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How to Choose a Reputable Bankruptcy Attorney in the Bay Area?

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It is actually very simple to find a reputable bankruptcy attorney in the Bay Area if you take the time. We truly want our prospective clients to speak with other attorneys, preferably before they speak with us. The best thing someone can do for us is speak to other bankruptcy attorneys to find out firsthand how superior our services are from start to finish. If you follow the approach below we are confident you will find the right law firm and person to represent you, even if it is not us. Although, the best thing to do is obtain a referral from a friend, colleague or family member. We know this is a difficult thing to discuss sometimes, but going through this process with an attorney that has already done right by someone you know is priceless.

Take the time to choose a reputable bankruptcy attorney in the Bay Area.

Take the time to choose a reputable bankruptcy attorney in the Bay Area.

Talk to at least three different bankruptcy attorneys that have an office around where you live or work.

It is important to take the time to meet with at least three different law firms. How you are treated when you call and at the initial consultation will be a sign as to what is to come. If your initial consultation is not with an attorney run away. Some firms use legal assistants or paralegals that are not authorized to practice law, give legal advice or answer your legal questions. This is ethically wrong and you deserve better. After speaking with one or more law firms you will understand what filing bankruptcy requires, what your options are and know what range of attorney fees is appropriate. You should receive a breakdown of the fees. How much are for the attorney, the filing fee, the required courses and credit report. If you receive a quote around $30 per course for the required course run away. The required course for any individual filing bankruptcy should not exceed $12.95 TOTAL! If a law firm is suggesting you have to pay them $100 or more for the required courses run away. They are pocketing processing fees and not telling you. Also stay clear of anyone trying to sell you on post-bankruptcy credit repair. It is a scam, just ask the FTC by going to http://www.consumer.ftc.gov/articles/0225-credit-repair-scams and read for yourself. Only time can heal your credit woes.

Do a Google or Other Search Engine Search of the Law Firm and Attorney Name

Do a Google search of the business name and the word complaints or reviews. Do a Google search of the bankruptcy lawyer name you met with and complaints or reviews. If you look at Yelp you also need to look at the “Filtered Reviews.” There is a link towards the bottom of the Yelp page that is gray. To get the whole story you need to look at the reviews that Yelp for whatever reason chose to filter out. If there is one bad review do not be concerned. If there are a number of bad reviews you know that it is not an isolated incident, but a pattern of poor service that you do not want to pay money for.

Now Here Are the Tough Questions to Ask

How many of your Chapter 7 cases did you have to convert to a case under Chapter 13 because the United States Trustee objected? You may not receive an honest answer to this question. I can tell you as of the writing of this article none of our Chapter 7 cases have had to be converted to Chapter 13 to save the case, but that could change. This questions targets whether the attorney can properly evaluate whether you qualify to file a Chapter 7 case, or should the case be filed as a Chapter 13 to begin with.

Do you enjoy what you do, if so why? If they do not enjoy it do not retain them. Surprisingly enough this question can tell you a lot about who you give your money to. If they are just doing a job and have no passion why do you want them to represent you? You will be surprised at the responses you get. You will know the right response when you receive it.

How long does it take you to respond to my phone calls or questions? This is a good question to ask because communication is important. We return all emails and phones calls within 24 hours. The point is to make the attorney give you some sort of response to rely on. If they do not respond to you timely in the future be sure to let them know what the represented to you before you retained their services.

Will I be able to speak with an attorney after I retain your services? Amazingly this is a good question to ask. Again, you may not receive an honest answer to this question. Read the complaints and reviews and you will read that a common complaint is they were never able to speak with an attorney and had no idea who the attorney was that showed up at the 341 meeting of the creditors to represent them. I see it all the time and it is shameful.

Who Are These Companies Filing Proofs of Claims in My Bankruptcy Case?

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In certain bankruptcy cases the companies or people you owe money to are asked to file a proof of claim or should file a proof of claim in the hope of being paid a portion or all of the debt owed to them. If you filed a Chapter 7 case and all of your assets cannot be protected by bankruptcy exemptions then you have an asset Chapter 7 case. The Chapter 7 trustee assigned to the case will send out a notice of possible dividends, which means there is a possibility of creditors receiving money from the bankruptcy estate in the bankruptcy case. If you file a Chapter 13 case then your creditors should always file a proof of claim to be paid pursuant to the Chapter 13 plan filed. In Chapter 13 cases a creditor may not receive anything, but still should file a proof of claim just in case.

Bankruptcy Code Section 101(9)(A) defines a “creditor” as any “entity that has a claim against the debtor at the time of or before the order for relief.” A “claim” is a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, secured, or unsecured.” 11 U.S.C. § 101(4)(A). A “claim” also can be a “right to an equitable remedy for breach of performance if such breach gives rise to a right to payment.” 11 U.S.C. § 101(4)(B). See In re Beugen, 99 B.R. 961, 963 (9th Cir. B.A.P. 1989)

Who Are These Companies Filing Proofs of Claims in My Bankruptcy Case

Who Are These Companies Filing Proofs of Claims in My Bankruptcy Case

I Do Not Recognize Any of the Creditor Names

Once creditors start filing their proofs of claims you may not recognize any of the names of the creditors because the original debt was sold or transferred to a third party. This is normal and quite common. Each proof of claim is supposed to provide who the original creditor was and have the assignment or transfer documents attached to the proof of claim so that you can determine if you actually owe the money or not. If the claim does not provide proper documentation as to how it was calculated your bankruptcy attorney should object to the claim.

Debts Cannot be Purchased for Improper Purposes Though

See In re Beugen, 99 B.R. 961 (9th Cir. B.A.P. 1989), aff’d, 930 F.2d 27 (9th Cir. 1991) regarding a creditor purchasing claims for an improper purpose. In this case the creditor, Young, was more or less buying claims so that he could harass the debtors, the Beugens. Young apparently had no intention of just collecting on the underlying debts of the purchased claims. In this case Young originally filed an adversary complaint against the Beugens arguing fraud resulting from the sale of a salon from the Beugens to Young. The complaint was dismissed and then Young filed a motion to dismiss the Beugens’ corporate Chapter 11 and their personal Chapter 11 cases. The court agreed with Young and dismissed the corporate Chapter 11 but the court did not dismiss the personal Chapter 11 case. Eventually the court did convert the Beugens’ personal Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code. Here is where Young went wrong though. The first claim Young purchased was a claim totaling $753.38 from a small claims judgment. A balance of only $374.47 remained on this claim at the time Young purchased it from the original creditor. Young acquired another claim totaling $5,000. Both of these claims were solicited and assigned after the Beugens filed their Chapter 11 case. Young proceeded to file another adversary complaint objecting to the Beugens under the claims he had purchased. The Beugens bankruptcy lawyer argued that since Young was not the original holder of these two claims that Young did not have the right to object to the Beugens discharge under 727 of the Bankruptcy Code. The court in Beugen provides in part that “the right to object to a debtors discharge is not a marketable commodity which may be purchased by one party from another in order to inflict punishment and discomfort upon a debtor.”

Purchasing a claim is perfectly normal and acceptable if the underlying motivation is to seek payment of the claim. If a claim is purchased for other purposes such as objecting to the discharge of the debtor a party should think twice before proceeding. Mr. Young was ordered to pay the attorney fees and double costs of the Beugens pursuant to Federal Rule of Appellate Procedure 38. A very expensive mistake.

Federal Government Shutdown and the Effect on California Bankruptcy Courts

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Amazingly the Federal Government shutdown is entering its 15th day. In the Bankruptcy Court for the Northern District of California the Chief Judge, the Honorable Alan Jaroslovsky, issued an order on October 11, 2013, regarding the continued operations of the Court. A link to the General Order 28 is at the end of this article. So far we have experienced some slowdowns in certain areas, but it appears in the Bankruptcy Court for the Northern District of California will continue for the most part uninterrupted.

The same cannot be said for the Bankruptcy Court for the Eastern District of California. According to Aaron Koenig, a bankruptcy lawyer in the Sacramento area, the Eastern District of California will no longer conduct 341 meeting of creditors or court hearings on or around October 21, 2013. That does not mean you will not be able to file for bankruptcy protection. The newly filed bankruptcy cases and bankruptcy cases still being administered will be halted in their tracks. This could have far reaching negative consequences for both debtors and creditors. Hopefully the Federal Government will appropriate some money for the Federals Courts this week.

Unfortunately we had a client forget to bring their social security card to their meeting of creditors last week. After your bankruptcy attorney files your bankruptcy petition you must attend a meeting of the creditors and provide a valid government identification card and proof of your social security number. When you receive the official notice of the date and time of the meeting of the creditors and other various deadlines it also says to bring proof of your social security number. Depending upon the Chapter 7 Trustee assigned to your case you may be able to use a W-2 or a government issued letter with your social security number listed. Most of the time a tax return will not be allowed.

The Chapter 7 Trustee assigned to our bankruptcy case was kind enough to question our client and then continue the meeting of the creditors to verify their social security number. Normally our client could go to the United States Trustee’s office in the same building anytime between the first meeting of the creditors and the continued meeting of the creditors and show the United States Trustee proof of their social security number. Due to the Federal Government shutdown the United States Trustee’s Office is closed. Granted the problem was created by our client, but now we may have to appear with our client at the continued meeting of the creditors.

Hopefully the Federal Government shutdown will come to an end soon and everything will go back to normal.

http://www.canb.uscourts.gov/files/GENERAL%20ORDER%2028.pdf

What Happens to My Car if it is Leased When Filing for Bankruptcy?

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One of the most important parts of having a job is being able to get to the job each and every day. That means you need reliable transportation. There are a number of misconceptions when filing for bankruptcy protection. A common question is will I lose my car? If you cannot afford to make the monthly car loan or lease payment, then probably yes. You have to continue to make the car loan payment or lease payment to keep a car with a loan or a lease. If you can make the car loan payment or lease payment each month, then rarely will you lose a vehicle when seeking bankruptcy protection.

Leased Vehicles and Chapter 7 Bankruptcy

When you seek the counsel of a bankruptcy lawyer and file for bankruptcy protection with a lease vehicle you have a couple of options. You may either assume the lease or reject the lease. Assuming the lease means that you intend to fulfill the terms of the lease you agreed to prior to the bankruptcy filing. Section 365(d)(1) of the Bankruptcy Code provides: “In a case under chapter 7 of this title, if the trustee does not assume or reject an executory contract or unexpired lease of residential real property or of personal property of the debtor within 60 days after the order for relief, or within such additional time as the court, for cause, within such 60-day period, fixes, then such contract or lease is deemed rejected.” This means that you and/or the trustee assigned to your case, depending upon the circumstances, must decide whether to assume or reject a car lease within 60 days of the bankruptcy case being filed. This time limit can be extended though. If the car lease is not assumed within the 60 days the lease is automatically rejected and it is time to turn over the vehicle to the dealership that leased it to you.

Lease Vehicles and Chapter 13 Bankruptcy

When filing a Chapter 13 bankruptcy to reorganize your debts you may also keep a lease vehicle or choose to get rid of it. Some Chapter 13 bankruptcy cases are filed to pay back missed lease payments in the Chapter 13 plan and then continue to make the regular lease payment after the case is filed. Make sure you let your bankruptcy attorney know if you are current on the lease payments or behind when you discuss your circumstances during the initial consultation. Most Chapter 13 plans have a designated section for leases. There will be a box for the name of the other party to the lease, a description of the leased item, the regular monthly payment, the amount of the payments missed before the case was filed and lastly the monthly amount to be paid in the Chapter 13 plan to catch up the missed lease payments. If a lease is not listed in this section of the Chapter 13 plan, the plan usually provides the lease is rejected. Upon approval of the Chapter 13 plan by the court the effected lease holder may take all steps necessary to enforce their rights pursuant to applicable law. Basically you should turn the leased vehicle over to the dealership so they can sell it or auction it off.

If Your Mortgage Loan is Sold or Transferred You Still Have to Pay and the New Note Holder has the Right to Foreclose

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We can all agree that the mortgage meltdown was horrible and there is a lot of blame to throw around. In the aftermath of every disaster whether financial or natural there are unsavory people out there to try and make a buck. Just ask all the people who paid contractors to help them rebuild after hurricane Katrina who were ripped off. The mortgage meltdown was no different. Of course the mortgage meltdown was a boon for bankruptcy lawyers, but everything we do is by federal court order with layers upon layers of oversight.

The first wave of crooks were the loan modification companies and some attorneys. Many were taking large upfront retainers and providing little to nothing for the thousands of dollars they accepted. The California legislature finally tried to put a stop to the fleecing of desperate homeowners in 2009 when California Senate Bill 94 was passed and took effect October 11, 2009. I can tell you from firsthand experience it took another two years or more for homeowners to be aware of the new law and for mortgage modification companies to stop taking upfront fees. Then once the California State Bar started disbarring attorneys who continued to accept upfront fees the crooks stopped. Then loan modification companies/attorneys started to create new categories of services like pre-litigation education fees to try and skirt this new law. I believe that unethical practice has stopped as well.

Back to your mortgage and what happens when it is sold or transferred to another entity. It is very common for a note or deed of trust to be transferred or sold to another party before you make the final payment. This does not mean you no longer legally owe the money pursuant to the original note. This was another scam some attorneys used to bilk thousands and thousands of dollars from unsuspecting homeowners who could no longer make their mortgage payments.

Many lawsuits were filed in state court to attempt to stop foreclosures under the Securitization Theory. Almost all notes or deeds of trust recorded have provisions that they can be transferred or sold without notice to the borrower. The original note, deed of trust or loan contract is distinct and separate from any securities transaction. In In re Nordeen, decided by the Bankruptcy Appellate Panel for the Ninth Circuit, Case No. NV-12-1441-DKiCo, the panel does an excellent job explaining the difference between entering into the mortgage or deed of trust versus the transfer or assignment of the security interest as a securities transaction. As the Bankruptcy Appellate Panel correctly points out, if all of the payments are made pursuant to the mortgage or deed of trust the borrower may never ever know who ends up owning the note. Again, all the lawsuits regarding the Securitization Theory popped up once the mortgage meltdown began. It is just unfortunate that some attorneys and bankruptcy attorneys chose to use this theory in failed attempts to stop foreclosures and take thousands of dollars from desperate homeowners. So if you believe there is an issue regarding the assignment or transfer of your mortgage to another party be careful. This issue has now been litigated thoroughly and you had better have grounds that the original mortgage, deed of trust or loan is defective on its face.

Will In re Flores Finally Settle the Applicable Commitment Period Question When Filing Chapter 13 in the 9th Circuit?

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On August 29, 2013, the Ninth Circuit Court of Appeals (En Banc) issued their opinion in the matter of Cesar Ivan Flores and Ana Maria Flores, No. 11-55452. Hopefully this opinion will finally put to rest how long the applicable commitment period is when seeking reorganization under Chapter 13 of the Bankruptcy Code. That is, how long does a Chapter 13 Plan have to be? The Ninth Circuit issued this opinion “En Banc” which is significant given that prior inconsistent opinions were issued by a divided panel of Ninth Circuit Judges. All Judges of the Ninth Circuit participated in this opinion, so the Flores opinion is binding.

So what is the applicable commitment period for a Chapter 13 Plan? It is how long the Chapter 13 Plan of reorganization will last or how many monthly Chapter 13 Plan payments a debtor has to make before receiving a discharge of their remaining debts. The Bankruptcy Code says the applicable commitment period is either 3 years or not less than 5 years if the debtors current monthly income when multiplied by 12 is not less than the median annual family income in the applicable state. Each state has different median incomes to compare to a debtors income. Your bankruptcy attorney should know the median incomes for your particular state. In California the median incomes by number of people in a household right now are follows:

Household of 1 $48,415 per year or $4,035 per month
Household of 2 $63,030 per year or $5,253 per month
Household of 3 $48,415 per year or $5,617 per month
Household of 4 $63,030 per year or $6,305 per month
Household of 5 $48,415 per year or $6,980 per month
Household of 6 $63,030 per year or $7,655 per month
Household of 7 $48,415 per year or $8,330 per month
Household of 8 $63,030 per year or $9,005 per month

In the Flores case the debtors’ income was not in dispute and it was over the median income based upon the number of people in their household. So the applicable commitment period should arguably be five years. The Flores’ and their bankruptcy lawyer proposed a plan of three years though given that their Chapter 13 Statement of Monthly Disposable Income resulted in either $0.00 or negative monthly disposable income. Here is where the different decisions from different jurisdictions comes into play. The Kagenveama case led to confusion or an argument that if a debtors projected monthly disposable income was negative there is no applicable commitment period and a three month plan in theory could be confirmed/approved. So the Ninth Circuit in Flores tells us that “in light of the statute’s text, purpose, and legislative history, we now hold that the temporal requirement of §1325(b) applies regardless of the debtor’s projected disposable income. What does that mean? It means if your average income for the six months prior to filing for Chapter 13 protection is above the median income in California as listed above you will have to file a 5 year Chapter 13 Plan of reorganization. If you live in another state the median incomes will be different. It appears we are now back to how things were prior to the Kagenveama and Lanning cases to determine the term or length of Chapter 13 Plans.

As the former staff attorney for a Chapter 13 Trustee I can tell you that in most cases the commitment period is not an issue. The majority of cases filed include a Chapter 13 Plan of reorganization that is 60 months or five years because it makes the monthly Chapter 13 Plan payment less than if the Chapter 13 Plan was proposed for only 36 months. A debtor may choose to propose a 60 month Chapter 13 Plan even though their income is less than the median income in their state. For example, if a debtor has $15,000 in priority taxes they are paying back in a Chapter 13 Plan the 36 month payment would be about $416.67 per month and a 60 month payment would be $250.00 per month. The debtor may not be able to afford to pay $416.67 a month and have to file the 60 month plan anyway. Many bankruptcy attorneys pushed the envelope though and tried to propose plans that were only 6 months long or 12 months long. Their clients had negative projected monthly disposable income so arguably there was not a required applicable commitment period.

What Happens if a Claim is Disallowed in My Bankruptcy Case? It the Claim also Discharged?

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If you filed a Chapter 13 or Chapter 11 bankruptcy case then you know that the claims process is an important part of reorganizing your debts. What is the result if you object to the allowance of a claim and the claims is disallowed in its entirety? Is the claim therefore discharged when the plan of reorganization is completed? Does the creditor have a right to seek payment of the disallowed claim after you receive your discharge and the case is closed? The answer is it depends upon the type of claim that was disallowed. Make sure you give your bankruptcy lawyer as much information as possible prior to objecting to a claim.

The first case to discuss involves student loans. Student loans are not dischargeable pursuant to Section 523(a)(8). In Cruz the debtors objected to the claim of Educational Credit Management Corporation (“ECMC”.) ECMC did not respond to the objection and the court entered an order that said the claim was disallowed in its entirety and the claim was paid in full. After the debtors completed their chapter 13 plan and obtained a discharge ECMC intercepted the debtors’ post-discharge tax refund to satisfy the student loan held by ECMC. The debtors bankruptcy attorney reopened the bankruptcy case and filed a motion for sanctions against ECMC. The court found that ECMC’s claim was not discharged and ECMC had a right to intercept the debtors’ tax refund.

The disallowance of a claim does not necessarily mean the underlying debt is discharged. See Bell v. ECME 236 B.R. 426 (N.D. Ala. 1999) or In re Shelbayah 165 B.R. 332, 335 (Bankr. N.D. Ga 1994) holding that the allowance or disallowance of claims is unrelated to the dischargeability of those claims under section 523. In the Cruz case the underlying debt was not dischargeable, a student loan. Therefore even though the claim was not allowed the underlying debt was not discharged.

General Unsecured Claims

What if the underlying claim was that of a credit card company? If you object to a credit card claim and the claim is disallowed in its entirety is it also discharged? A general unsecured claim should be discharged upon completion of the plan of reorganization.

Vehicle Loan Lien

What about a car loan company that believes it has a valid lien on your vehicle at the time you file for bankruptcy? In National Capital Management v. Gammage-Lewis, No. 12-2286 (June 6, 2013) the court held that a car loan companies lien was extinguished when the debtor’s received their discharge given the car loan companies failure to provide the appropriate documents to prove it had a perfected security interest. The disallowance of the claim of a lien made the lien void under Section 506(d) of the Bankruptcy Code. The court held that the objection to the claim was sufficient to provide the car loan company the necessary notice and opportunity to be heard regarding their claim. In most circumstances an adversary proceeding must be initiated to determine the validity, priority or extent of a lien.

The bottom line whether a claim that is disallowed is also discharged depends upon the type of claim and the circumstances under which it was disallowed.

Options For Eliminating or Discharging Student Loan Debts

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Student loan debts are increasingly becoming problems for graduates once students hit the job market. We have all heard in the news that Congress is discussing student loan debt legislation to reduce interest rates and make paying back student loans possible. Bankruptcy attorneys are seeing more and more potential clients with student loan debts that cannot be paid back based upon the persons income and expenses.

Get rid of your student loans.

There are options to lower, eliminate or discharge student loan debts.

There are options if you have defaulted on your student loan payments. The following are possible options to help get rid of or discharge student loan debts depending upon your circumstances. You are part of the Federal Family Education Loan Program, William D. Ford Federal Direct Loan Program or the Federal Perkins Loan Program. School Closure: If the university or school you attended closed you may be able to have your student loan debts forgiven. You will need to know the dates you attended the school, the date the school closed, whether you were enrolled at the time the school closed and if you completed your course of study. False Certification/Ability to Benefit: Another way to potentially have your student loans discharged is proving that you did not have the ability to benefit from the school program you incurred the student loan debts for. If you did not graduate high school or obtain your GED before being enrolled you have an argument that you did not have the ability to benefit from the course work. You will need to know the dates of attendance of the school, did you receive a GED at the time of enrollment, did the school give an entrance examination to test your ability to benefit from the program and did you complete a development or remedial program at the school? False Certification (Disqualifying Status): If at the time you obtained the student loans you failed to meet the legal requirements for employment in your state of residence in the occupation for which the program of study was intended because of age, a physical or mental condition, criminal record or other reason. Your disqualifying status could be age, physical condition, mental condition, criminal record or some other reason. Total and Permanent Disability: If you claim that you are totally disabled and can no longer work you will need to show that you have little or no ability to engage in substantial gainful activity. You will need medical records to prove your mental of physical impairment. You will need to describe your limitations. Teacher Loan Forgiveness: There is a special forgiveness or discharge for teachers. You must have taught for five consecutive complete academic years at an elementary school or secondary school. This program does not consider school librarians, guidance counselors and other administrative staff as teachers for this program.

Filing Bankruptcy and Claiming an Undue Hardship

In 2005 the Bankruptcy Code was changed to not allow private student loans to be discharged when filing bankruptcy. Student loans can be discharged when filing bankruptcy if you sue the student loan company in an adversary proceeding and claim an undue hardship. Most jurisdictions use the Bruner Test or some variation of the Bruner Test. To prove an undue hardship and have your student loans discharged you will need to prove that: 1) you cannot maintain, based on your current income and expenses a minimal standard of living for yourself and your dependents if you have to repay your student loans; 2) it is likely that the undue hardship or circumstances are likely to continue for a long period of time or a significant portion of the repayment period; and 3) you made a good faith effort to repay the loan.

Filing A Chapter 13 Bankruptcy Case

Filing a Chapter 13 bankruptcy case can help to hold off or reorganize your debts. You bankruptcy lawyer will be able to explain the process in more detail. In a Chapter 13 Plan of reorganization you can pay back what you can afford and no more. If your student loan minimum payments are $750 a month and you only have $200 in disposable income to pay you should only pay $200 a month in a Chapter 13 Plan. You will be forcing the student loan companies to take less than what they say is the minimum payment. Chapter 13 plans can last for a maximum of 5 years. After the 5 years is up you will need to make payment arrangements with you student loan company again. You will have obtained 5 years of relief though.

What is a Motion for Relief From Stay?

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One of the most common motions in all Chapters of the Bankruptcy Code is the filing of a motion for relief from stay. If you filed bankruptcy and have a vehicle loan or home mortgage the company with the loan might have grounds to seek relief from the stay. The stay is the single most important part of filing for bankruptcy protection. Section 362 of the Bankruptcy Code provides the ins and outs of the stay. Seeking relief from stay is usually requested pursuant to Section 362(d). The automatic stay takes effect as soon as the initial bankruptcy petition is filed. The stay stops any and all collection activity by the people you owe money to. A motion for relief from stay is a company or person you owed money to asking the Bankruptcy Court to allow them to continue their collection efforts like repossession of a car or foreclosure of a home. So when can relief from stay be granted?

Generally cause exists for a creditor to ask for relief from stay when they are not adequately protected. That is the loan is not adequately protected. Cause cannot really be clearly defined under every circumstance. The judge assigned to your case gets to make that determination and of course there is case law to help define what cause is. If you are behind on your car payments and do not want to keep the car when filing for bankruptcy the loan company will ask the court for relief from stay to repossess the vehicle and auction it off to pay off the loan. The same is true of a home. If you are behind on your mortgage payments and do not want to keep the house when filing for bankruptcy; your mortgage company will usually request relief from stay to start or continue the foreclosure process. So what if you want to keep the car or the house and the loan company has filed a motion for relief from stay?

It is time for your bankruptcy lawyer to step into action. If you are behind on your mortgage payments and your mortgage company has filed for relief from stay you can hopefully work out an adequate protection order. An APO (adequate protection order) provide a remedy for the mortgage company to basically get paid the money you are behind and the Bankruptcy Court will give the mortgage company relief from the stay. Usually the APO will have terms in it that if you miss a payment agreed to in the APO the mortgage company will give your bankruptcy attorney notice of the missed payment. Generally most APO’s have language in them that if the APO is not followed the mortgage company can then obtain relief from the stay. Most APO’s are for six months. The missed mortgage payments will be divided into six equal payments. Once all the payments are made life goes on. There are many different reasons creditors seek relief from the stay, not just to repossess a vehicle or foreclose on a home.

What Happens if Someone Tries to Collect on a Debt Discharged in Bankruptcy?

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This question comes up all the time. What happens if someone tries to collect a debt that has been discharged in a bankruptcy case? There are many scenarios in which someone may try and collect a debt that has been discharged in bankruptcy. Maybe the creditor received notice and then mistakenly did not update the account records? Maybe the debt was transferred or assigned to a collection agency that does not know that a bankruptcy case was filed? What can be done about it was addressed in Barrientos v. Wells Fargo Bank (In re Barrientos), 663 F. 3d 1186 (9th Cir. February, 2011).

In Barrientos the bankruptcy filer noticed that a credit reporting agency was reporting a debt for Wells Fargo was still owed. Barrientos disputed the debt and Wells Fargo verified the debt in violation of the order of discharge and Section 524 of the Bankruptcy Code.

So what can be done here? In this case the bankruptcy attorney filed an adversary proceeding to sue Wells Fargo for an injunction, declaratory relief and contempt for violation of the order of discharge seeking damages including attorney’s fees and costs. The 9th Circuit in Barrientos held that the proper remedy is to seek an order of contempt from the bankruptcy court and not file an adversary proceeding. Section 524 of the Bankruptcy Code does not provide a private right of action for damages. The normal remedy for the violation of a court order is to hold the violator in contempt of court. The discharge order is no different. The discharge order signed by the court permanently enjoins a creditor from every collecting on the debt again.

Federal Rule of Bankruptcy Procedure 9020 provides that FRBP 9014 governs motions for contempt by trustee or a party in interest. So your bankruptcy lawyer needs to reopen the bankruptcy case and file a motion for contempt if a creditor violates the order of discharge and attempts to collect a discharged debt. Whether you actually seek contempt depends upon if there are damages and how severe the damages are. To reopen a bankruptcy case the court filing fee is $260.00. To stop the collection activity you may only have to send the creditor the order of discharge for their records. If a creditor sues you, repossesses a vehicle or continues with a foreclosure sale of your home in violation of the automatic stay or order of discharge your damages could be very significant.