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 a Non-Filing Spouse of a Spouse that Filed Bankruptcy Buy a Community Property Asset From the Bankruptcy Estate?

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The short answer is yes, a non-filing spouse of a spouse that filed bankruptcy can buy a community property asset from the bankruptcy estate. See 11 U.S.C. §363(i) and In re Lewis; BAP No. CC-13-1367. For some this question alone might be confusing. When a couple is married either spouse may file for bankruptcy protection without the other spouse. All of the separate property of the filing spouse and community property of the filing spouse must be listed in the petition. In California, community property consists of: all property, real or personal, wherever situated, acquired by a married person during marriage while domiciled in California is community property. Cal. Fam. Code §760. In the Lewis case the community property at issue is an employment law lawsuit filed, but not resolved, prior to the bankruptcy case being filed. The cause of action is therefore an asset of the filing spouse’s bankruptcy case. See Vick v. DaCorsi, 110 Cal. App. 4th 206, 212 n.35 (2003).

A twist in the Lewis case was that the bankruptcy trustee sold the bankruptcy estate’s interest in the lawsuit to a company named Kallman & Company, LLP for $40,000 pursuant to 11 U.S.C. §363(b). Section 363(b) allows the trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate . . . . . . The Chapter 7 trustee’s bankruptcy lawyer filed, served and correctly provided notice of the motion for approval to sell the cause of action to Kallman & Company, LLP. A hearing was held and the bankruptcy court approved the sale to Kallman & Company, LLP. According to the terms of the sale Kallman did not have to pay the $40,000 until 30 days after the closing date of the sale, and the closing date occurred only when the order approving the sale became final and not appealable. Given the delay in closing the sale the non-filing spouse had time to act and her bankruptcy attorney and her did indeed act.

The non-filing spouse informed the Chapter 7 Trustee and counsel that she intended to exercise her rights pursuant to 11 U.S.C. §363(i). 11 U.S.C. §363(i) provides: before the consummation of a sale of . . . . . . property of the estate that was community property of the debtor and the debtor’s spouse immediately before the commencement of the case, the debtor’s spouse, or a co-owner of such property, as the case may be, may purchase such property at the price at which such sale is to be consummated. So the Chapter 7 trustee then filed a motion under 11 U.S.C. §363(i) under the grounds that the lawsuit claim is community property and the sale to Kallman & Company, LLC was not consummated yet. Kallman & Company, LLC of course opposed the sale to the non-filing spouse. The bankruptcy court granted the motion to sell the lawsuit claim to the non-filing spouse and held that the lawsuit claim was community property and the sale to Kallman & Company, LLC was not consummated. After various legal wrangling the order approving the sale to the non-filing spouse was appealed to the 9th Circuit Bankruptcy Appellate Panel. The 9th Circuit BAP found the act of the non-filing spouse asserting her claim to the lawsuit asset and obtaining an order from the court granting the sale was an intervening event that prevented the consummation of the sale to Kallman & Company, LLC. The 9th Circuit Bankruptcy Appellate Panel went further to say that Kallman & Company, LLC have no one but themselves to blame. Kallman could have consummated the sale immediately by tendering the purchase amount to the Chapter 7 Trustee and Kallman could have asked to have the stay pursuant to Federal Rule of Bankruptcy Procedure 6004(h) to be waived. FRBP 6004(h) provides that an order authorizing the use, sale, or lease of property other than cash collateral is stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise. The 9th Cir. BAP further said that Kallman instead provided the non-filing spouse with sufficient time to assert her §363(i) right and to prove that she had the ability to make good on her offer to purchase the lawsuit claim from the bankruptcy estate. What is there to take away from this case? If you are a purchaser of assets under 363 of the Bankruptcy Code and you really want the assets you are purchasing consummate the sale as soon as possible if there is a non-filing spouse.

How To Avoid or Prevent the Necessity of Filing for Bankruptcy?

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One of the most common remarks we here from clients is, “I never thought I would file for bankruptcy protection.” Our response is usually, “No one ever does.” They probably never thought the bad thing that happened to them or, their family, that led to having to file for bankruptcy protection would happen either. Bad things happen every day that are not in our control. So unfortunately for some there is no avoiding the necessity of filing for bankruptcy. For example: being laid off from a job, medical debts, debts resulting from car accidents or a natural disaster. While these circumstances are not traditionally in our control there are plenty of other pieces of the financial puzzle that are within our control.

Credit Cards/Payday Loans/Cash Advances/Vehicle or Title Loans

These four types of debts are primarily the types of debts that can have incredibly high interest rates. If you have never heard of usury laws you are not alone. Each state has or had usury laws to limit the amount of interest a lender could charge a borrower. The laws are designed to protect all of us from unfair or unconscionable interest rates. These laws have been weakened over and over again in the name of greed and corporate profits. For more detailed information please read “How Can Credit Card Companies Charge Such High Interest Rates?” http://www.westcoastbk.com/blog/2012/07/how-can-credit-card-companies-charge-such-high-interest-rates/ So the law now allows for the ridiculous and unconscionable interest rate as high as 29% on some credit cards. If you do not pay off the credit card each month that has a high interest rate the underlying debt will balloon quickly. Spread that problem around four or five different credit cards are you are heading in the direction of a bankruptcy lawyers office unfortunately. So do your best to limit the use of creditor cards and especially the use of your highest interest rate credit cards. Payday loans and cash advances are even worse. The highest interest rate I have ever seen on an actual loan documents was over 1,000%. Somehow this is legal. Standard vehicle loans can have generous interest rates. Title loans are when your vehicle is paid in full, but you take loan and use the vehicle as collateral. The loan company will take your pick slip/title until the loan is paid in full. Title loans are traditionally horrible for the borrower. Again, very high interest rates and title loan companies rarely keep very accurate records regarding payments and accrued interest.

Home Mortgages

Do not buy too much house. Other than banks handing out questionable loans and fraudulent appraisals artificially increasing the value of homes, the next largest factor as to why so many people lost their homes in my opinion was because they bought too much house. That means they purchased a house that was too large and too expensive given their income and expenses. The cause of this was mostly interest only mortgages and adjustable rate mortgages. So do not buy too much house. If you income is reduced 20% will you still be able to afford your mortgage payment each month? How long can you pay your mortgage if you are laid off? We all hope that these unfortunate events do not happen to us, but they happen to everyone without discrimination.

Taxes

The thing with taxes is you have to pay them, period. So just let the government have the money upfront so you do not have an issue when it comes time to file your taxes each year. In California the Franchise Tax Board is does aggressively collect unpaid taxes. The FTB will garnish your wages and attached a tax lien to your home if you own real property. If you have changed your deductions on your paycheck to artificially increase your net income each month you are creating a tax debt each paycheck. Will you have the money to pay the taxes at the end of the year? No, you will not because you changed your deductions to increase your net income because you are currently having trouble paying your bills. Do not change your deductions to artificially increase your net income. It is a recipe for disaster. If you take an early distribution from a retirement account pay the penalty/taxes at the time you have the money taken out. Do not defer the penalty/taxes to when you have to file your return. Again, this is a recipe for disaster. Every bankruptcy attorney will tell you that ERISA and other qualified retirement accounts (Tax Deferred) are 100% protectable when filing bankruptcy under almost all circumstances. So another reason to not raid a retirement accounts because you can keep the retirement money and still discharge your debts.

If you are having difficulty paying your bills each month bankruptcy might be the best option to get back on track financially.

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

By Kitty J. Lin

We have all heard this story many times: a homeowner gets behind on their mortgage payment and cannot catch up. 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 automatic stay? The Ninth Circuit Bankruptcy Appellate Panel recently decided that the eviction does actually violate the automatic stay.

That is 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 premises. 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 file 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.

Can I File Bankruptcy If I Have a Payday Loan or Advance?

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Can I file bankruptcy if I have a payday loan or advance? Yes you can. Payday loans are unsecured debts just like a credit card or medical debt. Payday advances are dischargeable. There are some issues though given the nature of the debt. Payday loans are usually to be repaid within a relatively short period of time. Given that payday loans are usually recently incurred when filing for bankruptcy protection there are a few issues for bankruptcy lawyers to discuss before filing for bankruptcy protection. The reality is few payday loan companies pursue nondischargeability claims At the same time, past results are not necessarily indicative of future results.

1. Payday Loans Are Horrible

Before discussing the pitfalls of filing for bankruptcy when you owe payday loans let us examine payday loans in general and how the work. Payday loans are supposed to be short term loans until the borrower gets paid next. The percentage rates are usually disgustingly high and should be illegal. We have documentation of a percentage rate of 1000%. To obtain a payday loan or advance it usually requires some sort of regular income of some significance. If make $200 a week you will most likely not qualify for an amount larger than that. Once you are approved for an amount to borrow, you will be asked to write a post-dated check for the amount borrowed to be cashed when you get paid. The original loan will have some sort of fee ranging from $40 to $100 for the loan. If you are unable to pay the loan back when you get paid some companies will allow the loan to be renewed for another high fee ranging from $40 – $100. What about that post-dated check you wrote? If the check bounces your bank will charge you fees too. Not paying the payday advance or loan on time will start a vicious cycle of increased fees. Borrowers commonly have to continue to obtain a new payday advance or loan to keep their bills paid while continuing to incur more and more fees.

2. Recently Incurred Debts May Not Be Discharged

Debts incurred or obtained close in time to filing for bankruptcy raises a number of issues. The problem is that the payday loan company may have an argument that you never intended to pay back the loan given you filed for bankruptcy so close in time to obtaining the loan. Bankruptcy Code Section 11 U.S.C. 523(a)(2)(C) provide for a 90 day look back for cash advances and payday loans. The payday loan company would have to file an adversary lawsuit against the bankruptcy filer alleging the payday loan should not be discharged given it was incurred within 90 days of filing the bankruptcy case. Bankruptcy Code Section 11 U.S.C. Section 523(a)(2)(A) governs debts incurred from fraud. If the case is filed within the 90 days of incurring the loan the payday loan could argue with circumstantial evidence you never intended to pay back the payday loan.

3. Payday Loans With Post-Dated Checks Are A Problem

Another problem is the post-dated check that was provided to the payday advance company. Section 326 of the Bankruptcy Code governs the automatic stay that becomes effective as soon as your bankruptcy attorney files your bankruptcy case. The automatic stay stops any and all collection activity. The problem is that Section 362 does not stop the presentment of a negotiable instrument, or a post-dated check. You need to research your circuit cases regarding this issue to determine if trying to deposit the post-dated check is a violation of the automatic stay or not.

While it is rare for a payday loan company to sue a bankruptcy filer for an unpaid payday advance or loan it is important to be fully advised of the potential ramifications or filing for bankruptcy protection with a recent payday loan or advance. It is more of a cost benefit analysis. If the payday loan is only $500 it does not make much sense to spend thousands of dollars to prove the loan should not be discharged. It does happen though.

What Events Can Toll or Stop The Clock for Reach Back Periods When Discharging Taxes in Bankruptcy?

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There are a number of requirements to discharge taxes when filing for bankruptcy protection. Timing is everything. Taxes can be discharged if they taxes are three years old, filed on time or 2 years before the bankruptcy case was filed, assessed 240 days prior to the bankruptcy case, non-fraudulent return and no willful tax evasion. This article will not address the numerous issues that can arise regarding each of the requirements listed. This article focuses on what events can stop the clock or start the tolling of the different time periods. Your bankruptcy lawyer in your jurisdiction will be able to discuss how your state taxes are dealt with in bankruptcy.

Tuition Credits are not Student Loans

Tuition Credits are not Student Loans

For example, the due date for 2009 taxes is April 15, 2010. In theory taxes owed for 2009 therefore will be dischargeable after April 15, 2013, when filing for bankruptcy protection. So stops the clock on the three year period though? Or what stops the clock for the filed on time or return filed at least two years before filing for bankruptcy?

Bankruptcy Code Section 507(a)(8)(G) provides in part . . . . “applicable time period specified in this paragraph shall be suspended for any period during which a governmental unit is prohibited under applicable nonbankruptcy law from collecting a tax as a result of a request by the debtor for a hearing and an appeal of any collection action taken or proposed against the debtor, plus 90 days; plus any time during which the stay of proceedings was in effect in a prior case under this title or during which collection was precluded by the existence of 1 or more confirmed plans under this title, plus 90 days.

Events that Toll or Stop the Clock From Running

1. Filing Bankruptcy: The first event is the filing of a prior bankruptcy case. As soon as the bankruptcy case is filed the automatic stay is in effect stopping any and all collection activity, including collection of taxes. The time period of three years and 240 days is not stopped since the governmental agency is prevented from attempting to collect the taxes. However long the automatic stay was in effect should be subtracted from the total days. Bankruptcy Code Section 507(a)(8)(G) also adds 90 days to the time period.

2. Request for a Hearing: Once you receive a letter in the mail from the IRS or FTB that you allegedly have unpaid taxes you may request a hearing to object or challenge the taxing authorities findings. Once you make this request the time period for looking back to determine if the taxes are dischargeable is tolled or stops. In addition once the event is over the time starts to run again 90 days must be added to the time period.

3. Appeal of Any Collection Action: This is more or less the same as making a request for a hearing. If the IRS or FTB levied on your bank accounts or informs you of a proposed assessment and you appeal the collection action or assessment the time period looking back is again stopped or tolled.

4. Offers In Compromise: If you make an offer in compromise it will stop the 240 day period while the offer is pending or in effect, plus 30 days. See Bankruptcy Code Section 507(a)(8)(A)(ii)(I). The trap here is if you had an offer-in-compromise in effect previously but no longer. The time the OIC was in effect must be calculated and added to the 240 day time period. Also, it only tolls the 240 day period with the taxing authority the offer was made to.

5. Extension to File Return: The Internal Revenue Service requires a form be filled out to obtain an extension of the deadline to file a tax return. Some states, like California, will automatically extend the deadline to file a return if not filed on time. This is an issue that needs to be looked at closely. Do not assume the federal tax time periods and deadlines are the same for whatever state taxes are owed as well.

The good news is that entering into an installment agreement with the Internal Revenue Service or Franchise Tax Board does not toll or stop the time periods. This is our recommendation also. If all else fails then enter into an installment agreement as soon as possible. Ignoring the taxing authority will only make matters worse. You do not want the government levying on your bank accounts, garnishing your wages or issuing tax liens on your real and personal property.

Hayward California Bankruptcy Attorneys and Lawyers

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It is 2014 and things a looking better for the economy and housing market in the Bay Area. That does not mean everyone has recovered from the mortgage meltdown and sluggish economy. Our Hayward California bankruptcy attorneys and lawyers are ready to discuss your circumstances during a free consultation right now. We have offices in Oakland, California and Fremont, California for your convenience. We will also conduct free phone consultations to determine if bankruptcy is right for you. We have helped many clients from Hayward California area become debt free and live happier, healthier lives. Please give us a call at 1-877-9NEW-LIFE to schedule a free consultation.

Chapter 7 Bankruptcy Case

Many people call this a straight bankruptcy and liquidation bankruptcy case. I honestly do not know why people call Chapter 7 bankruptcy straight bankruptcy. Are other chapters bent? Now calling this type of bankruptcy a liquidation case makes more sense. In a Chapter 7 bankruptcy case exemptions protect your stuff or assets. If what you own is worth more than can be protected then the Chapter 7 trustee assigned to your case can take that stuff and sell/liquidate it for the benefit of those that you own money, your creditors. If there is a bankruptcy estate with assets those assets are liquidated. During your free consultation our Hayward California bankruptcy attorneys and lawyers will discuss your assets with you and what exemptions are available to protect the stuff you own. Most Chapter 7 cases are cases without any assets to turnover. California’s exemptions are generous and usually will protect all of your assets, so the only thing that happens if your debts and discharged. Whether you qualify to file a Chapter 7 case and discharge all of your debts depends upon your assets, expenses and income. A typical Chapter 7 case from the date of filing the petition to the court signing the order of discharge will take around 100 days approximately. The only appearance you need to make, and our Hayward California bankruptcy attorneys and lawyers will be appearing with you, is at the Section 341 of the Bankruptcy Code meeting of the creditors. The Chapter 7 trustee randomly assigned to your case from the standing panel will ask a series of questions to verify information in the bankruptcy petition and investigate your financial circumstances. The 341 meeting of the creditors usually only takes about 5 to 10 minutes. You must have a valid unexpired identification card and proof of your social security number for the meeting of the creditors.

Chapter 13 Bankruptcy Case

Chapter 13 is the chapter of the Bankruptcy Code that allows individual and small business owners to reorganize their debts in a Chapter 13 Plan of reorganization. During your free consultation our Hayward California bankruptcy attorneys and lawyers will explain the reorganization process. Filing a Chapter 13 case is usually more expensive given there is more work involved. A typical Chapter 13 plan will last between three to five years depending upon your circumstances. There are many reasons why filing a Chapter 13 case may benefit you financially. Chapter 13 will allow you to catch up on missed mortgage payments, missed car loan payments, pay back taxes without interest or penalties, discharge taxes, discharge unsecured debts, get rid of underwater mortgages or home equity lines of credit and much more. Even if your income is high and you can afford to pay back your debts Chapter 13 can help. Unsecured debts like credit cards are paid back in a Chapter 13 plan without paying any interest. This is a huge savings and will allow you to pay back your debts in 5 years instead of the 20 years it will take when adding in interest each month. Our Hayward California bankruptcy attorneys and lawyers have filed hundreds of Chapter 13 bankruptcy cases in the Bay Area. We have free consultations available to discuss your finances today. Do not wait until you are sued or wages are garnished to act. Find out how bankruptcy can help now to help you make better decisions going forward.

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.