Monthly Archives: November 2011

Bankruptcy Fees Have Increased as of November 1, 2011

By Kitty J. Lin, Attorney at Law

As we all know, prices today are rapidly increasing, from the price of food staples such as bread and eggs, to the price of gas.  I am sure it comes as no surprise that the court fees for bankruptcy have increased as well.  Effective November 1, 2011, most of the bankruptcy court fees that affect you have increased.  The increased filing fees can be found here: http://www.canb.uscourts.gov/bankruptcy-court-fee-schedule.

The filing fees that impact consumers most are the Chapter 7 bankruptcy filing fees and the Chapter 13 bankruptcy filing fees.  The Chapter 7 bankruptcy filing fee has increased from $299 to $306.  The Chapter 13 bankruptcy filing fee increased from $274 to $281.  Even though the filing fees for Chapter 7 and Chapter 13 bankruptcy petitions increased by only $7, if you are thinking of filing for bankruptcy, you know that every dollar counts.  The people that may notice these increased filing fees the most are people that have filed a previous bankruptcy recently and need to file another bankruptcy.  Be sure to include an extra $7 if you are filing pro se.  The U.S. Bankruptcy Court only accepts exact change. For people that have retained attorneys, the attorneys will make sure the filing fee is paid.  The filing fees for the other chapters, including Chapter 9, Chapter 11, Chapter 12, and Chapter 15 bankruptcy filing fees have also increased by $7.

Another fee that may affect you is the increased fees for amending your Schedules D, E, F and/or Creditor Matrix.  The fee increased from $26 to $30.  The difference with this fee is that it is entirely avoidable.  If your original schedules are correct and do not need to be amended, then you will not incur this $30 fee, so try to be diligent and make sure the schedules are correct the first time.  Another increased fee is the returned check fee.  The returned check fee increased from $45 to $53.  This fee is also avoidable.  Be sure you have the funds in your bank account before issuing a check to the bankruptcy court and you will not be charged this fee.

If you are requesting a fee waiver in a Chapter 7 bankruptcy case, the qualifications have not changed, so the filing fee increase does not affect the fee waiver.  Fee waivers may be granted to families that have income less than 150% of the poverty guidelines and that cannot pay the filing fee in installments.

If you have any questions or you need to consult with an experienced bankruptcy attorney or bankruptcy lawyer, please call us toll free at 877-9NEW-LIFE or 877-963-9543 for a free consultation.

Who Can Garnish Wages?

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Who can garnish wages is virtually unlimited.  Anyone that has obtained a judgment against you can enforce or collect on the judgment by garnishing your wages unless it is the Internal Revenue Service or Franchise Tax Board.  From a taxing authority you will receive a notice of levy and if you do not respond they will garnish your wages without obtaining a judgment.  Your wages can also be garnished under rare circumstances if you have agreed to a wage assignment, which is different than wage garnishment.

All other parties must sue you by filing a complaint and serving you with the summons and complaint.  Once served has been made the party can then obtain a judgment against you.  If you ignore the complaint the party will be able to request entry of the judgment by default.  If you choose to answer the complaint the party suing you will next be able to obtain a judgment by filing a motion for summary judgment by the court.  If your debt and lawsuit are the result of a breach of contract like not paying a credit card company you will have very few defenses and they will most likely obtain a judgment against you.

Once the judgment is entered the next step is to enforce the judgment.  Just because a party has obtained a judgment against does not necessarily mean they will spend more money to go through the process of enforcing the judgment.  To enforce the judgment they can garnish your wages, levy on your bank accounts and record the judgment with the county in which you live hoping it will attach to any real property you may own.

If your wages are garnished you can file an exemption to reduce the amount that can be garnished each paycheck and even stop the garnishment altogether depending upon your circumstances.  Filing bankruptcy will stop the garnishment of your wages and depending upon the circumstances get rid of the judgment forever too.  Bankruptcy is not the only answer, but for many it is the permanent solution to making sure the enforcement of the judgment does not continue.

Many collection agencies improperly tell people that they are going to garnish their wages without having obtained a judgment in an attempt receive a payment.  This could be a violation of the Fair Debt Collection Practices Act and any contact with the collection agency should be documented for future prosecution if it continues.

Contact us for more information from our experienced bankruptcy lawyers or one of our wage garnishment bankruptcy attorneys to find out if bankruptcy is right for you.

What Happens During Bankruptcy?

By Ryan C. Wood, Attorney at Law

What happens during bankruptcy depends primarily on the chapter of the bankruptcy code you file under.  The most common bankruptcy is the filing of a consumer no asset chapter 7 bankruptcy.  The next most common cases are consumer chapter 13 reorganizations and asset chapter 7 bankruptcy cases.

1.       The Automatic Stay Takes Effect as Soon as the Case is Filed

The first thing that happens during every bankruptcy is as soon as the case is filed the automatic stay is in effect stopping any and all collection actions against you.  This includes wage garnishment, foreclosure, lawsuits and harassing phone calls.  Everything is stopped and must be addressed in the bankruptcy case.  The whole point of filing bankruptcy is to get rid of burdensome debts and treat creditors fairly under the Bankruptcy Code.

2.       Documents are Forwarded to the Trustee Assigned to the Case

After the case is filed certain documents must be forwarded to the trustee assigned to your case.  Some trustees require bank account statements in addition to pay advices and your most recently filed tax return.  If the case is a Chapter 7 case there is a panel of trustees that are assigned cases.  Each jurisdiction has different Chapter 7 trustees to administer the bankruptcy estate.  If your case us under Chapter 13 there is a standing trustee that administers all of the cases filed within in their jurisdiction.

3.       Second Course is Completed and Certificate Filed

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act created two courses that must be completed.  The first course, Credit Counseling, must be completed before the case can be filed.  The second course, Financial Management, must be completed before you may obtain a discharge of your debts.  You must complete the second course within 60 days of the date the 341 meeting of the creditors is scheduled.  If you do not complete the second course your case will be closed and you will not receive a discharge.

4.       341 Meeting of the Creditors Attended and Concluded

The 341 meeting of the creditors should be the only appearance you need to make in the bankruptcy case.  The meeting is usually scheduled 30-45 days after the case is filed.  If the case is Chapter 7 or Chapter 13 the meeting is administered by the trustee assigned to your case.  The meeting is not in a courtroom but there are formalities observed.  You will provide testimony under oath and it is recorded.  This meeting also provides your creditors an opportunity to ask you questions about the bankruptcy petition filed.  Creditors rarely appear at the meeting unless you have committed some sort of fraud.  If everything is in order then the meeting of the creditors will be concluded.

5.       Debt is Discharged and Closed

In a no asset Chapter 7 case after the conclusion of the meeting of the creditors the only remaining deadline that needs to pass is creditors right to file an adversary proceeding objecting to the discharge of the debt owed to them.  Creditors have 60 days from the date the meeting of the creditors is schedule to file an adversary proceeding objecting to the discharge of your debts.  Once the 60 days passes the Bankruptcy Court may now enter the order discharging your debts and closing the case.

In a Chapter 13 bankruptcy case the Chapter 13 plan will still need to be confirmed or approved by the Bankruptcy Court.  Depending upon the debts you are reorganizing in your Chapter 13 plan this can take a number of months.  Once the Chapter 13 plan is confirmed the plan will need to be completed.  Once the Chapter 13 plan is completed the order discharging the debt you do not pay back in the plan can be discharged and the bankruptcy case closed.

If you are need of bankruptcy you may contact us at San Jose bankruptcy or contact us at Oakland bankruptcy for more information.

The Top 10 Things To Do Before Filing Bankruptcy

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After meeting with hundreds and hundreds of potential clients during our free consultations the same issues arise over and over again.  The following are the top ten most common issues that should be addressed or followed prior to filing either a chapter 7 bankruptcy or chapter 13 bankruptcy case.

10.       Do Not Wait To Speak To An Experienced Bankruptcy Attorney

Even if you are not ready to file bankruptcy speaking with an experienced bankruptcy attorney will give you the information you need to make educated decisions.  To determine if you are speaking with an experienced bankruptcy attorney, ask the attorney how many other areas of law they practice, how long they have practiced bankruptcy law, how many bankruptcy cases have they filed and to name the trustees in the jurisdiction and what document requirements each trustee requires.  If the attorney does not know who the trustees are and what each of them requires they do not regularly file bankruptcy cases.  One the most common problems we face is meeting with potential clients when it is already too late.  If you have been served with a summons and complaint you need to speak with an bankruptcy attorney.  If you owe taxes and the IRS or FTB has indicated they are going to garnish your wages you need to speak with a bankruptcy lawyer.

9.         Review Your Monthly Expenses

All consumer bankruptcy petitions include Schedule J.  Schedule J is the estimate of the average or projected monthly expenses for your household at the time the bankruptcy case is filed.  Prior to scheduling a free consultation with an experienced bankruptcy attorney take a few minutes and review your bank account statements and get a better idea of where your money is going each month.  This will help to determine if you have any disposable income available to creditors.

8.         Make Sure All of Your Tax Returns Are Filed

In 2005 the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) provided new guidelines for the filing of tax returns and bankruptcy.  If you file for bankruptcy you will need to provide your tax return for the previous year, or the current year if requested.  If you fail to file your return that becomes due after you file for bankruptcy the IRS can request dismissal of your bankruptcy case.  Section 1308 of the Bankruptcy Code requires filers of chapter 13 bankruptcy cases to have filed all of their tax returns for the previous four years before the filing of the bankruptcy petition.  This is one of the standard questions asked by the standing chapter 13 trustee at the meeting of the creditors.

7.       Review and Document Self-Employment or 1099 Income

If you are self-employed or receive 1099 income it is essential that you know what your income is and what your expenses are for each of the six-months prior to filing for bankruptcy.  Just like in Number 6 below, the Means Test uses a six-month average of your income to determine if you have disposable income available to creditors each month.  Determining what your take home pay is when self-employed or receiving 1099 income is always more time consuming, but absolutely necessary prior to filing bankruptcy.

6.         Save Your Pay Stub or Proof of Income Each Month

In 2005 Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) changing the bankruptcy code and creating what is commonly called the Means Test.  The Means Test is based upon local and national standards for expenses.  The Means Test also uses the six-month average of your gross income extrapolated to a twelve months.  You will need all six months of your pay statements or other proof of income.

5.         Do Not Take a Cash Advance on a Credit Card

Taking a cash advance close in time to filing bankruptcy can be a huge problem.  This can be a problem for the same reasons detailed in Number 4 listed below.  It really depends upon the circumstances, but if you take a $5,000 cash advance on a credit card three weeks before filing bankruptcy you will probably hear from the credit card company when you file bankruptcy.  An adversary alleging fraud could be the likely result.

4.         Do Not Continue to Use Your Credit Cards

One of the most common complications in a consumer bankruptcy is the use of credit close in time to filing for bankruptcy.  The problem is the recent use of credit is circumstantial evidence that the user never had the intent to pay the debt back.  If you are unable to pay your bills as they come due how can you incur more debt?  If you are not making payments to your creditors do not continue to use your credit cards.  If you are having trouble paying your credit cards and are missing payments regularly you need to stop incurring more debt.

3.         Do Not Transfer Money or Assets to Friends or Family Members

The simple transfer of a car to a friend or family member before filing bankruptcy to reduce your assets is not allowed.  It must be disclosed and will only complicate your bankruptcy case.  When filing bankruptcy the sole goal is to successfully discharge all of your eligible debts.  Transferring assets in an attempt to hide assets will only complicate your bankruptcy case and possibly have your right to a discharge take away.

2.         Do Not Borrow Funds or Take an Early Withdrawal From an Individual Retirement Account or 401(k) Plan

Bankruptcy provides exemptions to protect assets such as retirement funds.  We meet with client after client that has unfortunately borrowed or withdrawn from their retirement accounts all of their retirement money trying to pay off debts or stay afloat.  You must weigh all the positives and negative before choosing to withdraw or borrow against your retirement accounts.  Bankruptcy provides exemptions that can protect for the average person all of their retirement funds.  You can file bankruptcy and still keep your retirement.

And The Most Important:

1.         Disclose All of Your Income, Expenses and Assets

Anyone that files for bankruptcy protection must disclose all income, expenses and assets in their petition.  The backbone of bankruptcy is the automatic stay, but the body is treating creditors according to the type of debt owed and the priority of payment of debts required under the bankruptcy code.  Without full disclosure treating all parties fairly cannot take place.  It is not the bankruptcy court’s duty or the duty of the trustee assigned to your case to find assets.  It is the bankruptcy filer’s duty to be open and honest about their income, expenses and assets in exchange for the discharge of their debts.  If you have not fully disclosed everything you may not only lose your right to a discharge of your debts, but criminal charges could be filed and fines imposed.

For more information about filing bankruptcy or the steps necessary to file a successful bankruptcy you may contact us at San Francisco bankruptcy or our Redwood City bankruptcy lawyers toll free at 1-877-963-9543.