Archive for April, 2016
CREDITOR BANKRUPTCY RELIEF FROM STAY OPTIONSby Chekian Law Office
You or your firm are owed money from a debtor who filed bankruptcy. The debt could be a personal loan, a corporate debt, or an institutional debt such as a mortgage or vehicle loan. Your delinquent account was downgraded from a seriously delinquent debt, a pending lawsuit or a judgment, to bankrupt status. You just received a notice of pending bankruptcy. In most cases (there are exceptions), you have to stop all debt collection actions pursuant to the automatic stay of bankruptcy section 11 U.S.C. Section 362(a).
One of the most powerful and effective tools is the bankruptcy relief from stay action. This is a relatively simple motion where creditors can obtain permission of the court to (despite the bankruptcy stay): a) proceed with foreclosure, b) repossession of secured collateral, and c) continuation of lawsuit litigation. Each of these categories are discussed below.
Relief From Stay To Proceed With Foreclosure: If you or your company is a real estate secured lender, the bankrupt may have filed bankruptcy while your company was in the process of a non judicial foreclosure on the debtor’s real estate. Bankruptcy filings on the eve of a foreclosure sale are common. You need a consultation with an experienced bankruptcy lawyer to determine if a relief from stay action is recommended. The main factors to be evaluated include the amount of equity in the property (including your lien and any other liens), the amount of delinquency, whether any prior bankruptcies have been filed, and the chapter of bankruptcy filed.
Relief From Stay To Proceed With Repossession: If you or your company is a secured lender on personal property such as vehicles or equipment owned by the debtor, you want to consider whether a relief from stay action would further your goals to repossess the property and liquidate it to reduce or eliminate the loss owed to you or your company on the debtor’s defaulted secured loan. On the other hand, if the debtor is current on the obligation and has filed bankruptcy for other reasons, no relief from stay action may be needed. Assuming a delinquency and little or no equity in the collateral, a relief from stay action may the best way to maximize you or your company’s recovery of cash on a failing loan.
Relief From Stay To Continue With Lawsuit Litigation: It is extremely common that lawsuit plaintiffs must react to a bankruptcy filing, whether it be on a newly filed lawsuit or on the eve of trial. Shortly after the bankruptcy notice is received, a business judgment should be made about whether it makes economic sense to pursue the debtor in relief from stay actions to preserve the possibility of recovery on the debt. Usually, this will require 2 things. An adversary proceeding or bankruptcy lawsuit to be filed within 90 days of the bankruptcy filing, and a relief from stay action to proceed to trial in non bankruptcy court against the debtor. Typically, relief from stay will be acquired to prove up a fraud related cause of action which can be carried into bankruptcy court to sustain an allegation under section 523 of the Bankruptcy Code, a judgment which will survive the bankruptcy as something the debtor must pay back.
Creditor bankruptcy issues are often complex. What to do when faced with a bankruptcy filing depends on who the debtor is, the debtor’s history, the chapter of bankruptcy filed, prior bankruptcy filings, and many other factors. Michael Chekian is an experienced, California Bankruptcy Certified Specialist who runs a full service law firm ready to serve your needs. Contact Mike or his staff today for a friendly, confidential, free evaluation of your specific issues. Voice: 310 390 5529; email email@example.com ; facsimile 310 451 0739.
What To Expect at My Chapter 7 Bankruptcy Meeting of Creditorsby Chekian Law Office
Okay, so you filed Chapter 7 bankruptcy. You may or may not have a lawyer or law firm representing you. This is usually the first appearance you or your lawyer is required to attend. First of all, this is not a court appearance. There is no judge. Do not feel intimidated. In most cases (unless you are unavoidably out of town, imprisoned or medically unable to attend), you do need to attend personally. You will need to provide proof of your identity, usually government issued picture i.d. such as driver’s license or passport, and proof of your social security number or tax i.d. number, such as a social security card, or recent W-2 or 1099 tax form.
Although the hearing is titled “Meeting of Creditors”, in most cases, only the bankruptcy trustee, you and your lawyer attends this hearing. However, creditors are allowed to attend this hearing and ask limited questions. The questions are limited to asking about your assets and financial situation as disclosed on the bankruptcy petition and schedules. If a more detailed examination is required, creditors have the option of requested a “Rule 2004” examination from the judge assigned to the case, and if granted, an examination is scheduled which proceeds much like a state court deposition, where creditors can ask detailed questions to determine if they will proceed to object to the discharge of debts sought by the debtor in the bankruptcy. This is very rare.
The typical examination of you in an individual Chapter 7 case by the bankruptcy trustee at the Meeting of Creditors is short, about 3 minutes, and limited to about 10-15 questions. Expect basic questions such as: what is your name, did you read your bankruptcy petition and schedules before you signed them, where do you live, are you married, did you list all of your assets and all debts, did you ever file bankruptcy before, did you transfer anything of value out of your name in the last 4 years, did you pay back any debts to any family or friends in the last 4 years.
At the Meeting of Creditors, if your situation is more sophisticated, you may expect further questions. If you have a dba or a closely held business, the trustee will probably ask when you formed the company, what it does, ask if there is existing inventory, receivables and assets. The hearing may be continued to provide additional documents such as business bank account statements and tax returns. If you or your spouse own real estate, the trustee may ask when you bought the real estate, how much you paid for it, and the basis for your valuation of it as listed on your bankruptcy schedules.
Remember, the trustee is not the judge in your case, s/he is only the one appointed to potentially administer (sell and recover) money to pay him/herself, his lawyers and professionals, and pay money to your creditors. In 98% of the cases, the trustee recovers nothing, you as the debtor keep all your assets, and you wipe out all debts as allowable under the Bankruptcy Code. It helps to have a good attorney who properly prepares all your bankruptcy paperwork and protects/exempts all your assets. In the event that the hearing is continued for a further date, if you timely produce the additional information and documents, you will not be required to appear at the continued hearing.
That is it! So don’t feel intimidated, make sure you arrive promptly and are not rushed, bring a copy of the full bankruptcy filing and review it the night before, and bring extra copies of your latest filed federal and state income tax returns just in case the trustee lost the copies which you or your lawyer previously sent to the trustee. Dress however you want to, but be respectful and do common sense things like take off your hat and cover up any tattoos while you are being examined. Do not do anything to upset the trustee or any creditors who may attend. Just get through the hearing and keep your eyes on the prize of your bankruptcy discharge-this is why you filed your bankruptcy case-to get relief from debts which you could not afford to pay.
Many people in California have debt problems. Michael Chekian is a California State Bar Certified Bankruptcy Specialist. Mike runs a full service bankruptcy law firm based in Los Angeles. He and his staff provide friendly, non-judgmental, confidential free consultations. Voice 310 390 5529; email firstname.lastname@example.org.