Common Bankruptcy Questions

Many creditors fall into harassing behaviors, whether by calling incessantly, calling at inappropriate times or explicitly threatening debtors. The Fair Debt Collection Practices Act (FDCPA) regulates the manner in which creditors contact debtors to collect on unpaid debts, protecting debtors from such inappropriate behavior.

Unfortunately, many debtors are unaware of their rights and fall victim to these practices anyway. I have handled numerous cases where creditors are harassing my client after they file bankruptcy. From the moment you file, correspondence from creditors must go through your attorney directly, meaning you get immediate relief from the phone calls and letters that are causing you stress.

Furthermore, if we find any creditor to be in violation of these FDCPA rules and regulations, we may pursue legal action on your behalf.

Stop Debt Collection Calls

The Fair Debt Collection Practices Act (FDCPA) is a federal law that regulates what creditors can do to collect unpaid debt. For those in California, the California Fair Debt Collection Practices Act (CFDCPA) also regulates these actions.

The CFDCPA covers more types of creditors and offers more protection to debtors than the federal law alone.

Under these laws, a creditor is required to:

  • Avoid using threats or unlawful conduct to try to make you pay.
    No creditor or debt collector may legally threaten or intimidate you with physical force, criminal tactics or claiming that you are a criminal for not paying debt. Furthermore, threats that involve seizing property can only be made if the creditor has legal right to do so and plans on taking that action.
  • Only communicate with you in a certain manner.
    Creditor or debt collectors must identify themselves as such when contacting you and may not use obscene or aggressive language when discussing the debts you owe. They may not call you repeatedly to annoy you, call you at odd hours, or disclose information about your debt to others.
  • Respect and protect your privacy.
    A creditor may contact those around you, such as your friends, family or employer to locate you, but may not disclose information about your debt to these people or organizations. A creditor may not publish your name and the amount of debt you owe, and any correspondence from a creditor must be in a sealed envelope that does not showcase your debt information.
  • Accurately represent itself as a creditor or debt collector.
    Creditors must be clear about who they are. They cannot claim to be attorneys, nor can use law firm stationery if the documents are not coming directly from a law firm. They also cannot represent themselves as credit reporters or threaten to report you if unless they are actually going to do so.
  • Not contact you if you are being represented by an attorney.
    When you work with a bankruptcy attorney, he or she will inform your creditors of your representation and instruct them to send all correspondence to the law firm that represents you. If they fail to do so they are in violation of FDCPA.

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Credit card debt is one of the most prominent causes of bankruptcy. These debts are typically paired with high interest rates, confusing contracts and predatory lending practices that mislead consumers and enter them into harmful levels of debt.

At the Law Offices of Thomas P. Kelly III, we help our clients overcome the burden of credit card debt by helping them file bankruptcy. I have worked with hundreds of individuals throughout the Sonoma County area giving them personal attention and detailed representation through every stage of the bankruptcy process.

I also use bankruptcy to achieve specific goals, such as stopping wage garnishments, defending against foreclosure or dealing with the expense of divorce.

How Can Bankruptcy Help Me With Credit Card Debt?

When you file bankruptcy, your recent financial activity will be analyzed by the bankruptcy court. If you take out cash advances from your credit card shortly before filing bankruptcy, or try to pay off other debt by using your credit card, then this aspect of your bankruptcy may be considered fraudulent.

Why is this the case? Bankruptcy law is strict about preventing fraud, and even if you simply were trying to stay afloat when you made the decision to take out a cash advance from a credit card, that activity may be viewed as intent to defraud your credit card company.

Beyond these restrictions, Chapter 7 bankruptcy and Chapter 13 bankruptcy typically handle your credit card debt with ease. All debts in a bankruptcy are paid back in order of priority, and credit card debts are typically considered nonpriority debts. That means that in many instances, these debts are either discharged or reorganized into a repayment plan that works for you.

Every individual has a different level of income and a different debt burden to overcome. We are here to provide debt help and help you determine what legal path to take.

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In California, an exceptional number of people are underwater with regard to home financing. They have fallen behind in mortgage payments or are the victims of systematic foreclosure abuses on the part of large financial institutions.

Just because you have been threatened with foreclosure, you do not have to sit back and watch it happen. Bankruptcy can provide a means to protect you from foreclosure and reorganize debts into more manageable payment plans, allowing you to keep your home and all you have worked for.

I have experience fighting and stopping wrongful foreclosures in both state court and in the bankruptcy courts.

Time is not on your side – if you have received a notice of default or notice of trustee sale call us RIGHT NOW

In California, a nonjudicial foreclosure process is used, meaning a lender does not have to file a lawsuit in order to obtain a court order to foreclose. Rather, a power of sale clause is written into the mortgage or deed of trust that allows a lender or lender’s representative (i.e., trustee) to sell property to pay off a loan that is in default.

If you are in default, you will likely receive a notice of default from your lender, which gives you 90 days to catch up on late payments and penalties so your loan can get back on track. After those 90 days are up, the lender may choose to foreclose your property.

This type of foreclosure is often referred to as a trustee sale. If you receive a notice of trustee sale, this is an emergency situation. You have a very short period of time 21 days to take action.

If the trustee sale is completed, it is final. There is no way to reverse it. That is why you need to contact us RIGHT NOW.

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Going through a divorce is stressful enough, but the financial consequences of a divorce can cause ongoing hardship as both parties attempt to accommodate legal fees, changes in household income, child support payments and other similar obligations related to family life. In some cases, bankruptcy arises as the product of divorce. In others, financial problems were partly to blame for a contentious family life.

At the Law Offices of Thomas P. Kelly III, we understand the complex nature of these issues and the toll they take on our clients’ finances. We strive to provide recommendations that meet their needs and clarify their legal options while encouraging them to keep a level head about what will help them move forward most effectively.

Attorney Thomas P. Kelly III works with each of our clients directly, thoroughly analyzing their financial situation and their goals. How important is it to keep the family home? Which assets are worth keeping and which are best left to liquidation in bankruptcy? These are answers you can only find by working with a legal adviser who knows your specific needs.

To reach an experienced lawyer who can walk you through the bankruptcy process with confidence, contact our firm online or by telephone at 707-545-8700. Divorce debt relief is just a phone call away.

A Santa Rosa Attorney To Help With Bankruptcy During Divorce

Choosing to file a bankruptcy before a divorce is typically the most fiscally responsible option you have. Joint filing fees match those of individual filing fees, so why double up on these as individuals when you can share the cost? Divorcing couples are not able to file jointly the way married couples are, even if your debt issues were caused by actions taken during your marriage.

Furthermore, the community property laws in California can create additional liabilities that should be addressed prior to getting a divorce. You do not want financial issues from your marriage to arise in the midst of your bankruptcy filing after your divorce is final.

In rare instances, one individual is solely responsible for a series of debts. Responsibility here is determined by legal responsibility rather than by who each party tries to blame for debt. In this instance, if legal responsibility falls on only one individual, then it may be better to file for bankruptcy after a divorce.

It is best to work with an experienced lawyer before making decisions regarding your finances and bankruptcy filing as you go through a divorce.

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The loss of personal belongings is perhaps the greatest concern of individuals thinking about bankruptcy. The creditors who contact them often threaten to repossess cars, foreclose on homes or garnish wages.

All of these actions can be halted automatically by the automatic stay immediately when you file bankruptcy.

There is also another aspect of filing for bankruptcy in California which are called. California has two sets bankruptcy exemptions under C.C.P. 703 and C.C.P. 704, and you are free to use either depending on your circumstances.

These create a wide variety of property which you will keep and is exempt from creditors or the bankruptcy trustee trying to force you sell or surrender. For example, individual household goods worth less than $600 are automatically exempt. So your clothes, dishes, family photos, most furniture, and other similar items are protected and you do not need to fear losing them.

For more details on how exemptions work check my entry on exemptions

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Instant, automatic protection from your creditors

When you file a bankruptcy petition, the automatic stay goes into effect IMMEDIATELY. This is created by 11 U.S.C. 362, and halt all efforts by creditors to continue collections efforts for any debt against you. This includes lawsuits, wage garnishment, foreclosures, repossessions of vehicles, bank levies, and also forces creditors to stop contacting you on the phone or my mail as well. It’s effect is immediate, and applies to all of your creditors.

If you case is successful and a discharge order entered, the automatic stay is converted into what is called a permanent injunction. That means your creditors are forever barred from seeking to collect any of the debts that have been discharged.

Exceptions to the automatic stay

There are some important exceptions to the automatic stay. It does not stop criminal prosecutions, family law cases such as divorce, some kinds of tax audits, and will not stop an eviction if your landlord has already completed the eviction process.

Also, secured creditors can ask the court for relief from the automatic stay. If you have a car loan or home loan, and you are not making payments, the creditor will file a motion with the court called a Motion for Relief from Stay so that they can get permission to repossess the vehicle or foreclose on the house. If you are current on the payments, and stay current, you have nothing to worry about. For house payments, if you are significantly behind in the monthly payments, then you can enter a repayment plan lasting up to five years under Chapter 13.

Violations of the automatic stay

Some creditors will keep coming after you even with the automatic stay. If they do this, then I will file an action against them for any damage you suffered, as well as attorneys fees, costs, and possible punitive damages. It is relatively uncommon, and if this happens, I will represent you in taking care of this problem.

Also, any action a creditor takes in violation of the stay is automatically void. If you file for bankruptcy, and the bank repossesses your car a week later, we will sue them to get it back. The same is true for foreclosures, wage garnishments, and most other collections efforts.

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In the bankruptcy process, a discharge means that a financial obligation for which you are legally responsible cannot be legally enforced against you any longer.

A discharge is a fresh start, and it is the fundamental goal of the bankruptcy system. As the Supreme Court stated in Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934) “[I]t gives to the honest but unfortunate debtor a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.”

It is important to note that bankruptcy only affects legal obligations. One of the most common questions clients have is whether they can still pay back a family member or friend who has lent them money due to the hard times they are facing.

The answer is yes, with some limitations. You can choose to repay any creditor after a successful bankruptcy, but you are released from any personal liability from specific debts and prohibits creditors from ever taking any action against the debtor to collect those debts.

In a Chapter 7 bankruptcy, the discharge takes effect when the Judge issues an order at the end of the case granting the discharge. In a Chapter 13 case, the discharge is entered after you have completed the Chapter 13 repayment plan by making all of the Trustee payments.

If you seek to have a secured debt discharged, such as a mortgage or car loan, then the creditor will take back the car or house through a repossession or foreclosure. If you want to keep these items, then you must arrange with the lender to keep making the payments. To explain how this works, consult an attorney.

Some kinds of debt cannot be discharged. Examples include criminal fines, child support, student loans, and tax debts. There are limited exceptions, but in practical terms these debts will not be discharged. But credit cards, lines of credit, medical debt, and most other kinds of bills are discharged, and you will not have to repay them.

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In bankruptcy, an exemption means a specific kind of property which is “exempt” from seizure or liquidation by the bankruptcy trustee or creditors.

Exemptions are controlled by the laws of the State in which you live, and in California there are two sets of bankruptcy exemptions under C.C.P. 703 and C.C.P. 704.

C.C.P. 704 is used where you own a home, and have equity in that home. The amounts vary depending on your circumstances. An individual or married couple with no one else living in the house (such as children) can claim $75,000 in equity as exempt.

If you are married and have children that amount increases to $100,000. If you are over 65 years old, that amount is increased to $175,000. There are other applicable exemptions under C.C.P. 704, but you should give me a call to talk about those.

C.C.P. 703 is used where you do not own a home, or you have no equity in that home. Under C.C.P. 703 it creates what is called a “wildcard” exemption which allows you $25,000 of exemption which can be applied to anything you own. Cars, boats, artwork, electronics, or any other property you own.

There are numerous other exemptions for equity in a car, tools you use in your work, some jewelry, and others too numerous to list here.

An important exemption that applies to all cases is for retirement accounts, IRAs, college savings accounts, and health savings accounts. These are all 100% exempt. So if you are considering taking money out of one of these accounts to make it through the month, DO NOT TOUCH IT. You will not only have to pay back the money you take out, but there are harsh tax penalties on top of that. If you are considering this, it is time to send me an email or give me a call at 707-545-8700

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