In response to the Covid-19 pandemic, the California legislature substantially expanded the amount of homestead exemption available to bankruptcy debtors claiming exemptions under §704 of California’s Code of Civil Procedure. Cal. Civ. Proc. Code §704.730(a) (2025). At the time of this writing, the allowed homestead exemption under §704.730(a) available for bankruptcy debtors in California varies based on location. For example, in the San Francisco Bay Area where Nova Law Group represents clients, many clients can claim a homestead exemption of up to $699,421, which adjusts over time based on the Consumer Price Index (CPI).

The amount of available homestead exemption under §704 is significantly greater than the exemption that could be claimed under §703 of the California Code of Civil Procedure, and accordingly, many homeowners with equity in their residences generally opt to claim exemptions under §704. However, prior to the amendments to §704, bankruptcy debtors claiming §704 exemptions to protect equity in a primary residence always had to confront one substantial downside—claiming §704 exemptions generally did not allow for much exemption of any funds the debtor had available when filing. In fact, with some narrow exceptions, no exemption for available funds of the debtor claiming §704 exemptions was provided at all.

The new amendments to §704 seek to address this problem and provide bankruptcy debtors with exemptions for funds available. Cal. Civ. Proc. Code §§704.220, 704.225 (2025). These new exemptions include a $2,170 fixed amount for deposit account funds (§704.220), and an additional exemption in a variable amount for deposit account funds to the “extent necessary for the support of the judgment debtor and the spouse and the dependents of the judgment debtor.” (§704.225). The new amendments to §704 create options for clients who need to utilize §704 exemptions to protect equity in a homestead, but who also seek to protect some amount of available funds from creditors. The new amendments also create strategic options for a skilled bankruptcy attorney to argue that any funds left available, after any exemption amount in accordance with §704.220 has been claimed, are nevertheless exempt as “necessary for the support” of the debtor, the spouse, and any dependents, in accordance with §704.225.

The variable amount of the exemption provided by §704.225 might appear ripe for litigation between bankruptcy debtors, bankruptcy trustees, and creditors of the estate, as interested parties seek a determination of what funds are “necessary for the support” of the debtor, the spouse, and any dependents. The amount “necessary for the support” is subject to interpretation and is impacted by the specific facts of the debtor’s lifestyle, financial capacity, and other factors. This analysis would almost certainly require an evidentiary hearing for the court to determine the proper amount of the exemption in an individual bankruptcy debtor’s circumstances, if such matters became contested.

While the general parameters of what is considered “necessary for the support” will continue to be developed in the courts, at the time of this writing (January, 2025), there appears to be only one case with potential precedential authority in the 9^th Circuit describing the process a court might undertake to determine the appropriate amount of a claimed exemption in accordance with §704.225. Zhu v. Li, 19-cv-02534-JSW (TSH), 2024 WL 1122422 (N.D. Cal. 2024). Regrettably, the court’s discussion in Zhu v. Li is not particularly enlightening regarding the standards utilized by a court to determine the parameters of the §704.225 exemption, because the district court readily found that the debtors in Zhu were not entitled to the exemption they had claimed, “given their high income” of $286,296 per annum, relative to the comparatively miniscule, claimed exemption of $6,492.07. Id. at *3. The Zhu v. Li court did indicate that “necessary for the support [of the debtor]” was not limited in its application to merely what is “essential barely to support life, but that it includes many of the conveniences of a refined society.” Id. However, the approximate extent to which the lifestyle and financial capacity of the debtor, his or her spouse, and any dependents, contributes to defining the appropriate amount of the exemption, is not further illuminated.

Due to the ambiguity present in §704.225, and its applicability to a wide variety of cases in which a bankruptcy debtor claims exemptions in accordance with §704, effective representation by a bankruptcy attorney for a client considering such exemption options can result in superior outcomes for a bankruptcy client. This is particularly true when the amount of the claimed exemption may be contested, either due to the amount claimed exempt, or other factors that might cause a party to question the claimed exemption.

As part of the superior level of legal advocacy we provide at Nova Law Group, we regularly advise clients regarding their exemption options and litigate such exemption disputes on behalf of our clients when necessary. Nova Law Group represents bankruptcy clients throughout the San Francisco Bay Area.

If you are considering bankruptcy and would like information regarding your options or have other questions, contact a Nova Law Group attorney today and we will be happy to discuss your needs with you.

HSA’s are tax-advantaged accounts that are created to allow individuals with high-deductible insurance plans to save for their healthcare expenses. Individuals can contribute to the HSA and then withdraw money as needed to pay for qualified healthcare expenses.

While the purpose of HSA’s is to save for healthcare expenses not covered by insurance, technically the money can be withdrawn by an individual for any purpose with a 10% penalty applied (in addition to income taxes) if the individual is under the age of 65. At the age of 65, money in an HSA can be withdrawn for any reason, by paying the income taxes due on such withdrawn amounts. HSA funds are generally considered property of the bankruptcy estate, unless an appropriate exemption applies.

Accordingly, the question remains, are HSA accounts exempt in bankruptcy? At the time of this writing, when applied to individual debtors claiming California or Federal exemptions, the answer is “no.” Federal exemptions do not include any specific exemption for HSA funds. 11 U.S.C. §522(d) (2024). Additionally, there is no separate California exemption for HSA funds at the time of this writing, although legislation has been enacted in other states to separately exempt HSA funds, which may also occur in California in the future. Cal. Civ. Code §§703, 704 (2024).

While HSA funds are not subject to a specific exemption under the Federal or California exemptions, individuals who wish to exempt HSA funds in bankruptcy can still exempt such funds by using the “wildcard exemption” provided in both Federal and California exemptions. 11 U.S.C. §522(d)(5) (2024); Cal. Civ. Code §703.140(b)(5) (2024).

If you have questions regarding filing bankruptcy, including the treatment of your HSA account in bankruptcy, contact Nova Law Group and speak with a bankruptcy attorney who will be happy to assist you with your needs. Nova Law Group represents bankruptcy clients throughout the San Francisco Bay Area from our office in Mountain View, California.

I always recommend to prospective clients who are making the decision of which bankruptcy attorney to hire that they select an attorney who is “local” in the sense that he or she knows the bankruptcy trustees, the bankruptcy judges, and other bankruptcy professionals in the area in which the case will be filed. This is important because a “local” attorney in this sense will generally have more credibility with these various professionals, trustees, and judges, and may obtain a more favorable outcome for the client than if he or she was completely unknown within the bankruptcy community. Most bankruptcy communities, including the one in the San Francisco Bay Area, are very small. This means that most frequent practitioners of bankruptcy know the other attorneys who commonly practice in the area. The more complex the bankruptcy case, the more important it is to have local bankruptcy counsel representing the client, as in complex cases, there is a much greater chance that multiple hearings and communications will be needed with the court, the trustee, and other professionals. A client represented by good local counsel with significant bankruptcy experience will almost always be able to obtain a more favorable outcome for a client than bankruptcy counsel with equivalent experience, but who is unknown in the community and has no intrinsic credibility with the court, the trustees, or other professionals.

At the same time, “local” bankruptcy counsel need not mean counsel that is literally in the same city as the client. Frequently, counsel only needs to be “local” enough to have a good relationship with the court, the trustees, and other professionals. Accordingly, usually hiring counsel who frequently practices anywhere in the same district as the bankruptcy court in which the case will be filed is sufficient. For example, Nova Law Group is located in Mountain View, CA and meets with bankruptcy clients at its office location. However, Nova Law Group represents clients throughout the entire San Francisco Bay Area, including Mountain View, Sunnyvale, Los Altos, Los Altos Hills, Menlo Park, East Palo Alto, Palo Alto, Cupertino, Santa Clara, San Jose, San Francisco, Oakland, and many other communities throughout the South Bay, East Bay, North Bay, and the mid-peninsula. Accordingly, Nova Law Group can expertly represent a bankruptcy client who needs debtor or creditor representation regarding bankruptcy cases filed anywhere in the greater San Francisco Bay Area, including the San Jose, San Francisco, and Oakland divisions of the United States Bankruptcy Court for the Northern District of California.

Stated differently, Nova Law Group practices bankruptcy law and is “local counsel” anywhere in the San Francisco Bay Area, and as a result, a client need not be in Mountain View, CA or even the mid-peninsula to retain Nova Law Group. This provides important flexibility for clients, because there are many other factors to consider when hiring a bankruptcy attorney, such as skill, intellectual ability, experience as a bankruptcy attorney, cost, availability, customer service and personality, and dedication to serving the client, all of which matter just as much or more than geographical location.

Accordingly, whether you or your company is a resident of Mountain View, CA, or anywhere else in the Northern District of California, Nova Law Group can assist you with your bankruptcy needs. We also assist individuals and companies as creditor counsel located anywhere in the world, as long as the bankruptcy case in which the client is a creditor is pending in the Northern District of California. Please call a Nova Law Group attorney if interested and we will be happy to assist you.

A common misconception about bankruptcy is that it ruins the debtor’s credit score forever and that no one will ever lend to the debtor ever again. This false assumption is further perpetuated by many “debt consolidation agencies” because they want to dissuade debtors from filing bankruptcy and force them into debt repayment plans, which are not the best option for all people who owe significant debts.

The impact of a bankruptcy filing on the credit score of an individual person is highly-dependent on the chapter of bankruptcy the individual is filing and how the individual acts to repair his or her credit after the bankruptcy is filed.

The first impact on an individual person’s credit score as a result of a bankruptcy filing is the chapter of bankruptcy being filed. If an individual is filing a chapter 7 bankruptcy, he or she will generally notice a greater decline in his or her credit score upon filing than if the same individual were to file chapter 13 bankruptcy. Many individuals will notice a 100-200 point drop in FICO score when a chapter 7 bankruptcy is filed and a 75-150 point drop in FICO score when a chapter 13 bankruptcy is filed. This will vary based on the pre-bankruptcy credit score of the borrower and other myriad factors which are not within the scope of this article. Generally, the higher the credit score pre-bankruptcy, the more points are deducted from an individual’s FICO score when he or she files. Individuals with bad credit experience less of a drop because in many cases these people already have a low credit score due to missed payments, high borrowings relative to total debt, and other reasons. The credit reporting agencies often view chapter 7 bankruptcy as “worse” than chapter 13 bankruptcy because creditors often receive higher distributions statistically from chapter 13 cases than chapter 7 cases. However, in many cases, chapter 7 bankruptcy will often allow individuals to rebuild credit faster than the same individual can in chapter 13 bankruptcy, because chapter 13 bankruptcies usually last much longer (3-5 years) than chapter 7 bankruptcies (3-6 months). Additionally, chapter 13 debtors are prohibited from incurring new debt without approval from the bankruptcy court, which can make it more difficult for chapter 13 debtors to establish new credit and rebuild a credit score. Generally, debtors filing chapter 7 cases can begin rebuilding credit with secured credit cards, auto loans (at higher interest rates), or other loans very soon after receiving the bankruptcy discharge, which usually occurs within 3-6 months of filing for bankruptcy. Some creditors will even lend money to a chapter 7 debtor while in bankruptcy, but generally it is recommended to avoid incurring new debt during the chapter 7 case unless it is an emergency (car breaks down, medical emergency, etc.). In contrast, chapter 13 debtors must wait to accumulate new lines of credit until after bankruptcy unless such debt is incurred with bankruptcy court approval. This can mean that chapter 13 debtors will not actually be able to obtain new credit for 3-5 years after filing bankruptcy, unless a sufficient reason is given for the court to allow the new debt, such as an emergency need to finance a car or other item needed for the debtor’s business or profession. Accordingly, even though chapter 7 bankruptcy often results in a larger credit decline initially than chapter 13 bankruptcy, many debtors filing in chapter 7 can rebuild their credit faster than comparable debtors filing in chapter 13 bankruptcy.

The second impact on an individual person’s credit score as a result of a bankruptcy filing is the action that such individual takes post-bankruptcy to rebuild his or her credit. This credit rebuilding phase usually can begin within 3-6 months after filing for chapter 7 debtors, and 3-5 years after filing for chapter 13 debtors. During this phase, Nova Law Group recommends that a client slowly apply (not more than one application for credit every six months) for new credit lines until they reach a minimum of three. These credit lines can be credit cards, bank lines of credit, auto loans, installment loans, or any other type of loan from a creditor that reports to the credit reporting agencies. However, a client should only obtain credit if it is useful to the client. For example, a client should never get an auto loan if the client doesn’t need a car. With regard to credit cards, even if a client never wants another credit card, Nova Law Group recommends that a client simply obtain enough credit cards to reach the minimum of three credit lines, and then the client can stop accumulating credit for credit rebuilding purposes. As part of rebuilding credit, a client should utilize the credit line or credit offered each month, but can utilize a very small amount of the credit if desired. For example, if a credit card obtained has a limit of $500, a client can simply charge $1/month for a cup of coffee on the card and then pay the credit card off, in full, and on time, every single month. This usage is then reported to the credit reporting agencies and will generally increase a client’s credit score significantly over time as each monthly bill (however small) is paid off in full, and on time, each month.

For the reasons stated above, filing for bankruptcy does not always mean a large credit decline upon filing. Furthermore, most former bankruptcy debtors can quickly rebuild credit over a one to four-year period simply by utilizing the steps listed above for credit repair after the debtor’s chapter 7 bankruptcy or chapter 13 bankruptcy case (or less commonly, chapter 11 bankruptcy case) is completed. Many former clients of Nova Law Group have improved their credit scores 100-200 points over a one to four-year period through the above methods and have gradually developed excellent credit over time. While every client’s situation is different and the above methods are effective to different degrees for each client, the above methods can assist all post-bankruptcy debtors with rebuilding credit to a significant extent.

If you are an individual interested in bankruptcy or have questions regarding the credit impact resulting from a bankruptcy case, feel free to contact Nova Law Group and an attorney will be happy to speak with you. Nova Law Group’s office is located in downtown Mountain View, CA, and we serve bankruptcy clients from all over the San Francisco Bay Area, including mid-peninsula cities like Palo Alto, Menlo Park, Los Altos, Sunnyvale, and Los Altos Hills, as well as from the major metro areas of Oakland, San Francisco, and San Jose, including all cities surrounding such metro areas in the greater SF Bay Area. Feel free to contact us regarding your bankruptcy needs and we will be happy to speak with you.

            Most non-dischargeability actions against a debtor are based upon either specific allegations of fraud, under 11 U.S.C. §523(a)(2)(A-B), or a presumption of statutory fraud under 11 U.S.C. §523(a)(2)(C). While the specifics of defending against this type of action for a client is discussed in the article “What is a Non-Dischargeability Action?” (also on this website), it is important to note that any non-dischargeability action must allege sufficient facts to state a claim under one or more sections of 11 U.S.C. §523, and that even if a presumption of fraud is alleged to be applicable under 11 U.S.C. §523(a)(2)(C), that such presumption may be rebutted.

            For example, many junior attorneys often ask the managing attorney of our firm if they should settle an action on behalf of a client with a creditor, merely because such creditor claimed that the “client made luxury purchases within the 90 day period prior to filing bankruptcy.” Typically, such allegations by a creditor are made without any specific facts alleged as to which purchases made were fraudulent prior to bankruptcy, when the fraudulent charges were made, where they were made, and why such purchases might be considered “luxury goods” under 11 U.S.C. §523(a)(2)(C)(i)(I) for purposes of the statutory presumption. Many creditors attempt to make blanket claims of fraud against the debtor which lack substantive merit, thinking that most bankruptcy debtors will never challenge the action, or will settle to avoid paying legal fees and costs to the debtor’s bankruptcy lawyer.

            Accordingly, it is a fair question to ask how a bankruptcy client can afford to pay his or her bankruptcy attorney to defend a meritless non-dischargeability action against the client in a cost-effective manner. The answer is often the statutory language provided in 11 U.S.C. §523(d), which allows for bankruptcy debtors to receive reimbursement for attorney fees and costs from the creditor that sued them, at least where the debtors can prove that such action was meritless (as it often is).

            The bankruptcy code states under 11 U.S.C. §523(d) that a bankruptcy debtor can recover attorney’s fees and costs from a creditor that sued such bankruptcy debtor unsuccessfully, if the court finds that the suit filed by the creditor was not “substantially justified,” unless “special circumstances” would make the award of such fees and costs unjust. 11 U.S.C. §523(d) (2012). Essentially, to obtain an award against a creditor for fees and costs in the non-dischargeability action, the bankruptcy debtor must not only win the case, but also convince the judge that the creditor’s original suit in bankruptcy court had no merit to begin with, and that the creditor can afford to pay the legal fees and costs if awarded. While this might seem like a difficult task in most situations, in reality, most non-dischargeability actions filed are objectively meritless and often insufficient to meet federal pleading requirements. As a result, it is often a good idea for a debtor’s bankruptcy attorney to file motions to dismiss meritless actions under Federal Rules of Civil Procedure 12(b)(6), rather than answer a meritless complaint, as a victory at the motion to dismiss stage will often mean that the court views such complaint as not “substantially justified,” and legal fees and costs will be much easier to obtain. Fed. R. Civ. Proc. 12(b)(6) (2012). In essence, it is much easier to argue that a creditor’s action is not “substantially justified” when the court itself has dismissed the action for failure to state a claim multiple times, as it will be difficult for a creditor to argue that its action “was substantially justified” under 11 U.S.C. §523(d) if the court already found the action to be “insufficient to state a claim for relief.” Additionally, it is the experience of Nova Law Group that most creditors’ attorneys have no idea how to litigate a motion to dismiss adequately, and as a result, often will settle such actions in a manner favorable to the bankruptcy debtor when confronted with skilled opposition from the debtor’s bankruptcy attorney.

            In conclusion, a client should always be sure that the bankruptcy attorney representing him or her is aware of the necessary steps to effectively defend against a non-dischargeability action, as well as the cost-saving provisions of 11 U.S.C. §523(d) for recovery of attorney’s fees and costs in such an action. This provision can not only serve as a very significant cost-savings to a bankruptcy client, but also can operate as a significant deterrent to any creditor contemplating an action in bankruptcy court against the debtor. If you would like to learn more about effective representation of bankruptcy debtors in non-dischargeability actions or would like to consult with a Nova Law Group attorney regarding your individual situation, feel free to contact a bankruptcy attorney of our office and we will be happy to assist you.

            The bankruptcy code lists several factors that are analyzed by a bankruptcy court in determining whether or not a certain debt, which otherwise would be dischargeable, should be rendered non-dischargeable on the basis of the debtor’s conduct prior to the filing of the case. Most of these factors are encompassed in 11 U.S.C. §523, and include fraud, material misrepresentation, intentional malice, and certain criminal behavior. Often these allegations will be raised by a creditor of the debtor and will assert that a certain debt owed the creditor should be non-dischargeable (not eliminated in bankruptcy) on the basis that the debt was procured by fraud, misrepresentation, or some other bad faith action on the part of the debtor. For example, it is sometimes the case that credit card companies who loaned a bankruptcy debtor money within 90 days prior to the time that the bankruptcy debtor filed the case, will claim that such debtor knew that he or she was going to eliminate the credit card debt borrowed from the company, and accordingly, that such credit card debt should be non-dischargeable after the bankruptcy case ends. The credit card company often alleges that such credit card charges were incurred fraudulently, as the bankruptcy debtor represented that she would pay the credit card company back on the money borrowed, but then allegedly never actually intended to, knowing all along that she would file her subsequent bankruptcy case.

            While some bankruptcy clients might normally be concerned that several creditors might commonly challenge the dischargeability of certain debts, in practice, these suits are relatively rare. Part of the reason for the rarity of these actions in most circumstances is that “intent” to commit fraud or misrepresentation is often very difficult to prove. Accordingly, some creditors use what are called “statutory claims” to establish a case for fraud or misrepresentation against the debtor, as the bankruptcy code itself lists certain actions and/or purchases made by the debtor that are presumptively non-dischargeable. For example, using a credit card to pay a non-dischargeable tax claim makes the credit card debt used to pay on the claim non-dischargeable itself. Likewise, luxury goods of more than $600 incurred within 90 days prior to the filing of the bankruptcy case and cash advances taken of more than $875 within 70 days of the filing of the bankruptcy case are presumed non-dischargeable.

            A creditor could theoretically proceed against the debtor under 11 U.S.C. §523(a)(2)(A) or 11 U.S.C. §523(a)(2)(B) without any statutory basis for claiming that the debt owed the particular creditor is non-dischargeable, but it is often much more difficult to prove intent to defraud or misrepresent a material fact without a statutory presumption stating that a certain act of the bankruptcy debtor constitutes fraud. When a creditor does proceed without a statutory basis for alleging fraud however, a creditor usually cites to relevant case law establishing certain types of acts of the debtor that tend to indicate fraud. There is a detailed list of factors that bankruptcy courts in the 9th Circuit typically look at to determine non-dischargeability in the case of In re Dougherty, 84 B.R. 653 (9th Cir. BAP 1988). Generally, as long as the bankruptcy debtor intended no bad faith with regard to the purchases and intended to repay such debt at the time it was incurred, the creditor will tend to lose these actions where there is no statutory claim for non-dischargeability that applies to debtor’s circumstances. Nonetheless, it is very important for a bankruptcy client to inform her attorney if she has incurred substantial debt within the 90 days preceding a bankruptcy case filing, and possibly even before this time period if such debt was very substantial or out of the ordinary relative to the bankruptcy client’s typical circumstances.

            While it is possible for a creditor to allege that a specific debt owed that creditor by the debtor is non-dischargeable, it is important to note that even if such action by the creditor is successful, it is only that particular debt that becomes non-dischargeable. In other words, the debtor is still entitled to a discharge of all other dischargeable debts in the case, even if the bankruptcy court rules in a particular creditor’s favor with regard to a certain debt.

            It is the opinion of Nova Law Group that most non-dischargeability actions filed against debtors are objectively meritless and should be vigorously litigated when such actions are pursued without substantial evidence against the debtor or without statutory claims being credibly alleged. Our firm has substantial expertise in litigating these types of actions, including on appeal, and we invite prospective clients who are considering a defense against a non-dischargeability action to contact an attorney at our office, who will be happy to assist you.

Bankruptcy Practice Focus and Experience:

                The first important element to consider when hiring a bankruptcy attorney is whether the attorney focuses on bankruptcy as a core field of his or her practice, or in the alternative, is a “general practitioner” who might only try to perform an occasional bankruptcy case and who doesn’t specialize in the area.

                Zachary Tyson, managing bankruptcy attorney of Nova Law Group, thinks it is vitally important for clients to hire counsel who regularly practice in the bankruptcy field, because bankruptcy law can be very complex even for attorneys, and an attorney who doesn’t regularly practice in the field is more likely to make mistakes and be less familiar with the law in this specialized area. It has been his experience that the representation of debtors in bankruptcy is often too complex for attorneys who do not regularly practice in bankruptcy, and it is very important that the client hire an attorney who focuses in bankruptcy to handle the case, and not just “any attorney,” or one who practices in many unrelated fields of law. In essence, clients should not assume that simply because an attorney is “bar certified” or “licensed to practice law” in California, that he or she can handle the client’s bankruptcy case competently, or cost-effectively.

                In selecting a great bankruptcy attorney, there are many sources that a client may turn to in making the selection.

                First, most serious practitioners of consumer bankruptcy law are members of NACBA, which is an acronym for the National Association of Consumer Bankruptcy Attorneys. If the bankruptcy attorney you are considering is a member of this organization, then it is likely that the attorney you are reviewing considers bankruptcy to be a key focus of his or her practice, and is more likely to be familiar with the law in our field. NACBA is a professional organization that helps provide continuing legal education and professional seminars for bankruptcy attorneys, and most serious bankruptcy attorneys are members of this organization, because it helps us stay on the cutting edge of bankruptcy practice. All Nova Law Group attorneys are members of NACBA and most have been for several years.

                Second, the attorney’s website and associated information may indicate whether the attorney focuses primarily on bankruptcy practice, or whether bankruptcy is only one of many fields in which he or she focuses. When viewing the websites of some attorneys, it becomes clear that the attorney doesn’t really practice bankruptcy law at all, and therefore, should not be selected. Other factors might include whether or not the attorney has informative bankruptcy content on his or her website,  whether the attorney’s website seems credible, the representative engagements of the attorney and demonstrated experience he or she has in bankruptcy, and the organizations the bankruptcy attorney has worked for prior to entering private practice.

                Third, it is advisable to check the educational history of your attorney and what law school he or she attended, as the quality of attorney practitioners who went to law schools of high caliber and those who did not can be very substantial. These qualifications are often posted on the attorney’s website, but if not, then the client can ask the attorney he or she meets with at the initial consultation where the attorney received his or her legal training. High caliber schools like Cornell, Harvard, Stanford, UC Berkeley, Duke, University of Chicago, Columbia, and other top-tier schools are very selective in their admission standards, and as a result, attorneys who graduate from top-tier institutions tend to have significantly better critical and analytical thinking ability, oratory ability, and writing ability than attorneys trained at less selective schools. The educational credentials of all Nova Law Group bankruptcy attorneys are posted in the education section of the attorney’s personal bio on our website.

                Fourth, ask your attorney what experience he or she has in handling bankruptcy cases, and whether bankruptcy is a large portion of his or her practice. Do not make the mistake of assuming that an “older attorney” is necessarily a more “experienced attorney.” There are many older attorneys practicing in the bankruptcy field who have no clue how to successfully complete a bankruptcy case of moderate complexity, either because they never learned how to perform legal research or don’t handle complex cases, or because they only recently started handling bankruptcy cases. Please remember that not all bankruptcy attorneys are created equal—every attorney has different levels of expertise, personality, critical and analytical thinking ability, oratory ability, and willingness to work diligently toward the successful completion of the client’s case. Hiring a bankruptcy attorney is not like buying a gallon of milk at the store, and price is definitely not the only variable to consider when selecting a great bankruptcy attorney.

Bankruptcy Attorney Relational and Communication Ability:

                The second element of hiring a great bankruptcy lawyer is also often one of the most overlooked by clients—the ability of the attorney to communicate effectively with the client in a professional and respectful manner. A client should hire an attorney who is courteous, professional in appearance, and who responds to the client in a timely and efficient manner. For example, at Nova Law Group we strive to return all client communications within 24 hours, and often much sooner, but this is not common practice at most bankruptcy firms. Quite to the contrary, there are some bankruptcy attorneys practicing in the field who return client calls late (or not at all), appear to client meetings in jeans and a T-shirt, fail to communicate with clients regarding important court dates, and in some cases, fail to attend the mandatory court dates at all.

                At Nova Law Group we strive to not only return all client communications promptly (almost always within 1-24 hours), but also have extended office hours to service our clients. Nova Law Group bankruptcy attorneys schedule client meetings at the client’s convenience, and are available between 9AM and 9PM Monday through Friday, and on weekends by request to schedule meetings. We understand that often clients who are going through financial hardship cannot always take time off work to go see a bankruptcy attorney, and the bankruptcy attorneys of Nova Law Group hold extended evening and weekend hours at our offices in Mountain View, CA for this reason to accommodate our bankruptcy clientele.

                In addition to the attorney’s availability, prospective clients should consider the attorney’s personality and whether the client can envision working successfully with the attorney on the bankruptcy case. Clients should find an attorney who can communicate effectively, speaks in a respectful manner, listens to client needs and wants, and answers client questions. Great bankruptcy attorneys are often also available to meet in person with clients, and in most cases, a client should be very skeptical about hiring any attorney who refuses to meet in person, or is frequently unavailable to talk with the client, as the attorney is likely to treat the client with the same level of indifference during the bankruptcy case as well. As stated previously, Nova Law Group bankruptcy attorneys are always available to our clients, whether by phone, email, fax, or in person for a face to face consult, and are often able to book meetings within a 1-3 day timeframe based on client needs. The superior customer service that Nova Law Group bankruptcy attorneys provide our clients is one of the defining characteristics of our firm, and we believe, the reason our bankruptcy firm is rated so highly by clients and recommended so frequently through referral. Whether you are seeking a bankruptcy attorney in Mountain View, CA, or in the Greater Bay Area or San Jose Metro Area in general, feel free to give a Nova Law Group bankruptcy attorney a call and we will be happy to assist you.

Bankruptcy Attorney Location and Geographical Area of Practice:

                The third element of hiring a great bankruptcy attorney actually has nothing to do with the attorney’s credentials or personality, but rather is simply a consideration of where the bankruptcy attorney is located relative to where the client needs to file his or her bankruptcy case. The location of any prospective bankruptcy attorney is not only relevant in terms of convenience to the client and the ability of the client to meet with the attorney in person, but also is legally relevant, as bankruptcy attorneys generally only practice before certain bankruptcy courts and might not practice in the bankruptcy court where the client needs to file.

                For example, as of the time this article was written, Nova Law Group’s bankruptcy attorneys are based in Mountain View, CA, within Santa Clara County. From our offices in Mountain View, our bankruptcy attorneys practice in the bankruptcy courts in San Jose, San Francisco, and Oakland, which service clients filing in almost every county throughout the Greater Bay Area. As a result, Nova Law Group bankruptcy attorneys can service clients in almost every county in the Bay Area, but there are bankruptcy courts in other states, or in Southern California, or up in Sacramento, where our bankruptcy attorneys do not practice at this time. Even though our bankruptcy attorneys are based in Mountain View, CA, we service clients filing in Morgan Hill, San Francisco, Walnut Creek, and everywhere in between, including almost all cities throughout the Greater Bay Area region.

                It is important for all clients to note that the Bankruptcy Code itself often mandates where the client must file a bankruptcy case. For example, in the vast majority of situations, personal bankruptcy clients must file their bankruptcy case in the bankruptcy division of the bankruptcy district where they have lived for the greater part of the last 6 months prior to filing. An illustration of this rule is the following:

John Doe moved from New York, NY to Palo Alto, CA four months before he planned to file his bankruptcy case. John Doe still owns a home in New York, NY, and most of his belongings are still in New York, as he didn’t have the money to move most of his possessions to Palo Alto, CA when he moved.

John consulted a Nova Law Group bankruptcy attorney in Mountain View, CA and asked where he should file his bankruptcy case. The Nova Law Group bankruptcy attorney told John that he must file his bankruptcy case in the San Jose Division of the United States Bankruptcy Court, because the San Jose Division serves Palo Alto, CA, and he has lived in Palo Alto, CA for the greater part of the last 6 months (John has lived in Palo Alto, CA for 4 months). Consequently, John will need to file bankruptcy in the bankruptcy court which services Palo Alto, CA (in this case San Jose Division), because he has lived there for the greater part of the last 6 months—where he lived before or where his belongings are is irrelevant.

                This requirement, called “venue,” is a very important element for clients to consider when selecting a bankruptcy attorney, as it will help ensure that your prospective attorney practices in the division in which you must file your bankruptcy case.

Bankruptcy Attorney Fees and Costs:

                The fourth important element of hiring a great bankruptcy attorney is cost, but it is evaluated last in this article, because it is often the least important element of hiring a bankruptcy attorney. That is right—it is the opinion of our firm that cost is the least important element of hiring a bankruptcy attorney to handle your case. Why you might ask? The following illustration should help clarify:

Suppose you are told by a reputable heart surgeon at an established hospital that you are about to have a heart attack, and that without a complex, time intensive surgery that only a specialist can perform, you might die within a few months time. This reputable doctor then gives you medical data that substantiates his opinion regarding your condition, proves to you that the surgery is needed, and says that he believes if he performs the surgery himself that it will cost you $10,000 for him to do the work.

Imagine now that you are approached by another surgeon, who you see on “Craigslist,” or meet at the local coffee shop, or see in a tiny web advertisement with cheesy catch-phrases (etc.), and with whom you happen to share your condition when you find out he also “performs surgery” (supposedly). He listens to your story, and then states that he’ll do your entire heart surgery for $500!

                If you were in the situation described above, would you hire surgeon #1 or surgeon #2 to perform your life-saving heart surgery? I hope your selection was surgeon #1, or you’d likely end up getting a great bargain, but winding up dead on the operating table.

                I give this illustration for one very important reason—to demonstrate to clients that when it comes to hiring a bankruptcy attorney, not all bankruptcy attorneys are created equal. Hiring a lawyer is not like buying a gallon of milk—price comparisons are largely meaningless. This is because so many elements go into the cost of hiring an attorney—experience, intelligence, effective communication, geographical location, quality of work product, attentiveness to client needs, efficiency, reputation, and many others. As a result, a client should never assume that a bankruptcy attorney charging $500 for a bankruptcy case is a “great deal” compared to another bankruptcy attorney charging $2,000 for the same bankruptcy case, as it is likely that the client will get very different levels of service and quality of representation from these two attorneys.

                Over his career, Zachary Tyson, the founder and managing attorney of Nova Law Group, has seen the work product of thousands of attorneys. While there are many great bankruptcy practitioners who generate excellent work product and service the needs of clients in an exemplary manner, there are definitely a significant subset of bankruptcy attorneys who do not. Many, although not all, of the bankruptcy attorneys who perform work that is completely unacceptable or fail to meet basic professional standards, come from bankruptcy firms who offer “bargain rates” or other gimmicky sales pitches to lure in clients. Many of these ads, some of which claim that the client can hire a bankruptcy attorney for “$99,” or perform the entire case for “$799,” come from bankruptcy firms that are less than reputable or lack the expertise required to counsel the client effectively. For example, Mr. Tyson has personally witnessed attorneys of other firms, many of which represent “bargain firms,” negligently counsel their clients in all of the following ways:

1. Inform clients that their family-owned bakery business could be kept open in a Chapter 7 case, even though the business was not incorporated. Outcome: The Chapter 7 Trustee shut down the clients’ bakery business permanently and called the U.S. Marshall out to ensure its closure, depriving the attorney’s clients of their only means of support.
2. File a Chapter 7 bankruptcy case for two clients without checking the value of the clients’ home, resulting in significant non-exempt equity in the home that belonged to the Chapter 7 Trustee and the bankruptcy estate. Outcome: Chapter 7 Trustee informed shocked clients at the 341 meeting that he would likely sell their house for the benefit of the estate, ousting them from their home.
3. Attorney arrived at the 341 meeting 30 minutes late with no excuse and then proceeded to sit and look bored, while completely ignoring what the trustee or her client was saying.
4. Attorney arrived at the 341 meeting and didn’t know who the Chapter 7 Trustee was, or even what the Chapter 7 Trustee was there for at the meeting. He also didn’t know that the meeting was recorded, and seemed to have no idea regarding the purpose of the 341 hearing for his client, or how to represent his client.

                The real-life situations above are just a sample of the attorney negligence of some practitioners of other firms, and we would advise clients to use caution when dealing with any gimmicky bankruptcy firm quoting a bargain-basement rate for legal services. Never has the following old adage been more true when hiring a bankruptcy attorney: “you get what you pay for.”

                At Nova Law Group, we strive to provide exemplary service to our clients along with superior work product at an affordable price. Nova Law Group bankruptcy attorneys are neither the least expensive bankruptcy attorneys, nor the most expensive, but rather we believe we provide the best overall value to clients hiring a bankruptcy attorney. For bankruptcy law firms of our caliber and professionalism, we provide a very high-quality of legal work to the client at an affordable price. If you would like to inquire how a Nova Law Group bankruptcy attorney can service your needs in connection with a bankruptcy case, feel free to contact us and we would be happy to assist you.

The Chapter 7 Trustee is an individual person that all clients who are filing a Chapter 7 bankruptcy case will meet at the 341 hearing, which normally occurs 20-40 days after the filing of the client’s bankruptcy case. The Chapter 7 Trustee has several duties, which include, among other things: 1.) preserving the value of the estate and maximizing the amount of money given to unsecured creditors; 2.) ascertaining whether or not the debtor has hidden assets or committed other types of bankruptcy fraud; 3.) recovering monies that were improperly transferred out of the bankruptcy estate prior to filing (such as preferences or fraudulent transfers); and 4.) distributing any non-exempt assets that exist to pay creditors, if any exist at all. In a Chapter 7 bankruptcy case, the trustee will attempt to determine from the debtor’s statements and schedules, as well as any other information provided or that the trustee can find, what exempt property the debtor gets to keep through the bankruptcy case, and correspondingly, what non-exempt property the debtor must give up to pay creditors (if any). While most Chapter 7 clients do not have any non-exempt assets and get to keep all of their property through the bankruptcy case, some clients that have substantial assets might need to give up some of those assets to pay creditors, and it is the Chapter 7 Trustee’s job to liquidate these non-exempt assets and pay creditors the proceeds to the extent required by law. Many of the exemption rules regarding what property can be kept by the client through the bankruptcy case and what property must be abandoned are very complex, and the assistance of competent counsel is highly recommended to ensure that the maximum amount of client property is protected. If you have questions regarding what property of yours might be exempt in a bankruptcy proceeding, feel free to contact a Nova Law Group attorney and we will be happy to assist you.

The Chapter 13 Trustee is an individual person that all clients who are filing a Chapter 13 bankruptcy case will meet, both at the 341 hearing scheduled 20-50 days after the filing of the client’s bankruptcy case and also at other relevant court hearings regarding plan confirmation. The Chapter 13 Trustee has several duties, which generally include: 1.) ascertaining the value of the client’s exempt and non-exempt property, even though the Chapter 13 Trustee will not liquidate that property; 2.) ascertaining whether or not the debtor has committed any kind of bankruptcy fraud or transferred assets pre-bankruptcy that are disallowed; 3.) distributing available assets to creditors in connection with the payments that are proposed in the client’s bankruptcy plan; 4.) ensuring that the client’s bankruptcy plan pays creditors the proper amounts required by the bankruptcy code; and 5.) ensuring that the client is eligible for Chapter 13 bankruptcy and has secured and unsecured debt below the Chapter 13 debt limits. It is important to note that it is not the Chapter 13 Trustee’s duty to liquidate non-exempt assets and distribute them to creditors, unlike the Chapter 7 Trustee, because in Chapter 13 bankruptcy the client is able to retain even non-exempt property as long as the debtor pays equal value to creditors over the duration of the bankruptcy plan. This is one major advantage of Chapter 13 bankruptcy over Chapter 7 bankruptcy for any client with substantial non-exempt funds, as Chapter 13 allows the client to retain the property anyway by paying creditors an equivalent amount over the next 3-5 years of the Chapter 13 bankruptcy case. If you are in a situation where you think you might have substantial non-exempt assets were you to file bankruptcy, or are considering Chapter 13 bankruptcy for other reasons, feel free to contact a Nova Law Group attorney and we would be happy to service your needs.

The United States Trustee is a branch of the United States Government, closely intertwined with the Department of Justice, which has two primary duties that are performed in both Chapter 7 and Chapter 13 bankruptcy cases. These two duties are: 1.) investigate bankruptcy fraud and other misconduct by both debtors and creditors; and 2.) in Chapter 7 bankruptcy cases, determine whether any client obtaining a Chapter 7 discharge, as opposed to a Chapter 13 discharge, would constitute an abuse of bankruptcy process [11 U.S.C. §§ 707(b)(2), 707(b)(3)]. The first duty of the United States Trustee, to investigate bankruptcy fraud and other misconduct, can take many forms. The United States Trustee, for example, might look into whether or not the client has not reported any assets or liabilities on the bankruptcy statements or schedules, has not reported all of his or her income, has transferred or otherwise hidden assets from the trustee, or has lied about his or her eligibility for bankruptcy. The United States Trustee has very broad powers to look into the financial affairs of any bankruptcy debtor, and in many cases, can subpoena financial records and other documents to uncover bankruptcy fraud or misconduct. However, as long as the client is entirely truthful in all dealings with the court and with the Chapter 7 or Chapter 13 Trustees, the client will never have a problem with the United States Trustee. The one exception to the above has to do with the U.S. Trustee’s second duty, which is to investigate whether or not the use of Chapter 7 bankruptcy by a client would be an abuse of bankruptcy process, and whether that client should be forced to obtain a discharge only in Chapter 13 (or Chapter 11 in rare cases). This duty, a part of which is called evaluating the “Means Test” under 11 U.S.C. § 707(b)(2), is a method the U.S. Trustee uses to determine whether a client could actually pay back a portion of his or her debt in Chapter 13 bankruptcy, and therefore, should not be allowed to file a Chapter 7 bankruptcy. Additionally, the United States Trustee is entitled to make an equitable argument under 11 U.S.C. §707(b)(3) claiming that the debtor’s use of Chapter 7 bankruptcy is “unfair,” and constitutes an abuse of bankruptcy process, the argument being that the debtor can actually afford to pay off his or her debts. It is the experience of Nova Law Group that the United States Trustee generally only objects when the Trustee perceives that the client can actually afford to pay back a portion of his or her debts over time, and due to the overwhelming debt that most clients face going into bankruptcy, these objections are rare. Nevertheless, it is very important to seek competent legal advice in evaluating the “Means Test” and the exceptions to the “Means Test,” as there are many sections of the law regarding this matter that can be effectively raised by competent counsel and sometimes qualify even a high-income debtor for Chapter 7 bankruptcy, even where some amateur practitioners or non-lawyers wouldn’t think it possible. Nova Law Group has extensive experience advising clients regarding the Means Test and similar matters, as well as experience actively litigating such matters with the United States Trustee. If you have questions regarding whether or not you can pass the Means Test or qualify for Chapter 7 bankruptcy, feel free to contact a Nova Law Group attorney and we will be pleased to assist you.