, so there is no representation if a creditor tries to sue or obtain a wage garnishment. Meanwhile, credit is still being damaged, since the person is paying the debt settlement company, and not the creditors. Months can pass before the company even tries to settle the debt, during which a credit score can plummet. Most people do not end up even finishing debt settlement programs, leaving them in a worse state than when they first began the program. Many clients call me after their debt settlement program has failed and they are now facing an impending lawsuit or judgment.
  4. Chapter 7 bankruptcy. Chapter 7 is a liquidation form of bankruptcy that allows a person to discharge credit card debt and other dischargeable debts. Once the process of Chapter 7 bankruptcy has ended, the person will usually be debt free, and, in most cases, will be able to keep all of his or her property.
  5. Chapter 13 bankruptcy. Chapter 13 allows a person to repay debts through a repayment plan over a three to five year period. This option is typically best for a person who cannot qualify for Chapter 7 bankruptcy. Other times a Chapter 13 may be a good choice when it can be used to strip away a 2nd or 3rd mortgage from your house.
  6. Default on the debts. For some people, this is a good option is they are “judgment proof. For instance, if all you have is Social Security income, your typical creditors cannot touch it. If you tell your creditors that you cannot and will not pay they can no longer call you per the debt collection rules in California. They can sue you, but that will not matter if you are truly “judgement proof” as there is nothing that they could do with a judgement. Whether or not you are truly judgment proof is an evaluation we can assess for you over the phone.

Schedule a Free Initial Consultation at Alzate Varley APC

Our firm is available seven days a week by phone, email, text message and video conference and by appointment at our Point Loma office. We are always available to answer questions and we answer all of our own phone calls. Contact Alzate Varley, APC, to schedule a free initial phone consultation at 619-800-8804.

Chapter 7 or Chapter 13

Knowing the difference between Chapter 7 and Chapter 13 bankruptcy, as well as the advantages and disadvantages of each option for your unique circumstances, is important to your total debt relief. For many people, Chapter 7 bankruptcy is a quicker and cheaper form of bankruptcy than Chapter 13.

At Alzate Varley, APC, we can help you determine whether you qualify under Chapter 7 bankruptcy and whether it is your best option for your circumstances. If it is, we will guide you through the process and work
towards giving you a fresh start for your financial future. If it is not, we will help you look at your other options and determine the bestroute for your debt relief.

Chapter 7 Bankruptcy

There are three issues that need to be addressed in every bankruptcy:
• Can we eliminate the debt?
• Can we protect the assets?
• Does the client qualify for Chapter 7?

If the answer to all three is yes, then it is usually the smartest choice to pursue a Chapter 7. In the majority of cases we evaluate – probably 60 percent or more – a person does qualify, can get rid of debt and can protect his or her assets. The best case scenario involves the elimination of credit card debt, medical debt and
unsecured debt, while being able to keep every possession. If a person makes too much money or has too many assets, Chapter 7 bankruptcy may not be an option, at which point we will look at other options.

Chapter 13 Bankruptcy

Chapter 13 is a form of bankruptcy sometimes called a “wage earner” plan. In order to pursue a Chapter 13, a person must have steady income that can be used to pay back some portion of the debt. At Alzate Varley APC, we have an approach that is aggressive and may be
different than some other bankruptcy attorneys. We will not simply propose a high payment in the effort to get the monthly payment plan approved right away by the trustee. Instead, we propose a lower payment
and we attend as many hearings as it takes and as many negotiations as we need to in order to negotiate the lowest payment we can for our client. After all, a person in a Chapter 13 bankruptcy will have to make this payment every month for the next three to five years.

The key to Chapter 13 bankruptcy is understanding whether a person is able to make the payments. If that is not realistic, Chapter 13 will not be effective. Attorneys should not just tell clients what they want to hear. We tell our clients what they need to hear. Our firm will
always be honest with you about your best options.

Schedule a Free Initial Consultation at Alzate Varley, APC

Exempting and Protecting Assets

Bankruptcy Exemptions to Protect Your Home and Other Property

The phrase, ‘exempting an asset, means protecting an asset in one of two ways.

The first way is to use exemptions. California exemptions are very generous compared to most other states. For example, the homestead exemption in California can protect between $75,000 and $175,000 of equity in your home depending on your age, income, marital status or disability. On January 1st of 2021, the homestead exemption increases to $600,000 in many cases !

For clients who are in the military or from
outside California, I may need to use the exemptions of other states.

The second way an asset can be protected is by debt. If there is a secured debt, such as a house that is worth $300,000 with
$400,000 still owed on the mortgage, the bankruptcy trustee is not going to take the house and sell it. There would be no point in such a sale, since no money would be left for unsecured creditors.

At our San Diego law firm, we understand
bankruptcy exemptions and your rights. Contact our office for a free initial consultation.

Asset Protection and Exemptions Attorney in California

In the state of California, there are two exemption schemes: the 703
exemptions and the 704 exemptions.
The 704 exemptions allow you to use your homestead exemption, anywhere
from $75,000 to $175,000, to protect equity in your house. The effectiveness of 704 is dependent on your age, marital status, income and or disability status. Since not everyone needs to protect a house, and the 704 has weak protections for cash, cars and other property,
the vast majority of people filing bankruptcy in California use the
703 exemptions instead.

The 703 is much easier to use. The 703 has an exemption called the “wildcard”, which can be used to protect up to $23,250 in value of anything: cash, equity in a vehicle, artwork or other property. You also get a protection of $3,525 for a car. If the car is worth more than that, you can dip into your wild card. There are all sorts of exemptions for assets such as insurance, jewelry, tools and household

Not knowing how to properly exempt your property can cost you, and your bankruptcy lawyer should know how to help you through this process. Too many cases get filed too early without proper preparation. It is important to be patient and pick the best time for the client. It is
possible to do things in such a way that when the case is filed, no assets will be lost. In the meantime, we will deal with all of the creditors and collection agencies.

Military Bankruptcy

Service Members Civil Relief Act and Bankruptcy Protection

For service members who are faced with debt and are thinking about the option of bankruptcy, there are many potential issues that need to be considered. There are a lot of smaller details that need to be taken care of, and if your lawyer is not aware of the special challenges and advantages that military members have when filing bankruptcy, it can cost you.

Throughout North County and San Diego County, we provide honest advice, helpful answers and dedicated representation to military members who are struggling through tough financial issues. Alzate Varley, APC, handles military bankruptcy cases in California.

Learn whether bankruptcy is right for you by contacting us and scheduling a free initial phone consultation. We can provide the honest advice and helpful answers you need.

Important Considerations in Military Bankruptcy

A lot of the issues involved in military bankruptcy are related to qualification. The base housing allowance, for example, still counts towards income when determining qualification for Chapter 7 bankruptcy. That allowance may get a person into a level where he or she does not qualify. It is also important to look at the LES carefully, as well as increased combat pay, to plan around deployment and income issues. Additionally, your attorney should be conscious of security clearance issues that could be impacted before filing for bankruptcy.

What happens if you are deployed after your bankruptcy case is filed? The Servicemembers Civil Relief Act states that it is possible to keep creditors at bay while a military member is deployed. A reservist who is called to duty and has to leave his or her job will also have an exception to the means test. These, and other issues in military bankruptcies, are why it is so important to have a lawyer on your side who has successfully resolved military bankruptcies in the past and understands the unique circumstances.


Business Bankruptcy

Alzate Varley APC helps corporate, partnership and sole proprietorships assess their alternatives and make the wisest choice, often saving substantial legal fees or avoiding bankruptcy. For example, Chapter 7 bankruptcy is sometimes over-prescribed as the legal path in effecting a complete dissolution for a corporation. A chapter 7 corporate bankruptcy does not result in a discharge of the debt, and it not be be necessary. Often the concerned shareholder or officers, despite personal guarantees are already protected by their own personal business debt bankruptcy or via asset protection instruments.

Chapter 11 bankruptcy can be helpful in effecting a corporate reorganization, but if the creditors could have reached an agreement without bankruptcy, the corporation could have saved substantial time and legal fees. Our team prefers when possible to help inform and negotiate with the creditors so that all parties reach the same result without losing control to a Federal bankruptcy court. This can result in a substantial savings of legal fees and a faster solution for all parties. The best result when possible, is one where the creditors are partners in the re-emergence of the company with the aligned goal of corporate success. Attorneys may take an adversarial approach that can be unnecessarily counterproductive. Our team is comprised of attorneys and CPA’s and former corporate executives. Our approach differs from many law firms.

After filing a Bankruptcy, you are normally require to appear at a MANDATORY Meeting of Creditors (or two). However, during the Covid-19 restrictions, trustee are conducting the hearings over Zoom video conference or telephone. You may even be asked to appear at a bankruptcy hearing at the Bankruptcy Courthouse. One of us will accompany you whether via zoom, telephone or in person.


Our attorneys are admitted to file bankruptcy in the following Federal bankruptcy courts:

  • Southern District of CA
  • Central District of CA
  • Eastern District of CA
  • Northern District of CA
  • Southern District of TX
  • Western District of TX
  • District of NV
  • District of OR

We are a debt relief agency.

We help people file for bankruptcy relief under the Bankruptcy Code.

Connect With Us

Our firm is available seven days a week by phone, email, text message and video conference and by appointment at one of our offices. 

We are always available to answer questions and we answer all of our own phone calls.

2305 Historic Decatur Rd Ste 100 San Diego, CA 92106
Office : 619-463-1800
Fax : 619-463-1881