Posted on February 12, 2018 in Bankruptcy And Divorce

Bankruptcy prevents or stops only certain limited divorce/family law proceedings. Others, including collection of ongoing support, continue.

Our last several blog posts have been about creditor collection actions stopped or not stopped by a bankruptcy filing. Today we get into divorce and family court related proceedings and debts.

Family Court Proceedings

The bankruptcy law that stops creditor collections immediately when filing bankruptcy is called the “automatic stay.”

The automatic stay doesn’t just stop creditor phone calls, wage and bank account garnishments, and vehicle repossessions and home foreclosures. It also stops most creditor lawsuits from being filed and prevents ongoing lawsuits from continuing. This makes sense because a creditor’s lawsuit is clearly part of its efforts to collect its debt.

However, there are certain kinds of lawsuits that have little or nothing to do with collecting a debt. Many of such lawsuits are in family or domestic relations court. Bankruptcy law creates exceptions to the automatic stay to allow certain specific family court proceedings. Such proceedings can be started or continued regardless of your bankruptcy case.

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 Posted on February 09, 2018 in Automatic Stay

Filing bankruptcy can stop a residential rental eviction. But only if you file your bankruptcy case is before a judgment of possession.

Our last blog post was about stopping the collection of unpaid spousal and child support by filing bankruptcy. Chapter 7 doesn’t stop collection of this special kind of debt. Chapter 13 does, but only temporarily unless you meticulously follow a number of requirements.

Today we get into the special rules about another very special kind of debt: unpaid residential rent. Somewhat similar to spousal and child support, if you meet certain requirements your bankruptcy filing can stop certain landlord collection actions—in this case, evicting you. But an eviction does not stop if you wait too long. Here’s how it works.

Keeping Possession of Your Rental

Bankruptcy’s “automatic stay” law makes it illegal for your creditors to take many actions against you and your property. There is a list of the kinds of actions that creditors can’t take as of the moment you file bankruptcy. Included on that list is for a creditor “to obtain possession of [your] property” or “to exercise control over [your] property.” (See Section 362(a)(3) of the United States Bankruptcy Code.)

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 Posted on February 07, 2018 in Child And Spousal Support

Chapter 7 doesn’t stop collection of unpaid support, but may enable you to catch up. Chapter 13 does stop this collection, conditionally.

Our recent blog posts have been about situations when creditor collection actions are not stopped by a bankruptcy filing. An example is a criminal fine or restitution. A bankruptcy filing has no effect on your obligation to pay criminal debts or on the collection of those debts.

We’ve also gotten into situations when collections are stopped only temporarily, including when that’s long enough to solve your problem. An example is a recent income tax debt. A Chapter 7 bankruptcy filing stops tax collections only for a few months. But that should be long enough to start a monthly payment plan, especially one that you can now afford after getting rid of all or most of your other debts.

So today we get into one special kind of debt for which the debt collection either doesn’t stop at all, is stopped only temporarily, or is stopped permanently. If you are behind on child or spousal support, you have three options in bankruptcy.

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 Posted on February 05, 2018 in Automatic Stay

If you’ve had more than 1 case filed and dismissed within the last year, you’ll need to show “good faith” to get automatic stay protection.

The Effect of ONE Prior Dismissed Bankruptcy Case

Our last blog post was about losing the automatic stay protection from debt collection, 30 days after filing bankruptcy. This loss of protection could happen as to ALL of your creditors, not just one particular one. It could happen if you had filed a bankruptcy case within 1 year before the filing of your present case, and that prior case got dismissed (thrown out and closed).

You could prevent losing this protection from debt collection by showing the new case is being filed “in good faith.” There are specific considerations laid out in the law for demonstrating “good faith.” See Section 362(c)(3) of the U.S. Bankruptcy Code.

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 Posted on February 02, 2018 in Bankruptcy Procedure

Either 1) wait one year to file your bankruptcy case after getting a prior bankruptcy case dismissed or 2) justify why the dismissal happened.

The last few blog posts have been about situations in which the automatic stay is temporary, but still very effective. These situations have involved individual debts or sets of debts—such as income taxes or student loans. The automatic stay’s protection from debt collection in a Chapter 7 case is temporary for debts which survive the bankruptcy case because the automatic stay expires once the case is completed—usually just 3-4 months after filing. But that may be fine with income taxes and student loans for reasons explained in the last two blog posts.

Today we get into a situation much more dangerous. Here the automatic stay protection from debt collection could be lost as to ALL your debts.

The Automatic Stay

We start first with a bit of background. One of the most important and immediate benefits of filing bankruptcy is the automatic stay. This is the federal law that stops creditors from collecting your debts immediately when you file your bankruptcy case. It protects you, your income, and your assets. The automatic stay usually provides this protection as long as your case is open. (See Section 362 of the U.S. Bankruptcy Code.)

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 Posted on January 31, 2018 in Student Loans

Filing Chapter 7 stops a student loan garnishment and other collection activities. Then use “undue hardship” or focus on the student loan.

Our last blog post was about a Chapter 7 bankruptcy stopping a tax garnishment only temporarily. In that situation this was OK because it gave time to set up a payment program with the IRS/state. With the bankruptcy discharging (writing off) all or most other debts, the taxpayer could afford a reasonable monthly payment to pay off the tax debt over time.

Today we deal with a somewhat similar situation. Assume you owe a student loan that you don’t have the cash flow to make payments on. Here’s how this situation can be greatly helped through a Chapter 7 filing.

Student Loan Collection and the Chapter 7 Filing

Similar to the tax authorities, student loan creditors and collectors have extraordinary collection powers. In most situations they don’t need to sue and get a legal judgment against you to begin aggressive collection procedures. These can include wage garnishment, tax refund setoff, and Social Security benefit capture. (This is true of federal student loans; private student loan lenders must first sue you and get a judgment.)

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 Posted on January 29, 2018 in Income Taxes

Filing Chapter 7 bankruptcy stops an IRS/state garnishment and other collection activities, even if it’s for a tax you still have to pay.

We ended the last blog post saying that sometimes a Chapter 7 bankruptcy will stop a wage garnishment only temporarily. One such situation is if the IRS (or state tax agency) is chasing you on a debt you can’t discharge.

An Income Tax Debt You Can’t Discharge

You can’t discharge (legally write off) the tax debt usually because it’s not old enough. If you owe such a tax debt, and your paycheck (or bank account) is being garnished, filing a Chapter 7 case will only stop the garnishment for the length of time your case is active—usually about 3-4 months. The protection from collection called the “automatic stay” ends when you receive a discharge of your debts. (See Section 362(c)(2)(C) of the U.S. Bankruptcy Code.)

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 Posted on January 26, 2018 in Bankruptcy Procedure

Filing bankruptcy protects your paycheck. It does so because federal bankruptcy prevents a state court wage garnishment order.

Last time we got into how hiring a lawyer can stop a creditor from suing you. Sometimes it can also stop a creditor which has already sued from getting a judgment against you.

But these work mostly for practical reasons, not legal ones. A creditor may not sue when you are about to file bankruptcy because it’s often a waste of time and effort to do so. It may hold off on taking a lawsuit to judgment when your lawyer is on the scene to oppose it. However, there is usually no legal reason stopping a creditor from proceeding.

So a creditor can, and sometimes will, sue you even if you’ve hired a bankruptcy lawyer. It can try to proceed with its lawsuit and get a judgment against you. One of the main reasons it would do so it that it wants to start garnishing your paycheck.

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 Posted on January 24, 2018 in Bankruptcy

Hiring a bankruptcy lawyer can stop creditor phone calls and some other potentially very important collection actions against you.

What relief can you get when you get a bankruptcy lawyer?

Relief After vs. Before Filing Bankruptcy

The moment you file a bankruptcy case, all or most of your creditors must legally stop collecting their debts. The law that accomplishes this is called the “automatic stay.” This is what prevents a home foreclosure or vehicle repossession from going through. It also stops a lawsuit from turning into a wage garnishment, and ends an ongoing garnishment. See Section 362 of the U.S. Bankruptcy Code.

However, if you are just now looking into bankruptcy as an option you may be several weeks, or more, from actually filing your case. In very urgent situations you may be able to file a bankruptcy case quite quickly. But to be practical, it can take some time for you to understand and choose among your options. You may need some time to gather information or documents. It’s sometimes much better tactically to delay filing for a few days or weeks. In all these situations it can be really helpful if you could get some relief sooner than the bankruptcy filing itself.

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 Posted on January 22, 2018 in Secured Debts

When is it better to reaffirm your secured debt—such as a vehicle loan—in a Chapter 7 case or instead cram it down under Chapter 13?

The last 4 weeks of blog posts have been about options for keeping collateral through Chapter 7 and Chapter 13. Mostly these options have involved reaffirming a secured debt in Chapter 7 or cramming it down in Chapter 13. Here is a handy summary and guide.

Reaffirmation in Chapter 7

You can only reaffirm a debt in a “straight bankruptcy” Chapter 7 case. Here’s what you need to know about reaffirmation:

• By reaffirming a debt you legally exclude it from the discharge (write-off) of your debts that bankruptcy otherwise provides you. This means that you are volunteering to continue owing that particular debt. In return you can keep the collateral (such as a vehicle), and start rebuilding your credit.
• For many debts secured by collateral, if you want to keep the collateral you have to reaffirm the debt. But sometimes you can just continue making payments and not going through a formal reaffirmation. It depends on the creditor. Talk with your bankruptcy lawyer.

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