Monthly Archives: January 2011

San Jose Bankruptcy Lawyer: Stop Wage Garnishment and Get Some of the Money Back by Filing Bankruptcy

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Many creditors and collection agencies threaten to garnish wages to scare people into making a payment.  The truth is that creditors must first file a lawsuit for breach of contract and obtain a judgment for the nonpayment of the debt.  Obtaining a judgment is not free and will cost the creditor anywhere from $1,000 to $2,000 to obtain a default judgment against someone.  There is a Court filing fee and the lawsuit must be personally served on the defendant.  If no answer is filed to the complaint, then the creditor that filed the lawsuit can request the Court enter the judgment by default.

Once a creditor has obtained a judgment, then they can enforce the judgment by garnishing the judgment debtor’s wages.  Again, garnishing wages is not free and requires a number of steps.  Eventually the payroll department of the person the judgment is against will be served with the writ of attachment/garnishment.  At this point it is only a matter of time before the judgment debtor’s wages will be garnished if all procedures have been followed properly.  A judgment debtor’s wages can be garnished up to 25% depending upon the circumstances.

The good news is that wages that are garnished in the 90 days prior to the filing date of the bankruptcy can be returned if certain requirements are met. While wage garnishment is a sign that it is time to consult an experienced bankruptcy lawyer, it is not the end of the world.  You can stop the wage garnishment and get some of the money back by filing a Chapter 7 bankruptcy or Chapter 13 bankruptcy as soon as the wage garnishment starts.  Contact one of our experienced bankruptcy lawyers today and request a free consultation.

Free Bankruptcy Consultations Are Always Completely Confidential

By Kitty J. Lin, Attorney at Law

When you meet with one of our Bay Area or San Mateo County bankruptcy lawyers, you can be assured that everything you tell us in the free consultation is completely confidential.  We are ethically bound by the attorney-client privilege to keep all communications between a client and his or her attorney completely confidential.  The attorney-client privilege is in effect as soon as you step through our doors.  Even if you do not end up retaining our services, we do not reveal anything you have told us in the consultation to anyone outside our office doors.   Thus, you can always speak freely and get an honest opinion about your case without the worry that your secrets will be revealed to the world.

Keep in mind that although our consultations are completely confidential, if and when you file your bankruptcy petition, the petition is public record.  This does not mean that your financial situation will be broadcasted to the world.  The fact that you have filed for bankruptcy protection is not sent to newspaper outlets, your neighbors or to your employer.  This means that if anyone wishes to search for your bankruptcy records, they will be able to do so, and they can find the records.  However, it is not free and takes some time and effort.  The only people that receive actual notice of your bankruptcy filing are the creditors that you owe money to.  This is similar to home ownership – your property information is recorded with the county, and anyone can search for your property holdings.   The only people that receive actual notice are the parties involved in the transaction.

If you need a free and confidential consultation with an experienced bankruptcy lawyer, please call us at 877-9NEW-LIFE or 877-963-9543.   We have offices in San Francisco, Redwood City, Oakland, and San Jose for your convenience.  You can also visit us online at www.WestCoastBK.com to schedule a free bankruptcy consultation.

Ownership Cost for Vehicles in the Means Test Finally Put to Rest in the Ransom Case

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In 2005 the Bankruptcy Abuse Prevention and Consumer Protection Act or BAPCPA was passed by Congress and created the Means Test.  The Means Test was created in an attempt to change a perceived problem with the bankruptcy system.  The idea behind the Means Test was to take IRS standard deductions and compare them to the income of those in need of bankruptcy protection to determine if someone has disposable income to pay some of their debts back in a Chapter 13 bankruptcy rather than having all of the debts discharged in a Chapter 7 bankruptcy.

In 2006, Mr. Ransom filed for bankruptcy protection under Chapter 13 of the bankruptcy code.  In his Means Test Mr. Ransom included an “Ownership Cost” in line 28 of the Means Test or Form 22C even though he did not actually have a car loan or lease payment.  By taking this deduction totaling $471 per month, Mr. Ransom reduced his monthly disposable income available to pay his unsecured creditors.  Taken over a 60 month Chapter 13 plan, Mr. Ransom would not have to pay back to his unsecured creditors approximately $28,000.  FIA Cards objected to the confirmation or approval of Mr. Ransom’s Chapter 13 Plan arguing that the $471 deduction can only be taken if Mr. Ransom actually has a car loan or lease payment.

While the Ninth Circuit agreed with FIA Cards and held that Mr. Ransom could not take the $471 “Ownership Cost,” the Fifth Circuit, Seventh Circuit and Eighth Circuit in similar cases did not agree.  On January 11, 2011, the United States Supreme Court upheld the Ninth Circuits judgment and agreed that the “Ownership Cost” in line 28 and line 29 of the Means Test or Form 22C may only be taken if the bankruptcy filer actually has a car loan or lease expense.  If a person owns their car free and clear then they must not take the “Ownership Cost” deduction. A bankruptcy attorney formerly could choose to take the additional ownership expense to decrease the line 59 disposable income of their client or pass the means test altogether.

The issue in this case turns on the interpretation of the word “applicable.”  What a mess one simple word could create.  The moral of the story is when Congress is considering the language of laws to pass, they must make their intent clear and analyze each word they use when drafting new legislation.  One word could make a huge difference.  In Mr. Ransom’s case, it is now a $28,000 difference.  Contact one of our bankruptcy lawyers for more information about the Means Test or In re Ransom.

Harassing Creditor Calls Stressing You Out? You Can Do Something About It!

By Kitty J. Lin, Attorney at Law

As the economy worsens, the number of people that are defaulting on their debt is unfortunately increasing every day.    Once you are behind on your credit card payments or other debts, your phone starts to ring, most likely often and at inconvenient times.  The good news is that there are laws that can protect you, the consumer.

The Fair Debt Collection Practices Act (FDCPA) was enacted in 1978 to combat increasingly abusive and harassing practices of creditors.  Under section 1692(c), the FDCPA prohibits debt collectors from certain abusive and deceptive acts when attempting to collect a debt.  Some of the prohibited actions include: misrepresenting the debt or using deceptive practices to collect a debt, calling consumers outside normal business hours, which is from 8 am to 9 pm local time, using profane or abusive language when talking to consumers, continually calling and harassing consumers, threatening arrest or legal action when it is not permitted or even considered, talking to a third party (not including your spouse) regarding your debt, calling consumers at work when the creditor has been informed that it was prohibited or unacceptable by the employer, and contacting consumers after they have been informed that the consumer has retained an attorney.  The above list is only a partial list of the prohibited acts.  For a complete list, please contact us at 877-9NEW-LIFE or 877-963-9543.

One of the downsides of the FDCPA is that it only applies to debt collectors or third party debt collectors.  Under 11 U.S.C. 1692(a), a debt collector is defined as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”  This means that your original creditor (for example: Chase calling you regarding your Chase credit card debt) is not subject to the FDCPA.  If you live in California, however, you are in luck.  The Rosenthal Fair Debt Collection Practices Act (Rosenthal Act) mirrors the FDCPA, and the Rosenthal Act regulates both original creditors and third party debt collectors.

Not all kinds of debts and debt collection practices are regulated by the FDCPA and the Rosenthal Act, so you should contact one of our experienced bankruptcy lawyers or our best bankruptcy lawyer if you believe you are a victim of the prohibited acts by creditors or debt collectors.  You do not have to continue to be harassed day after day.  You do not have to dread looking at your phone when it rings.  If you are continually being harassed by a creditor, give us a call today at 877-9NEW-LIFE or 877-963-9543. 

Oakland Bankruptcy Lawyer: Did Oakland Almost File Bankruptcy In 2009?

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The answer is yes.  But how is it possible for a government entity to file for bankruptcy protection?  There is a specific chapter of the Bankruptcy Code that allows a city or county to file for bankruptcy protection just like an individual or corporation, Chapter 9. Chapter 9 is for municipalities to file for protection from their creditors.  A state, such as California, cannot file for bankruptcy protection though. The United States Constitution does not allow a state to file for bankruptcy. The Federal Government likewise cannot file for bankruptcy. A state and federal government would just default on their debts.  Contact our local bankruptcy lawyers for more information about Chapter 9 bankruptcy cases.

Oakland’s problems are all too well known in California these days.  After years of cuts in funding from the State of California, reductions in Alameda County tax assessments, generous pay and retirement packages to employees and their families combined with the overall increase in the cost of providing citizens the services we depend on Oakland found itself with a multi-million dollar budget deficit.  The State of California itself has over a ten billion dollar budget shortfall.  The budget deficit of the State of California is more than the total budget for most states in the United States.  Schedule a free consultation today with our bankruptcy attorneys and find out if bankruptcy is right for you.

Orange County filed the single largest municipal bankruptcy when it filed in 1994 and lost $1.6 billion.  The Orange County bankruptcy is notable given the scale of the financial meltdown and what led to the county having to file for bankruptcy protection.  The treasurer is an elected official and had held the position for over twenty years.  Unfortunately the treasurer was investing the pooled funds of Orange County in risky investments and generating high returns to fund their general fund.  Eventually the house of cards fell apart and the largest single municipal bankruptcy was filed.