Category Archives: Automatic Stay and Bankruptcy

The Ninth Circuit Court of Appeals Finally Provides Debtor’s the True Ability to Enforce Their Rights When the Automatic Stay is Violated

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The Ninth Circuit Court of Appeals held on October 14, 2015, see In re Schwartz-Tallard Case No. 12-60052, that debtors can recover attorneys’ fees and costs reasonably incurred when seeking sanctions and damages for the willful violation of the automatic stay pursuant to Section 362(k) of the Bankruptcy Code. This is a huge decision and was badly needed. How can anyone enforce their rights if they cannot afford to hire representation and that representation cannot even recover their fees for correctly and successfully prosecuting the award of damages? They cannot and it created vast injustices for those damaged by the willful violation of the automatic stay. This holding by the Ninth Circuit Court of Appeals properly makes the party, creditors; bare the cost of their bad behavior, willfully violating the automatic stay. I previously wrote way back in December 2010 about how the backbone of the bankruptcy process is the automatic stay.

Previously debtors could only recover attorneys’ fees and costs up to when the violation of the stay was remedied. Not attorneys’ fees and cost associated with seeking sanctions and damages when remedying the automatic stay violation. This structure of recovery of fees was a huge problem for debtors and their bankruptcy attorneys. For some reason the system time and time again has policies that do not allow attorneys for debtors to be paid for their time when advocating on behalf of their clients. Enforcing the violation of the automatic stay used to be a prime example. A client would come to us with evidence a creditor is violating the automatic stay even though they were served with notice of the bankruptcy case. Some violations of the automatic stay are innocent and can be remedied by sending an email or letter to the creditor or their counsel. The damages are not significant.

In other circumstances creditors actually sue debtors post-discharge for a discharged debt and then refuse to dismiss the state court lawsuit. If you have ever been sued for any reason it does not feel good. Under the prior fee structure if their bankruptcy lawyer filed a motion for sanctions in bankruptcy court for the willful violation of the automatic stay the creditor could then just seek dismissal of the state court lawsuit as soon as possible after the filing of the motion for sanctions. Then all the time and effort to seek damages for the creditor’s willful violation of the automatic could not awarded to the debtor’s attorney. That would include the time to appear at the hearing for sanctions and any time after the violation was cured when continuing to prove damages that in some cases are very significant. What a horrible structure. It encouraged violations of the automatic stay and discouraged debtors from enforcing their rights for the violation of the automatic stay and seeking damages. In my opinion it went against everything filing for bankruptcy PROTECTION is supposed to be about.

Now creditors will properly weigh the consequences of their willful choice to violate the automatic stay properly given they will have to pay for the debtors attorney’s fees and costs from day one to the end of the process of proving damages. There will therefore be less violations of the automatic stay and debtors can obtain the relief they originally sought when filing a petition for bankruptcy. It will also eliminate the need to litigate exactly when the violation of the automatic stay ended and how much time and money was spent by the debtor’s attorney up to when the violation of the automatic stay ended. The focus can now be on the willful violation of the automatic stay that should never have happened and the resulting damages. Attorneys for debtors will also no longer fear, at least in this area of representing debtors, that they will get left holding the bag financially for properly advocating on behalf of their clients. Now if we could only get this kind of treatment in other areas of bankruptcy practice regarding the time we spend advocating for our clients there would be even more justice to be had by debtors. After all, filing for bankruptcy protection is following the law.

In the Schwartz-Tallard case the facts are actually far worse. The debtor’s house was improperly foreclosed on and the debtor had to fight to get the house back. The debtor then sought sanctions and damages. The creditor in this case appealed the rulings of the lower bankruptcy court and lost. In this case the debtor’s attorney could not recover all the time and money spent defending the appeals? The Ninth Circuit Court of Appeals remedied the prior strange result in the Steinberg case limiting recovery of attorneys’ fees and cost to when the automatic stay violation ceased and now include recovery of attorneys’ fees and cost seeking damages, including any appeals.

Is it Okay to File Multiple Bankruptcy Petitions Over and Over Again and What are the Possible Repercussions?

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I found the all-time record holder for the most bankruptcy petitions filed I have ever witnessed. I have redacted the person’s name even though it is technically a public record. This individual has filed 14 Chapter 13 bankruptcy petitions and 1 Chapter 7 petition since 2009. Yes, 15 total separate bankruptcy petitions for relief and they all have been dismissed for one reason or another except the most recent filing. Please see the cases and dates filed at the end of this article. I cannot think of a reason why someone would file this many petitions for relief and actually obtain some sort of value for it. So is it okay to file 15 petitions for relief in five years under the Bankruptcy Code? I cannot specifically answer that question for this person given I do not know the bankruptcy filers circumstances or facts surrounding the many filings. What I do know is this person may have spent a lot of money on filing fees (possibly exceeding $4,000.00, unless a fee waiver or installment payment was made for the filing fee) and used a lot of the Chapter 13 trustee and courts time to administer these cases before dismissal. This article will discuss the effect on the automatic stay regarding multiple bankruptcy filings and the possible repercussions against someone that files this many petitions for relief in such a short period of time.

Multiple Filings and the Automatic Stay

One of the most powerful bars to filing multiple bankruptcy petitions is the limitations of the automatic stay past the first case that is filed. In the first bankruptcy case filed the debtor will get an unlimited automatic stay stopping any and all collection activity as to all creditors. If the same debtor files another case within a year of the first case and the first case was dismissed due to not filing the required paperwork, not paying the fees on time, not showing up for the mandatory meeting of creditors and other reasons, then the automatic stay only lasts for 30 days. If the same debtor files a third case within a year of the first two cases then there is no automatic stay at all. In the second filed case the automatic stay can be extended past the 30 days if an order extending the stay is entered prior to the 30 day stay expiring. In the third case the automatic stay can be imposed by filing a motion with the bankruptcy court.

Possible Repercussions for Filing Multiple Bankruptcy Petitions – Vexatious Litigants

Section 109(g) of the Bankruptcy Code provides: (g) Notwithstanding any other provision of this section, no individual or family farmer may be a debtor under this title who has been a debtor in a case pending under this title at any time in the preceding 180 days if— (1) the case was dismissed by the court for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case; or (2) the debtor requested and obtained the voluntary dismissal of the case following the filing of a request for relief from the automatic stay provided by section 362 of this title.

I mostly practice bankruptcy law in the Northern District of California. We actually have a published opinion on this subject. In re Walker, No. C-98-20966-JW. In the Walker case the debtors filed ten petitions total. Their ninth bankruptcy case was dismissed with prejudice and the Bankruptcy Judge, the Honorable James R. Grube, barred the Walkers from filing another petition for 180 days and seeking a discharge of their existing debts for two years. Judge Grube also did not continue a hearing to dismiss with the case with prejudice so the Walkers could retain counsel. The Walkers appealed and lost.

In the Walkers’ case they testified that they filed three of the cases to stop the garnishment of Mrs. Walker’s wages. The rest of the cases appear to have been filed to stop the collection of utilities by the City of Santa Clara and not make pre/post-petition mortgage payments on their home. Focusing on the ninth bankruptcy petition filed, this case was dismissed for the Walkers’ failure to complete the petition schedules and they also did not appear at the 341 Meeting of the Creditors.

So what is a willful failure to abide by the bankruptcy courts order under Section 109(g)? Unfortunately the Bankruptcy Code does not define the word or term willful. Courts have interpreted “willful” to mean deliberate or intentional. In re Herrera, 194 B.R. 178, 188 (N.D. Ill 1996). To determine is willful conduct took place a court can consider repeated failure to appear or lack of diligence as willful conduct. A court can infer from multiple dismissals and re-filing of bankruptcy petitions without a change in circumstances willful failure to comply with order of the bankruptcy court. In re Nelkovski, 46 B.R. 542, 545 (N.D.Ill. 1985).

In the Walker case the debtors filed nine petitions for relief and never completed the petitions or fully prosecuted the cases. Interestingly enough, there is no absolute bar against filing nine successive bankruptcy petitions or serial filings. Tsafaroff v. Taylor, 884 F.2d 478 (9th Cir. 1989). On appeal the Court agreed with Judge Grube and affirmed the dismissal for the Walkers’ repeated willful failures to follow the Court’s orders under Section 109(g)(1).

Dismissal of the Walkers’ Case With Prejudice

Section 349 of the Bankruptcy Code provides (a) unless the court, for cause, orders otherwise, the dismissal of a case under this title does not bar the discharge, in a later case under this title, of debts that were dischargeable in the case dismissed; nor does the dismissal of a case under this title prejudice the debtor with regard to the filing of a subsequent petition under this title, except as provided in section 109(g) of this title. So there you go. A court can for cause bar a debtor from filing an additional bankruptcy for a period of time or seeking a discharge of their debts listed in the dismissed case. In re Leavitt, 209 B.R. 935 (9th Cir. 1997). In order to have cause, the debtors conduct must have been “egregious;” a finding of bad faith constitutes egregious behavior. Leavitt 209 B.R. at 939. A Bankruptcy Court may dismiss a case with prejudice in order “to punish abusive or bad faith filing.” In re Leavitt, 209 B.R. at 939.

In evaluating a debtor’s history of filings and dismissals, it is useful to consider five factors: “(1) the time between the prior case and the present one; (2) whether the second case was filed to obtain the favorable treatment afforded by the automatic stay; (3) the effort made to comply with the prior case plan; (4) the fact that Congress intended the debtor to achieve its goals in a single case; (5) any other facts the court finds relevant.” In re Hureta, 137 B.R. 356, 367 (B.R. CD Cal.1992).

In the Walker appeal the court noted that the Walkers filed case after case over a six year period with nine of the petition within a four year period and the petition subject to appeal was filed only 24 days after the previous bankruptcy petition was dismissed. On appeal the court noted that the Walkers petitions were dismissed as follows: 3 for failure to appear at the meeting of creditors or appearing at a hearing regarding the chapter 13 plan; 3 were dismissed for failure to appear the 341 meeting of creditors; 1 for failure to make the Chapter 13 Plan payments; and for failure to comply with court orders to file appropriate papers and confirm chapter 13 plans. The
Walkers were determined to have filed the ninth bankruptcy petition in bad faith and were abusing the bankruptcy process.

Vexatious Litigant Determination

A little known area of the law is the All Writs Act, 28 U.S.C. Section 1651(a). Section 1651(a) provides: The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.

I suppose this is the like the necessary and proper clause of Article I, Section 8 of the United States Constitution or Section 105(a) of the Bankruptcy Code. They potentially can allow the entity they refer to make any law, order or holding that is deemed proper. 28 U.S.C. Section 1651(a) is no different. It has been determined that Section 1651(a) allows the district court to enjoin litigants that abuse the court system. Tripati v. Beaman, 878 F.2d 351 (10th Cir. 1989); In re Oliver, 682 F.2d 443, 445 (3rd Cir. 1982). However, the conditions cannot be so burdensome as to deny a litigant meaningful access to the courts. Tripati, 878 F.2d at 352.

So the Walkers filing nine bankruptcy petitions in four years was an abuse and the number of dismissals for failure to prosecute the cases provides evidence and supports the conclusion that the Walkers’ were abusing the bankruptcy court system. There are six factors the court identified to help determine if a debtor is a vexatious litigant:
(1) the litigant’s history of litigation and in particular whether it entailed vexatious, harassing or duplicative lawsuits;
(2) the litigant’s motive in pursuing the litigation;
(3) whether the litigant is represented by counsel;
(4) whether the litigant has caused needless expense to other parties . . . or has posed an unnecessary burden on the courts and their personnel; and
(5) whether other sanctions would be adequate to protect the courts and other parties.

The ultimate consideration is “whether the litigant who has a history of vexatious litigation is likely to continue to abuse the judicial process . . . “ See Safir v. United States Lines, Inc., et. al., 792 F.2d 19, 23 (2nd Cir. 1986). The court of appeal wasted no time in determining the Walkers were in fact vexatious litigants and their access to filing more petitions should be restricted by applying the factors listed above. The Walkers’ petitions were duplicative, failed to prosecute all nine cases, they were not represented by counsel, caused needless expense to creditors and burdened the courts. Finally the court determined if the Walkers’ access was not restricted they would continue to file bankruptcy petitions. So the court of appeals ordered the Walkers be limited as follows: (1) the Walkers have to notify the clerk of the Bankruptcy Court if they desire to file a petition and they are vexatious litigants; (2) before the Walkers can file a petition the clerk shall lodge it with the General Duty Bankruptcy Judge and be granted leave to file; (3) once the petition is accepted for filing, the Walkers must obtain leave of the Bankruptcy Court to voluntarily dismiss the petition and (4) the order will remain in effect for 10 years without further order of the court.

So, 15 petitions filed since 2009 and the debtor listed below is still going strong. An interesting part of the history below is the time between the filing of the petitions. The debtors 13th case was dismissed in 2012, then the debtor comes back and files two cases in 2014, the 14th and 15th cases. So without spending too much time the debtor listed below has intermittently fallen within Section 109(g) and arguably depending upon the facts is not a vexatious litigant given the length of time between some of the filings. The debtor also properly received the benefit of the automatic stay in a number of the cases given the timing of filing. The bottom line is this debtor has not been barred from continuing to file bankruptcy petitions and there is probably a good reason why.
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“Notice of Debtor’s Prior Filings for debtor XXXX XX Case Number 09-61041, Chapter 13 filed in California Northern Bankruptcy Court on 12/17/2009 , Dismissed for Failure to File Information on 01/06/2010; Case Number 11-58863, Chapter 13 filed in California Northern Bankruptcy Court on 09/23/2011 , Dismissed for Failure to File Information on 10/14/2011; Case Number 11-60087, Chapter 13 filed in California Northern Bankruptcy Court on 10/31/2011 , Dismissed for Other Reason on 11/16/2011; Case Number 14-54381, Chapter 13 filed in California Northern Bankruptcy Court on 10/28/2014; Case Number 09-59783, Chapter 13 filed in California Northern Bankruptcy Court on 11/09/2009 , Dismissed for Failure to File Information on 12/01/2009; Case Number 10-54170, Chapter 7 filed in California Northern Bankruptcy Court on 04/23/2010 , Dismissed for Failure to File Information on 06/08/2010; Case Number 10-59424, Chapter 13 filed in California Northern Bankruptcy Court on 09/10/2010 , Dismissed for Failure to File Information on 09/29/2010; Case Number 11-56990, Chapter 13 filed in California Northern Bankruptcy Court on 07/27/2011 , Dismissed for Failure to File Information on 08/12/2011; Case Number 10-57982, Chapter 13 filed in California Northern Bankruptcy Court on 08/02/2010 , Dismissed for Failure to File Information on 08/18/2010; Case Number 11-54700, Chapter 13 filed in California Northern Bankruptcy Court on 05/17/2011 , Dismissed for Failure to File Information on 06/02/2011; Case Number 12-50023, Chapter 13 filed in California Northern Bankruptcy Court on 01/03/2012 , Dismissed for Other Reason on 01/19/2012; Case Number 10-52271, Chapter 13 filed in California Northern Bankruptcy Court on 03/09/2010 , Dismissed for Failure to File Information on 03/24/2010; Case Number 11-55983, Chapter 13 filed in California Northern Bankruptcy Court on 06/27/2011 , Dismissed for Failure to File Information on 07/13/2011; Case Number 10-56584, Chapter 13 filed in California Northern Bankruptcy Court on 06/25/2010 , Dismissed for Failure to File Information on 07/14/2010.(Admin) (Entered: 11/26/2014)”

What Can I Do If A Collection Agency Harasses Me or Tries to Collect a Debt After Filing For Bankruptcy?

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One of the not so great parts of filing bankruptcy for Bay Area residents is dealing with unlawful acts of collection agencies and creditors. Yes, everyone understands that a creditor has every right to seek payment for the debts owed to them. The problem is when a creditor tells one of our client’s mother that they are going to through her daughter into jail and arrest her if the mother does not send them money that same day. There are so many problems with this attempt to collect a debt I do not know where to start. If this type of conduct by a creditor happens after a bankruptcy case is filed is most likely a violation of the automatic stay. So, can a bankruptcy filer receive punitive damages, attorneys’ fees and damages for their emotional distress if a creditor is found guilty of willfully violating the automatic stay? According to In re: Snowden No. 13-35291 (9th Cir. 2014) recently published on September 12, 2014.

In re Snowden

In this case the bankruptcy petitioner obtained a $575 payday loan. Things unfortunately did not improve financially for Snowden and she filed for bankruptcy protection under Chapter 7 of the Bankruptcy Code. The pay day loan company, Check Into Cash, was very aggressive from the moment they found out Snowden would not be able to pay back the payday loan as agreed. Check Into Cash called Snowden at work even after she told them not to. After Snowden filed for bankruptcy Check Into Cash chose to cash the check Snowden gave them to secure payment of the payday loan. This resulted in Snoweden’s bank account becoming overdrawn and throwing her into further financial turmoil. Snowden eventually filed a motion for sanctions against Check Into Cash for their cashing of the check post-petition and their continued harassing phone calls post-petition in violation of the automatic stay.

Emotional Distress Damages

Section 362 of the Bankruptcy Code provides for the automatic stay as soon as a bankruptcy case is filed. Section 362(k) deals with damages for the willful violation of the automatic stay. Section 362(k)(1) provides in part: . . . an individual injure by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages. This section permits an award for emotional distress damages if the bankruptcy petitioner (1) suffered significant harm, (2) clearly establishes the significant harm, and (3) demonstrates a causal connection between that significant hard and the violation of the automatic stay. See Dawson, 390 F.3d at 1149. In the Snowden case the creditor took issues with the second prong of the analysis. The creditor argued through their experienced bankruptcy lawyers that Snowden did not prove significant emotional harm, but just fleeting or trivial anxiety or distress. The court disagreed though given that the post-petition cashing of the check and continued phone calls. Even worse was the fact that Check Into Cash did not rectify the situation timely. The Ninth Circuit Court of Appeals found the district court did not error in confirming the emotional distress damages award. The bottom line is this analysis is a case by case analysis. Whether any court will award damages for emotional distress depends upon the severity of the violation, the distress caused and what the creditor did or did not do about it once the creditor was put on notice that a violation had occurred.

Punitive Damages

Punitive damages are damages to punish a party for their conduct and deter any further violations in the future. Section 362(k) provides for punitive damages in “appropriate circumstances.” Good bankruptcy lawyers will be able to prove some showing of reckless or callous disregard for the law or rights of others. See In re Bloom, 875 F.2d 224, 228 (9th Cir. 1989) In the Snowden case Check Into Cash argues on appeal that the bankruptcy court applied the wrong standard, willful violation rather than the reckless disregard standard. The 9th Circuit Court of Appeals disagreed. The court found that Check Into Cash failed to provide a policy for employee training about how to address debt collection following a bankruptcy filing. This demonstrated reckless and callous disregard for the law making punitive damages appropriate under the facts of the Snowden case.

Attorneys’ Fees

It is well settled that a debtor can receive attorneys’ fees and costs related to enforcing the automatic stay and remedying the stay violation, but not attorneys’ fees earned when filing an adversary proceeding to be awarded punitive damages and damages for emotional distress. As soon as the violation of the stay is remedied a bankruptcy filer cannot collect from the creditor attorneys’ fees and costs going forward. The 9th Circuit Court of Appeals held that the ‘American Rule’ applies and each party to an adversary proceeding bears their own costs for litigation. There are exceptions. If a court rules a violation of the automatic stay took place and the creditor appeals the ruling, then the debtor has no choice but to incur additional attorneys’ fees and costs to defend the bankruptcy court’s decision and their right to collect damages for the willful violation of the automatic stay. Under these circumstances the bankruptcy filer would be able to recover attorneys’ fees. See In re Schwartz-Tallard, No. 12-60052, 2014 WL 4251571 (9th Cir. Aug. 29, 2014).

Can I Be Evicted after Foreclosure of My Home If I File Bankruptcy?

By Ryan C. Wood

We have all heard this story many times: a homeowner gets behind on their mortgage payments and cannot catch up to pay the lump sum now due. The house is foreclosed on and the new homeowners then file an unlawful detainer action against the old homeowner to have the sheriff evict the old homeowner. But what happens if the old homeowner files for bankruptcy protection after getting an unlawful detainer judgment entered against them, but before getting evicted? Does a subsequent eviction violate the bankruptcy automatic stay? The Ninth Circuit Bankruptcy Appellate Panel recently decided that the eviction does actually violate the automatic stay.

The circumstances detailed above are exactly what happened in the case of In re Perl, No. 13-1328 (B.A.P. 9th Cir. May 30, 2014). The homeowner, Sholem Perl, and another joint tenant (“the Perls”) fell behind on their mortgage payments and the property was sold to Eden Place in a foreclosure sale. The trustee’s deed was recorded in a timely manner. Eden Place then filed an unlawful detainer action against the Perls when they refused to leave the foreclosed home. The Perls filed a lawsuit against Eden Place and several others for wrongful foreclosure, violation of the Homeowner Bill of Rights, unfair business practices and breach of contract. Eden Place counter-sued. The judge entered a judgment against the Perls for the unlawful detainer action and the sheriff posted a lockout notice. Mr. Perl filed a skeleton petition on June 20, 2013 seeking bankruptcy protection under Chapter 13 of the Bankruptcy Code. Eden Place filed a Motion for Relief from Stay on June 24, 2013, but the sheriff proceeded with a lockout on June 27, 2013, before the motion was heard by the court. The Perls were now officially evicted from the property.

Mr. Perl’s bankruptcy attorney filed an Emergency Motion to Enforce the Automatic Stay and the court heard the Emergency Motion and Eden Place’s Motion for Relief from Stay on June 28, 2013. The bankruptcy court indicated that it seemed Eden Place violated the automatic stay by evicting the Perls prior to receiving relief from the automatic stay. Eden Place argued that Mr. Perl did not have any legal or equitable interest in the property since the property was foreclosed on and the trustee’s deed was recorded. Eden Place argued that Mr. Perl was merely a squatter on the property with no possessory rights. The court disagreed. The court indicated that the automatic stay applies even when there is bare possessory interest coupled with causes of action or claims for the right to possession. The automatic stay is very broad. “The automatic stay applies even to the more limited bundle of rights that still exists. It may not even be a bundle. It might just be the opportunity to seek some relief.” In re Perl, No. 13-26126 (Bankr. C.D. Cal. 2013). The bankruptcy court held that the eviction was a violation of the automatic stay and was therefore void.

The Bankruptcy Appellate Panel agreed with the bankruptcy court. In order to determine if Eden Place violated the automatic stay they needed to see if Mr. Perl had any interest in the property. The court held that Mr. Perl’s physical occupation of the property gave him a possessory interest in California law and he was therefore protected by the automatic stay. The court further went on to say that there was a willful violation of the automatic stay because Eden Place knew about the bankruptcy filing and still continued with the eviction. Even though there was no bad faith because Eden Place thought Mr. Perl did not have any legal or equitable interest in the property, it was still a willful violation. The eviction was therefore void. Eden Place appealed this decision to the Ninth Circuit Court of Appeals. In all fairness to Eden Place they legally foreclosed on the property, then legally filed and obtained a judgment in an unlawful detainer action to evict the former homeowner. This is not a quick or cheap process. At the very end the Perls and their bankruptcy lawyer filed an emergency skeleton petition to stop their eviction from a house they stopped paying for and no longer own. What is not discussed is whether the Perls’ even have a feasible reorganization case to begin with. It will be interesting to find out how the Ninth Circuit Court of Appeals holds on this issue and how they get there. If the prior homeowner does in fact have actionable claims regarding the purchase, loans or foreclosure of the property and they possess the property still there is a reasonable argument that the automatic stay should apply seems reasonable.

How Do I Stop a Credit Card Lawsuit?

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There are a number of ways to stop a credit card lawsuit and filing for bankruptcy is one of them. Unfortunately credit card interest rates have been allowed to become out of control. Every state has usury laws limiting the amount of interest a lender can charge. Many years ago the Supreme Court of the United States of America ruled that a company doing business in one state can charge all other citizens of other states according to the usury laws of the state they are doing business in. This resulted in a few states getting rid of their usury laws and the result is 29% interest rates on credit cards and the rest is history.

Please continue to read this article for possible ways other than filing bankruptcy to stop a credit card lawsuit. Filing for bankruptcy protection initiates the entering of the automatic stay. The automatic stay stops any and all credit card lawsuits. It is possible for a credit card company to ask the bankruptcy court for permission to continue the lawsuit in state court. It is very rare for a credit card company to have the right grounds for the court to allow the lawsuit to continue in state court. When you file for bankruptcy protection before the credit card company obtains a judgment the underlying debt is still an unsecured debt that should be eligible for discharge. Whether you qualify to file a Chapter 7 bankruptcy case and discharge all of your debts depends upon your income, expenses, assets and sometimes the amount of your debts. During your free consultation will discuss your circumstances to determine how bankruptcy can help you. Just because you have the one lawsuit does not necessarily mean you have to file for bankruptcy protection though. If the lawsuit is only for $2,000 then filing for bankruptcy protection would not be cost effective. If you have other credit card debts, unpaid taxes, persona loans, repossession, foreclosure or wage garnishment then filing for bankruptcy will most likely be cost effective. If you do qualify to file a Chapter 7 case the actual case once filed should take 100 to 120 days. The only appearance you should have to make is the 341 meeting of the creditors. Bankruptcy is federal, so the court you appear at is the federal court for the district you live in, not the county state court. You will receive notice from us as soon as your case is filed and you will receive notice of the date and time of the meeting of the creditors directly from the bankruptcy court seven to ten days after the case is filed. We do our best to make the process as smooth as possible by providing you with updates throughout the process and providing checklists of the documents we need to draft a complete and accurate petition for bankruptcy protection.
There are other ways regarding how you stop a credit card lawsuit and it depends upon your circumstances. Of course the simplest but probably most difficult way to stop the lawsuit is to pay off the debt. Given the credit card company has filed a lawsuit means paying off the debt is not an option. Entering into an installment or payment agreement can stop the lawsuit under certain circumstances too. Again, this requires a payment to be made that is probably not possible. The credit card company will most likely want their attorney fees and costs paid for given they incurred this expense when filing the lawsuit. This will make it more difficult to make the payment each month. So this remedy is probably not possible.

Another issue is whether you were served with the summons and complaint properly. The credit card company must file a proof of service declaring under penalty of perjury how, where and when you were served with the summons and complaint. If the service was not proper then you could have the lawsuit stopped and make the credit card company serve your properly. The problem with this scenario is the credit card company will most likely be able to turn around and serve you properly and now you are right back where you started from. A lawsuit is pending against you.

Another issue is whether the underlying debt is even legally enforceable? In California a law now exists to make credit card companies or collection agencies verify they have a right to enforce the debt and that the statute of limitations has not run out making the debt legally unenforceable. If the debt is not legally enforceable then the lawsuit should be dismissed. There are a number of ways regarding how to stop a credit card company lawsuit. It all depends upon your circumstances.

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 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.

What is the Backbone of Bankruptcy? The Answer is the Automatic Stay 11 U.S.C. Section 362

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The backbone and largest grant of authority to the Bankruptcy Court is the automatic stay.  As soon as a voluntary petition for bankruptcy protection is filed with the Bankruptcy Court the automatic stay is in effect.  The automatic stay stops any and all collection actions against the person or business that files bankruptcy.  The automatic stay is the single most important concept when filing for bankruptcy.

The automatic stay is a temporary injunction that stops lawsuits, foreclosure, repossessions, set-off of debt, any act to perfect a security interest, obtain possession of property, the commencement or continuation of a proceeding before the United States Tax Court and all types of actions taken to enforce a debt against a person or business that files for bankruptcy protection.  The automatic stay becomes permanent by order of the Bankruptcy Court when the bankruptcy case completed successfully. If a creditor violates the automatic stay most bankruptcy lawyers will file a motion for sanctions with the Bankruptcy Court against the creditor.

The automatic stay gives a person or business seeking protection from the Bankruptcy Court breathing room from their creditors to reorganize, actually start picking up the phone again, and in most Chapter 7 no assets cases just make all the annoying harassment and debt go away forever upon discharge.

So why is the automatic stay so powerful?  As soon as the automatic stay is in place all creditors must seek the Bankruptcy Court’s approval to continue to pursue assets owned or held by the person or business filing for bankruptcy protection.  This means if a creditor has a merit less claim or is doing something that is not allowed by applicable state or federal law, in theory the Bankruptcy Court will not allow the creditor to proceed.  A creditor will have to seek relief from the automatic stay or approval from the Bankruptcy Court to continue their state court lawsuit, foreclosure or repossession of your real or personal property.  Your bankruptcy lawyer at West Coast Bankruptcy Attorneys will represent your interests and make sure that a creditor is not violating the automatic stay and protect your property from unscrupulous creditors.

Also, if the automatic stay is violated by a creditor West Coast Bankruptcy Attorneys can seek sanctions against the creditor.  The automatic stay is violated when a creditor continues to seek collection of a debt by levying on a bank account, foreclosure of real property, or repossession of personal property.  A creditor may even sue a person or business after the automatic stay is in effect.  All of these actions are potentially sanctionable by the Bankruptcy Court.  Unfortunately, a motion for the violation of the automatic stay must be filed with the Bankruptcy Court and sanctions requested.