Northern California Bankruptcy Lawyer

On The Bankruptcy Soapbox

The Soap Box

Your Bankruptcy Discharge Has Teeth: Bite Back

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bankruptcy discharge has teeth

Your bankruptcy discharge is more than a piece of paper.  It’s a federal court order prohibiting action to collect the discharged debt from you.

And it has teeth.

When creditors ignore a federal court order, it has unpleasant consequences.  Or should have consequences.

So, my call to debtors is to stop being prey to unscrupulous debt collectors.

Bite back.

Discharge binds all creditors

All creditors who got notice of your bankruptcy are subject to the discharge injunction, with a few exceptions.

That’s why it’s so important to list everyone who thinks you owe them money in your bankruptcy schedules. Getting your schedules right.

The discharge is a public record, retrievable on PACER  by anyone who is interested.

In short, there is no excuse for the creditor (or anyone who bought the debt from your creditor) to attempt collection of debts predating your bankruptcy.

And creditors who try to collect have effectively given you the right to sue them at their expense. [Read more…]

Life After Bankruptcy: What’s It Really Like?

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life after bankruptcyWhat’s life really like after bankruptcy?

Everyone suffering through financial difficulties wants to know whether filing bankruptcy just trades one form of pain for another.

Will you be shut out of the American dream forever?

Here’s a collection of our best stories and advice on the world of your fresh start.

Your credit heals

Damaged credit improves over time, just like wounds heal. A credit report is not like a wine glass that once it’s broken, it’s gone forever.

 

after bankruptcy8 Tasks after bankruptcy

You’ve still got work to do after your bankruptcy to enjoy your fresh start.  Figure out where you are, money wise, and apply the lessons of the debtor education class you took to get the discharge.

 

after bankruptcyRenter to homeowner
Even with generous California exemptions, this aging client had nothing coming out of bankruptcy because she had nothing going in. Three years later, she’s a homeowner.

 

debts after bankruptcyDealing with debts that survive bankruptcy

A few unsecured debts can’t be discharged in bankruptcy; it’s a short list.  Some liens are your assets remain a charge on the collateral for that lien, but not on your new acquisitions.

 

car loan after bankruptcyGetting new wheels
How do you hold on to your ride, or replace your aging car after bankruptcy? Understand the impact of a shedding debts through bankruptcy.

 

bankruptcy discharge has teethDefending your discharge

The bankruptcy discharge is a federal court order;  it has teeth.  If creditors ignore your right to be free of collection efforts, you may have to bite back.

 

life after bankruptcyBankruptcy can be a life-changing event, for the positive

Life after bankruptcy can be what you make it.  You get a chance to make some new choices and to strip some sources of stress from your life.  How will you color it in?

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Is it better to just keep making minimum payments?

Secret alternative to bankruptcy

How debt makes you dumb

Bankruptcy as a life changing event

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How will filing bankruptcy change my life?

My clients ask all the time.  They imagine the remainder of their life after bankruptcy with neither credit cards nor credit.  Outcasts in our economy.  Shunned by all.  Crippled by bankruptcy.

They can see a scarlet “B” tattooed on their foreheads to mark them forever as Bankrupts.

My short, irreverent answer to that question is that they will sleep better at night.

Other side effects of bankruptcy include a drop off in telephone calls from collectors and shrinkage of the amount of mail they get.

They get smarter; debt makes you dumb.

All true, but probably not the answer they expected from a bankruptcy lawyer.

You drive change

The more serious answer has to reflect what brought them to me to file bankruptcy in the first place.

When the driving force was gambling or some other irresponsible behavior, I tell them that I can dig them out of this hole with bankruptcy relief, but positive change for the future requires that they change their behavior.

When the current crisis is  created by events beyond their control, like job loss, divorce or illness, bankruptcy is likely to put their financial lives back on track.

For those in business,  failure is one of the risks that we take when we sign up to be entrepreneurs.  Bankruptcy clears the financial decks so we can go forward with life.

Life after bankruptcy

At the superficial level, life continues only slightly changed after bankruptcy.

Your credit score probably goes up a bit, in the short run.  Credit is more expensive shortly after bankruptcy, becoming more available and more affordable as time goes on.  With time and a down payment, you can buy a house.

Credit heals

Your ability to borrow too much on student loans endures.

Most important, in my view, is that eliminating debt means that you can take responsibility for providing for your old age.  A frightening slice of Americans have nothing more than Social Security to support themselves as they age.  And age they will, even if they believe they will never “retire”.

An equal number of people couldn’t handle a $400 emergency without borrowing money.

Life after bankruptcy can be what you make it.  Bankruptcy makes it possible;  you fill in the details.

More

3 things that keep you from getting out of debt

Bankruptcy myths

Credit Reports Heal

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band-24298_1280 (1)_optWill filing bankruptcy hurt my credit? Probably.

Should that hit to your credit keep from filing bankruptcy?  Not by a long shot.

Incredibly, I encounter people drowning in debt who think their credit report is more important than their financial health.

Their thinking seems to be that credit, once damaged, is never the same.

It’s not so.

A blow to your credit is not permanent nor even long lasting.

Your “credit”, or really, your worthiness for new credit, is almost a living, breathing thing.  It can suffer a blow and recover.

Credit hit is like a cut

Whether you choose debt settlement, debt management or bankruptcy, the solution will damage your credit, in the short run.

Think of the damage like a wound.

The wound bleeds, it exposes the rest of your body to infection.  It hurts.

Think of bankruptcy as antiseptic.  Douse the wound with antiseptic to kill infection and promote healing and it hurts…but the hurt fades.

Over time, the wound closes and scabs over.  It isn’t painful most of the time.

When it’s healed, there’s a bit of a scar.

Over time, even the scar fades.

Debt is chronic disease

When your debts are beyond paying off in the normal course, it’s like a disease you can’t beat.  Persistent symptoms, sometimes progressively worse, other times just ever-present.

Debt saps your energy, consumes your thinking and limits your opportunities.

If your debts are such that you’ve considered bankruptcy, your credit worthiness is probably already compromised.  Would any creditor lend you more money at a reasonable rate?

If not, your credit may not be doing you any good at present.

Your balance sheet is what counts

A credit report is a limited history.  As time passes, the oldest history falls off the report to be replaced with the snapshot of today’s finances.

If you use bankruptcy to wipe away your old debts, your balance sheet (assets minus liabilities) improves on the spot.

The bankruptcy filing shows on your credit report, in the rear view mirror, for some time.  But its significance to lenders fades the farther down the road you get from filing.

But with your old debts gone, even right after you file, you no long look like someone who already has as much debt as they can handle  or more.

Take steps to get financially healthy and your credit will recover too.

Image courtesy of Flickr and RambergMedia Images under a Creative Commons license.

Your Right To Credit Reporting After Bankruptcy

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credit report after bankruptcy

You’ve finished your Chapter 13 and emerged from bankruptcy with your home loan current.

But your credit report is a blank page on your mortgage.

The mortgage servicer isn’t reporting your payments to the credit reporting agencies.  

Nothing. Nada.  Crickets.

So, even though you’re making regular payments, you’re not visibly rebuilding your credit.

Ask the servicer and they’ll tell you that they can’t report your payments “because of your bankruptcy discharge“.

But they are wrong:  a little-discussed provision of Chapter 13 says that long-term mortgage debt is not discharged in 13.

Yup.  The mortgage loan is not discharged as a personal obligation.

And therefore, there is no bar to the servicer reporting your payments, and every danger should they not report.

Servicer’s obligation to report

Put simply, if a creditor reported to credit reporting agencies before the bankruptcy was filed, then there is an obligation to report after the bankruptcy.  The “furnisher”, the creditor who supplies information to the credit reporting agency, has an obligation to make the information on file fully accurate. [Read more…]

Is There Life After Bankruptcy?

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multiple questions-grisel d'an flicker_opt

Is bankruptcy worth it?

Those who see the decision to file bankruptcy to get a fresh start as painful or less than honorable wonder what life is like, on the other side of bankruptcy.

I got a report from the other side this week from a Chapter 7 client from 3 years ago.

Single, well past middle age, a renter, and dead broke when she’d filed, she’d retired, moved, and bought a house!

Her email was entitled:  “A Happy Ending”. [Read more…]

Ten Debts That Follow You After Bankruptcy

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debts after bankruptcy

Some debts just follow you out of bankruptcy.

Not many but a few.

These debts continue to be collectible even after a Chapter 7 discharge.  The discharge in Chapter 13 is different and broader:  just another reason to choose Chapter 13.

1.   Family support

Regardless of what it’s called, court ordered payments for support of children or spouses

2.   Recent taxes

Income taxes for tax years  more than three years old, counting from when the return was due [Read more…]

Couple Beats Big Banks Who Ignored Bankruptcy Discharge

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bankruptcy discharge

 

A couple of banks found out that it’s expensive to ignore the bankruptcy discharge.

For a change, money will flow from banks to my clients.  Because even a bank can’t just do business as usual when their borrower files bankruptcy.

Equally important, the judge recognized, in dollars, the emotional costs to debtors when their discharge is ignored.  And she awarded compensatory damages without live testimony, expert witnesses, or protracted discovery.

Bravo for common sense on the bench.  She put real teeth in the bankruptcy court’s discharge order.

Discharge poorly enforced

Bankruptcy judges have regularly called out creditors for bad behavior and made debtors whole for their attorney’s fees.   But, too often, in my experience,  the harassed debtor got no meaningful monetary recovery.

For me, that unwillingness to put a dollar value on the peace which is supposed to flow from the bankruptcy discharge has been a huge hole in the bankruptcy system. It leaves the debtors feeling cheated of all of the benefits they expected when they made the hard choice to file bankruptcy.

Until it becomes more expensive to the scofflaw creditors to ignore the discharge than to honor it, debtors get only a fraction of what the discharge promises.

Debtors must not take it anymore

The flip side of the problem of discharge violation is that after the bankruptcy case is closed, debtors assume they have no remedy.  They simply suffer continuing collection efforts.

Or, the debtor assumes that his lawyer screwed up.  Why else would this creditor keep bothering him.

Bankruptcy discharge and zombie debt

Neither judges nor bankruptcy attorneys can fix the problem if the victim doesn’t make themselves heard.

The problem your bankruptcy lawyer can’t fix

My clients helped their case by keeping most of the dunning letters sent by the creditor over several years.

The case would have been better still, for this judge anyway, if they’d kept a log of the phone calls and what was said.  The fact that the creditor kept calling wasn’t sufficient proof that the call attempted to collect a debt.

Creditor pays for its mistakes

The creditors in my case will end up not only paying their Tall Building Lawyers to oppose our motion for sanctions, but they will pay my fees to make them stop.

In the thousands of dollars.

You see, the bankruptcy discharge is an injunction from a federal court.  It prohibits acts to collect a discharged debt as a personal liability of the debtor.

Ignore the order and you are in contempt of court.

When a debtor proves that the creditor knew about the discharge and intentionally acted anyway, the debtor gets compensatory, or civil, sanctions.

Almost without exception, the sanctions include payment of the debtor’s attorneys fees.

These creditors will also pay for the fee to reopen the case to get the matter before the judge.

It’s some solace to my clients who don’t feel as victimized as before.

More on enforcing the discharge injunction.

 

 

8 Essential Tasks To Maximize Your Bankruptcy Fresh Start

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sheikh_tuhin_To-Do_List-public domain Got your bankruptcy discharge recently?  

The end of the bankruptcy case is the start of your new financial life.

Now, you’ve got work to do to maximize that fresh start.

Save your bankruptcy papers

The bankruptcy schedules listed everyone you owed money to when you filed.  Those creditors got notice of your case. The discharge wipes out your liability to most of those creditors.

Save the creditor lists and the discharge order because chances are that some of your creditors will sell your discharged debt to a debt buyer who will try later to collect from you.  That’s zombie debt.

Proof of notice to the original creditor and the discharge order should ward off zombies.

List the debts that weren’t discharged

You may have debts that the law doesn’t allow to be discharged:  family support, recent taxes, and student loans .  If you have these kinds of debts, they survive the bankruptcy discharge.  The creditors retain their rights to enforce them.

If you are keeping a vehicle subject to a loan, you need to keep making those payments or the car will be repossessed.

The discharge order doesn’t say what debts survive;  you need a list of what you still have to pay.

Verify lien balances

Liens on your assets survive the discharge.  The creditor may not be able to  sue you if you don’t pay, but they can seize the collateral if you don’t pay.

Find out what you owe on your car loan and your mortgage.  Ask the creditor to resume sending bills or to restore online bill pay. [Read more…]

When Debt Collectors Won’t Stop, Despite Bankruptcy

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the letter-wikimedia-public domanNothing is more distressing than to get a collection notice after you’ve filed bankruptcy and gotten a discharge.

You’ve taken the hard step to get a fresh start, and it appears not to have worked.

Most people assume that the collector has a right to its money.  Often, they assume their lawyer must have screwed up if some creditor is still trying to collect.

Unlikely on both counts.

Far more likely that the collector is wrong.  The collector now in your face probably bought the debt without any clue that you had filed bankruptcy.

Welcome to the world of distressed debt, where companies who can’t collect the money they are owed sell their rights in that debt to debt buyers.

Debt buyers pay pennies on the dollar for the debt, get little more in background on each account than a computer tape, and try to score with a few of the accounts in every batch they buy.

Defending your discharge

If this happens to you, fight back. [Read more…]

1674 N. Shoreline Blvd.
Suite 140
Mountain View, CA 94043
Phone: (650) 694-4700

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