Author Archives: Admin

Do I Have the Right To Amend My Schedules After Filing My Bankruptcy Petition?

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What happens when you filed your bankruptcy petition with incorrect information? Mistakes happen all the time. No one is perfect. Does that mean you get to amend your petition to include the correct information?

According to the Federal Rules of Bankruptcy Procedure Rule 1009(a), “a voluntary petition, list, schedule, or statement may be amended by the Debtor as a matter of course at any time before the case is closed.” The bankruptcy courts want to provide the honest consumer who is unable to repay his or her debts with the opportunity to obtain a fresh start. For the dishonest consumer the rules are not as lenient. The Federal Rules of Bankruptcy Procedure Rule 4003(b) states that a party in interest or the trustee may object to the amendments if they believe that the amendments are incorrectly applied or used. The bankruptcy courts have also ruled that a judge could disallow certain exemptions if there was bad faith by the debtor (person claiming the exemptions) or prejudice to creditors. See Martinson v. Michael (In re Michael), 163 F.3d. 526, 529 (9th Cir. 1998).

So what is considered bad faith? Generally, this question is answered based on the totality of circumstances. There can be many instances of bad faith. One of the most common examples of bad faith is when the person amending their petition tried to hide assets and only amended their schedules to reflect the true value when it was beneficial to them or when they are found out or are in danger of being found out by the trustee or creditor. Bad faith can be found even if the person amending their petition disclosed the asset but misrepresented the value or undervalued the asset. If bad faith is found the right to amend the petition to claim an exemption could be lost. If you need to make a change in your bankruptcy petition is best to let your bankruptcy lawyer know as soon as possible.

What about prejudice to creditors? The court in Doan v. Hudgins (In re Doan), 672 F.2d 831 (11th Cir. 1983) states, “simple delay in filing an amendment….does not alone prejudice creditors. Nor does prejudice to creditors occur merely because a claimed exemption, if held timely, would be granted.” The court in In Re Arnold, 252 B.R. 778 (B.A.P. 9th Cir., 2000) lays out some instances of what is considered prejudice to creditors. “Prejudice to creditors is clearly present where they suffer an actual economic loss due to a debtor’s delay in claiming his exemption.” See Grzesnikowski v. Shaffer (In re Shaffer), 92 B.R. 632, 635 (Bankr.E.D.Pa. 1988). This was considered prejudice to creditors because the creditor would have acted differently if they knew the exemptions would be amended. In another case, In re Bowman, 1996 WL529233 (Bankr.D.Md. 1996), the court found there was prejudice to creditors because “substantial judicial resources were devoted to resolving issues that would not have required resolution if the debtor had promptly claimed the exemption.”

Needless to say, it is very important to make sure your petition and schedules are accurately listed to avoid losing your assets to creditors. It would be wise to consult with a bankruptcy attorney before filing your petition to ensure that all your assets are listed properly and therefore eligible to be protected by properly applied exemptions.

Can Student Loans Be Discharged In Bankruptcy?

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A large portion of Americans are struggling with their student loan payments. Student loans are available for many different types of occupations and programs. Not just for going to a traditional college and receiving a college degree. Student loans are called good debt sometimes because the idea is that you obtain training or education and then you can make more money and payoff the student loan debt. Things to not always work out like that though.

So, can student loans be discharged when filing for bankruptcy protection? Section 523(a)(8) and the Bankruptcy Reform Act of 2005 make student loans not dischargeable unless you can successfully argue the student loans impose an undue hardship on the person filing bankruptcy or their dependents.

In the Ninth Circuit the test is the Bruner test from a Second Circuit case in 1987. In re Brunner, 46 B.R. 752, 753 (S.D.N.Y. 1985) aff’d, 831 F.2d 395 (2d Cir. 1987). Your bankruptcy lawyer must file an adversary proceeding within the bankruptcy case to prove the bankruptcy filer (1) cannot maintain, based on their current income and expenses, a minimal standard of living if the student loans have to be paid back; (2) these circumstances are likely to persist for a significant portion of the repayment period of the student loans; (3) the bankruptcy filer made a good faith effort to repay the student loans.

Can A Minimal Standard of Living Be Maintained With Student Loans?

What is a minimal standard of living and can it be maintained if forced to repay the student loans? This is a case by case analysis based on the circumstances the bankruptcy filer finds themselves in. The bankruptcy filers Schedules I & J will be scrutinized. Your bankruptcy attorney and you will have to spend some time discussing your income and expenses in great detail. Are the bankruptcy filer’s expenses even necessary? Is too much money being spent on food or clothes each month? Are there any children that need to be supported and for how long? What future expenses will the bankruptcy filer have to pay in the future?

Is the Condition Likely to Persist?

There are again any number of factors that make the condition likely or unlikely to persist. If the debtor is 55 years old and well past the peak earning years of their life, then the condition is most likely to get worse and not better. Is future employment or pay increases likely or unlikely? If there is only a temporary problem reducing the debtor’s income and their income will increase in the near future the condition is not likely to persist, or you in fact know the condition is not going to persist.

Good Faith Attempt to Repay the Student Loans

The best evidence that you have acted in good faith and made a good faith effort to repay the loans is you actually did pay some of the student loan payments until they became too much. If you have asked for multiple deferments that is evidence that you are acting in good faith and tried to continue to make the student loan payments.

Juno Baby, Inc. Unfortunately Filed For Chapter 7 Bankruptcy

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Every now and then while I wait for my client’s case to be called at a 341 meeting of a creditors an interesting business bankruptcy case is called first. Unfortunately today that case was for Juno Baby, Inc. Juno Baby, Inc.’s bankruptcy attorney filed their petiton for bankruptcy protection under Chapter 7 of the Bankruptcy Code on December 21, 2012, Bankr. Case No. 12-33574.

I remember when this Juno Baby first started appearing because my brother had just welcomed his first child into the world in 2008. They were researching all kinds of learning tools for their first child. They liked the concept of songs and music teaching their child. What a great idea. Juno Baby was one that came up. Also with the happenstance of life I had a client who owned stock in Juno Baby, Inc. as well.

According to testimony by a former Juno Baby, Inc. CEO at Juno Baby, Inc.’s 341 meeting of the creditors today, Juno Baby, Inc. unfortunately did not catch on like you would think. According the California Secretary of State Juno Baby, Inc. was incorporated on April 16, 2009. The original founders basically sold all of the intellectual property of Juno Baby, LLC to Juno Baby, Inc. There were approximately three rounds of funding to start Juno Baby, Inc. The total amount of investment capital raised was around $4.2 million. According to their former CEO, Juno Baby, Inc. has not operated since 2011. An interesting twist that came up was the timing of the launch of the business and the emerging use of smart phones and launch of the IPAD. Originally Juno Baby, Inc. was focused on producing content in the form of DVDs. The shift was on to other platforms and apps with the Apple Store.

The bankruptcy schedules list $352,816 in assets and $6,913,903.00 in unsecured debts. Most of the assets are in the form of inventory totaling $331,806.00. What is clearly unknown in this case is: What is the value of the intellectual property such as the copyrighted content produced by Juno Baby, Inc.? Unfortunately for creditors there may not be any market out there to sell the intellectual property. There are number of creditors that are owed money such as Amazon.com. The single largest creditor is Peter Dal Pezzo for a loan totaling $6,681,742. Mr. Dal Pezzo’s claim represents 96.6% of the total claims against Juno Baby, Inc. If you are a bankruptcy lawyer representing a creditor it will be interesting whether the intellectual property created can be sold off to another company or individual for the benefit of creditors. Only time will tell. For now it marks the end for a once promising concept under the name Juno Baby. I do not think my brother ever ended up purchasing any of their products also. He probably owns some Baby Eistein stuff though.

Will I Get My Chapter 13 Plan Payments Back If My Case Is Dismissed Before Being Confirmed or Approved?

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There are many reasons why a Chapter 13 bankruptcy case would be dismissed. But what happens after the case is dismissed before the Chapter 13 plan is confirmed or approved? One of the most common questions is what happens to the Chapter 13 Plan payments I made to the Chapter 13 trustee’s office? What about my car payment or other people I owe money to after the case is dismissed?

Chapter 13 Trustee Payments

This is probably the most common question because everyone wants to get the money back they paid into the Chapter 13 plan when the case is dismissed. The money you get back depends upon how many months ago the case was filed and the language of the plan and what is going on in your case. If you have provided for pre-confirmation adequate protection payments to a creditor like a car loan company then those payments plus the Chapter 13 trustee percentage will be subtracted from the amount you get back. Some Chapter 13 plans include a provision that your bankruptcy lawyer will receive some of their attorney fees in the event the case is dismissed. So you may have to subtract all or a portion of your bankruptcy attorney fees from the amount you will get back. This same respect of course was not given to attorneys for debtors. In Chapter 13 cases, rarely at the fault of the attorney for the debtor, the Chapter 13 Plan is not confirmed and the case is dismissed.

Also, as of October 1, 2012, a Chapter 13 trustee is allowed to take a percentage of the Chapter 13 plan payments they return to you for their administrative costs. This is how the Chapter 13 trustee’s office gets paid. They get a percentage of the Chapter 13 plan payments they receive and then pay out to creditors (creditors have to file a valid claim pursuant to FRBP 3001). They used to only be allowed to take their percentage on pre-confirmation adequate protection payment and disbursements of funds after the chapter 13 plan was confirmed or approved. The United States Trustee, a part of the Department of Justice, in August 2012 decided it was okay for the trustee’s to also take their percentage from the amount refunded to people who file for bankruptcy in the event the case is dismissed.

What About The Attorney For The Debtor? How Do They Make Out Upon Pre-Confirmation Dismissal?

Does the attorney for the debtor get paid for all of their time upon dismissal of the Chapter 13 case pre-confirmation? Nope. The debtor’s attorney gets what they received as a retainer prior to the Chapter 13 case being filed. Then if you try and actually get paid for your time you run the risk of getting sued or a one-star review of Yelp for just seeking payment for the actual and necessary time and expenses expended for the benefit of the client.

How much is that? It depends. What happens though is the longer the Chapter 13 case is pending the more time and money the bankruptcy attorney has to expend to keep the case going and get the relief the client is seeking. This causes a horrible conflict of interest created by the compensation rules as they stand right now in the Northern District of California and other districts and Chapter 13 cases. Each and every client is indebted to me post-petition very quickly. Most of my time is front loaded and that is the correct way to properly represent debtors. If you do not go down every road to see if the bridge is out good luck after the case is filed figuring it out in a timely and efficient manner. Bankruptcy is an area of the law that you better have your ducks in a row before filing. So I will spend at least 2-3 hours before the petition is even started to be drafted to make sure we can be successful in reorganizing our client’s debts in Chapter 13. The meeting of the creditors comes around about 30 days after the petition for bankruptcy is filed. I now have around $200 – $300 in real paid expenses and anywhere from 10 – 15 hours into the case upon conclusion of the 341 meeting of creditors. At $350 an hour that is from $3,500 – $5,250 in attorneys fees and expenses expended for the benefit of the client. This is in a case that does not have any issues to address or argue about. If actually have to advocate on behalf of my client because a creditor or trustee’s office is not following the law or interpreting it differently look out. I am now into the case for anywhere from $5,250 to $15,000 [to get this money I have to file a application for approval of my fees and costs with a hearing; that is an additional $2,000 I have to spend just to get the time and expenses I have already spent approved] for fulfilling my obligation to my client regardless of the likelihood of being paid for my time. This is about as benign a way for me to describe these circumstances to you given I am in the boat. I also am poor so I have no real voice or choice in this. I think my largest problem with this I know that in the real world circumstances like this COULD never happen. On the street this COULD never happen. On street you instant personal liability for your choices. I am not condoning violence or vigilante justice. All I am saying is the world has a way of checking you in the natural course of things, some may call it “instant karma,” if you run afoul of another human being. But that is not how most things work today. The cannons or natural law that governed human interaction for thousands of years has been thrown out the window for a system that creates inequities between humans for financial gain. Corporations and a government that can do things and make decisions and have ABSOLUTELY no risk of going to jail for it or losing everything they have worked for their entire life. I put everything on the line each and every day I do business as an attorney. I am always personally responsible by operation of law. I live and work in the community I practice law in. Anyone can walk into my office and tell me what is up from down if they feel it is necessary. That is not how the government or corporations (directors and officers of corporation) have to face with their decisions. Hell, corporations just crunch the numbers and determine if dealing with the death and destruction they are going to cause makes more money than paying the insurance claim or setting up a fund to compensate the victims. Time and time again it seems the human cost can be dealt with and the corporation can still turn a profit so the stock market continues to go up and up. The government at this point is not much different in their decision making it seems. I digress . . . . . . .

At this point maybe the Chapter 13 Plan is confirmed and or possibly not. I can say the only reason our firm does not get a Chapter 13 Plan confirmed is because our client unfortunately cannot or chooses to not do what they are instructed to do to be successful in reorganizing their debts. It is never any fault or lack of effort on our part. We just left holding the bag time and time again. I give free consultations and lose anywhere from $5,000 – $30,000 every year over this issue. If that fair? At some point the powers at be decided the Chapter 13 Trustee’s office should not have to work for free if a case is dismissed pre-confirmation. Somehow that same respect is not given to bankruptcy attorneys. Instead the enforcement of the rules of bankruptcy attorney compensation create a conflict of interest with our clients almost instantly that no one seems to care to change. How sad. So I choose to work for free to uphold my obligation to my clients and the law as their bankruptcy attorney despite the issues discussed above.

Car Loan Payments

This issue was briefly mentioned above regarding pre-confirmation adequate protection payments. Some Chapter 13 trustees will require, or you might be able to cramdown (pay less than what you owe on the loan at the time your case is filed), that your car loan payments be paid inside the Chapter 13 plan. This means instead of making your car payment directly to the car loan company the payment will be made as part of the monthly chapter 13 plan payment to the trustee’s office. If the chapter 13 plan calls for paying pre-confirmation adequate protection payments then the car loan company will receive a car loan payment each month and there will not be a huge amount to catch up on once the case is dismissed. You will have to deduct the payments made to your car loan company if the case is dismissed. What if there are no pre-confirmation adequate protection payments being made? Under this circumstance your car loan company will not have received any payments on the car loan for however many months you were in the bankruptcy case and the chapter 13 plan was not confirmed or approved by the bankruptcy court. If you were in the case for 10 months before it was dismissed and the monthly car loan payment prior to filing bankruptcy was $250, then you will be behind $2,500 in car payments once the case is dismissed.

Can I Change or Modify My Chapter 13 Plan Once It Is Confirmed or Approved?

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Yes, you can change your chapter 13 plan once it is confirmed or approved by the Bankruptcy Court. The Ninth Circuit Bankruptcy Appellate Panel discussed this issue in Mattson v. Howe (In re Mattson), 468 B.R. 361 (9th Cir. BAP April, 2012). The BAP discussed whether the debtor must show a substantial unanticipated change in their circumstances to modify the approved or confirmed chapter 13 plan of reorganization.

Section 1329 of the Bankruptcy Code provides that at any time after confirmation of the plan but before the completion of payments under such plan, the plan may be modified, upon request of the debtor, the trustee, or the holder of an allowed unsecured claim . . . .

A number of circuits have adopted the “substantial and unanticipated change” test for whether a plan modification should be allowed or not. The Ninth Circuit has adopted no such test. The greatest hurtle a plan modification might face is a good faith test under Section 1325(a)(3) of the Bankruptcy Code. A modification of a confirmed plan must still be presented in good faith based upon the totality of the circumstances. In the Mattson case the Bankruptcy Appellate Panel provides that, “In the end, in evaluating plan modifications, it may make little practical difference whether the bankruptcy court applies the substantial and unanticipated change test as a threshold requirement or uses it as a discretionary tool.” Mattson v. Howe (In re Mattson), 468 B.R. 361, 369 (B.A.P. 9th Cir. 2012). “[T]he bankruptcy court believed that the good faith test lacked predictability and therefore added the requirements of the substantial and unanticipated change test and that the change in the plan correlate to the change in circumstances.” Mattson at 371 (discussing the standard used by the trial court). “We conclude that the bankruptcy court’s second requirement—that the proposed modification correlate to Debtors’ change in circumstances—necessarily implicates a good faith analysis.” Mattson at 371. “[W]e view the bankruptcy court’s correlation requirement as simply another factor that may be considered under the totality of circumstances approach to a good faith analysis in this Circuit. We emphasize, however, that no single factor is determinative of the lack of good faith.” Mattson at 371.

So what can bankruptcy attorneys take away from this case? Basically if you are going to request a modification of a confirmed plan make sure something bad has happened to your client that makes the change in the plan reasonable and in good faith based upon the totality of the circumstances. Do not have something good happen to your clients then try and change the plan that potentially harms the creditors in the case. In the Mattson case increasing the plan payment to $1,000 a month for 36 months rather than the $150 a month payment for 60 months would benefit creditors so . . . . I do not know what happened after the appeal, but I wonder if the Mattson’s bankruptcy lawyers got them stuck in a 60 month plan paying $1,000 a month?

What Relief Does The American Taxpayer Relief Act of 2012 Actually Provide Anyone?

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I always like to read what new laws are named and then read the law to find out what the law actually does and if the name is appropriate. The American Taxpayer Relief Act of 2012 or H.R. 8 raises taxes on anyone making over $400,000 and is single, and $450,000 if married. It also has a phase-out of tax deductions and credits for people whose incomes over $250,000 for individuals and $300,000 for couples. It also increases the amount estates totaling over $5,250,000 are taxed when someone dies from 35% to 40%. I have never been a fan of the death tax. The two-year old cut to payroll taxes was not extended. The payroll tax rate had been reduced from 6.2% to 4.2% for 2011 and 2012. That hurts all of us working stiffs out there each and every month. Take a look at your paycheck today. It is smaller than in 2012. So as a bankruptcy attorney I am asking where is the relief?

The Mortgage Debt Relief Act of 2007 was extended to January 1, 2014

At last there is bit of relief in this new law. Section 202: Extension of Exclusion From Gross Income of Discharge of Qualified Principal Residence Indebtedness. What does this mean? It means that if you house is foreclosed on in 2013 then the difference between what your home is worth and what you owe on the loan cannot be counted as taxable income just like in 2007 – 2012. When your home is foreclosed on or short-sold the bank that had the loan will issue a 1099-C or possibly a 1099-A for (C) cancellation of debt or (A) abandonment for the difference between the value of the house and what is owed on the loan. Of course most houses purchased recently are not worth what is owed on the loan. The cancellation of debt is not always taxable though. The cancellation of debt or difference is a taxable event unless it was (1) discharged in bankruptcy (2) you were insolvent at the time of the event (See IRS Form 982) OR (3) the house was your principal place of residence and the debt was incurred to buy, build or improve your principal residence or refinance that debt. See IRS Publication 4681.

So the extension to January 1, 2014, is definitely a positive and something that is unfortunately still necessary. The mortgage crisis is still ironing itself out. As a Bay Area bankruptcy lawyer I wish I could say there will not be quite a few foreclosures and short-sales this coming year, but there will be. There are even adjustable rate mortgages that are adjusting up let alone those who have watched the value of their homes decrease by one hundred thousand dollars or more the last few years. Relief from taxes on the cancellation of debt resulting from a foreclosure or short-sale is still necessary and is absolutely relief.

Do You Need A San Jose Bankruptcy Lawyer?

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If you do need a San Jose bankruptcy lawyer you have come to the right place. We offer free consultations with experienced attorneys. You will not be meeting with an inexperienced paralegal or legal assistant that should not be giving out legal advice. At West Coast Bankruptcy Attorneys we are committed to providing you with the best bankruptcy experience for a reasonable fee. Ryan C. Wood and Kitty J. Lin are bankruptcy lawyers that have filed close to a thousand bankruptcy cases in California and discharged millions of dollars of debt. If you are behind on your mortgage payments, behind on car payments or are having problems paying your credit card bills each month give us a call and schedule a free consultation to find out if bankruptcy can help you.

Personal Service

One of the most common compliments receive is that we respond quickly to emails and phone messages. You will always be able to email us directly to our personal email addresses and we answer our phone personally like in the old days. You will not be transferred to one person, the another person only to wonder if you will ever receive a call back or who can help you. We will return your call the same day or within 24 hours. We answer email questions extremely quickly. As long as we are in the office and available then email are answered as they are received.

Low Cost Required Courses

Another benefit of retaining our services is not paying more for the two required courses than necessary. The first course, credit counseling, must be completed before the case is filed. We use the least expensive provider of this course, $5.00. Other attorneys not only use providers that charge $30 for the exact same thing, but they add on processing fees to pad their pockets without telling you. The second course, debtor education, must be completed after the case if filed to be eligible for a discharge of your debts. The provider we use charges $7.95. Again, other attorneys not only use providers that charge $30 for the exact same thing, but they add on processing fees to pad their pockets without telling you. Both of the courses are on the internet and can be completed from the comfort of your home.

Reasonable Attorney Fees

Just like with the required courses we do what is possible to make sure we only charge reasonable attorney fees for the work your case requires. The more work that is required the higher the fee, or the less work that is required the lower the fee. We have noticed that some bankruptcy attorneys will charge clients $2,000 for each and every Chapter 7 they file. How can that be when different amounts of work are required or different cases and circumstances? You can rest assured that our reasonable attorney fees are based upon your circumstances and the amount of work your case needs.

What Is An Objection to Confirmation of Chapter 13 Plan?

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An objection to confirmation of a chapter 13 plan is how a creditor or the trustee assigned to administer the plan communicates to the court and the party proposing the plan that they believe the plan does not meet the requirements for confirmation or approval pursuant to section 1325 of the bankruptcy code. A chapter 13 plan is confirmed or approved by the bankruptcy court if it satisfies the requirements of section 1325.

Trustee Objection

The most common party that objects to the confirmation of a chapter 13 plan is the trustee assigned to administer the plan. Every jurisdiction has a standing trustee to administer all of the chapter 13 cases filed in their jurisdiction. In the Northern District of California there are three different standing trustees. Each trustee at some point will hopefully recommend the plan for confirmation if they believe the plan meets the requirements listed in section 1325 of the bankruptcy code. A plan can be confirmed or approved by the bankruptcy judge assigned to your case also and the trustee’ objection will have to be overruled by the court. The most common reason a trustee will object confirmation is because a creditor files a proof of claim for an amount owed that is different than what is scheduled in the bankruptcy petition and provided for in the plan. Your bankruptcy lawyer will have to file an amended plan to fix the problem.

Car Loan Company Objections to Confirmation

Car loan companies will regularly object to confirmation of chapter 13 plans because they disagree with the valuation of a car that is being paid in the plan. If the car was purchased 910 days prior to the filing of the bankruptcy case the plan only has to pay back the fair market value of vehicle and not was is owed on the loan. This can be a significant savings if the value of the vehicle is far less than what is owed. The percentage rate can be lowered as well. The car loan company naturally wants the value of the vehicle to higher and the bankruptcy filer wants the value of the vehicle to be lower. If your bankruptcy lawyer and the car loan company cannot agree to a value then there may have to be an evidentiary hearing before the court. The court will decide the value of the vehicle.

Mortgage Company Objections to Confirmation

The most common reason why a mortgage company objects to confirmation of a plan is because of missed mortgage payments and the dollar amount of missed mortgage payments in the proof of claim they file is more than what is listed in the chapter 13 plan. When mortgage payments are missed various late fees are added and if quite a few mortgage payments are missed then the mortgage company will set up an escrow account to pay the property taxes and insurance for the property. The amount owed in the escrow account seems to always be a point of contention in many cases.

How Can Private Disability Insurance Payment Be Garnished?

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If you were served with a summons and complaint the clock is ticking. If you want to answer the complaint and defend yourself seek the counsel of a civil litigation attorney in your area. If you just want it to go away and you have other debts as well that you cannot pay it is probably time to sit down with an experienced bankruptcy lawyer in your area. The credit card company or creditor who sued you will most likely obtain a judgment against you eventually. Once they have a judgment against you they can enforce the judgment.

Wage Garnishment

The most common and convenient way for a judgment creditor to get paid or enforce the judgment is to try and garnish your wages. Of course you must be employed for your wages to be garnished.
Can Private Disability Insurance be Garnished?

In California our California Code of Civil Procedure Section 704.130 provides that disability benefits are exempt from garnishment. See below. But what about the income once it is deposited into a bank account. Well, the insurance money is then commingled with other money. It is then possible for the insurance money to be garnished. The best course of action is to have separate bank accounts so that you can always trace your private disability insurance to one account and there is no question about the source of the funds.
California Civil Procedure Code Section 704.130
(a)Before payment, benefits from a disability or health insurance policy or program are exempt without making a claim. After payment, the benefits are exempt.
(b)Subdivision (a) does not apply to benefits that are paid or payable to cover the cost of health care if the judgment creditor is a provider of health care whose claim is the basis on which the benefits are paid or payable.
(c)During the payment of disability benefits described in subdivision (a) to a judgment debtor under a support judgment, the judgment creditor or local child support agency may seek to apply the benefit payments to satisfy the judgment by an earnings assignment order for support, as defined in Section 706.011, or any other applicable enforcement procedure, but the amount to be withheld pursuant to the earnings assignment order or other procedure shall not exceed the amount permitted to be withheld on an earnings assignment order for support under Section 706.052.

How Can Private Disability Insurance be Garnished?

Like everything there are limitations to protections. If you are paid money to pay for health costs and choose not to pay the health costs, then the health provider you owe money to can obtain and judgment and garnish your private insurance benefits. Your benefits can also be garnished if you have children you must pay court ordered support to. Generally any court ordered payment can be taken out of benefits. For more information about your specific situation consult a bankruptcy attorney in your jurisdiction or state.

What is the Basis for the Bankruptcy Court’s Authority?

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The single most powerful part of filing for bankruptcy protection is the automatic stay. The automatic stay is effective as soon as a petition for bankruptcy is filed with the court. The stay stops any and all collection activity making the bankruptcy court the single point of contact for creditors to seek payment or relief.

One of the most common reasons why people seek the counsel of a bankruptcy lawyer is because of a pending lawsuit, garnishment, repossession or home foreclosure. If you have been served with a summons and complaint for an unpaid debt it will most likely be just a matter of time before the credit card company obtains a judgment against you. Filing for bankruptcy protection will stop the lawsuit because of the automatic stay and in most cases discharge the underlying debt you are being sued for.

Once a judgment is obtained it can be enforced. The judgment creditor may conduct what is called a judgment debtors examination for force the judgment debtor to disclose where they work and bank account information. The most common way to enforce a judgment is to garnish wages. Filing bankruptcy will stop the garnishment and even allow you to get some of the garnished wages back depending upon the circumstances.
If you are one or more payments behind on your vehicle loan repossession of the vehicle is something to worry about.

The stay will prevent repossession of your vehicle and depending upon your circumstances filing a Chapter 13 bankruptcy can even lower what you pay for the vehicle and the percentage rate of the loan. You generally will have to had purchase your vehicle 910 days prior to filing your bankruptcy case and your vehicle is worth less than what you still owe on the vehicle loan.

Unfortunately the last four or five years has led to many bankruptcy cases being filed because of pending home foreclosures. Filing a Chapter 13 case will allow you to continue to make the normal mortgage payments and catch up on the missed mortgage payments in the Chapter 13 plan. You may also be able to get rid an underwater second mortgage, third mortgage or equity line of credit. A motion to value or adversary proceeding to value the house must be filed along with the Chapter 13 case.

There are many reasons to seek the protection of the bankruptcy court and the automatic stay. For more information about the power of bankruptcy contact a bankruptcy lawyer in your jurisdiction for more information.