Category Archive for ‘Bankruptcy’
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 firstname.lastname@example.org ; 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 email@example.com.
Life After Bankruptcyby Chekian Law Office
Congratulations. You have successfully completed your Chapter 7, 11 or Chapter 13 case. You have received a bankruptcy discharge. You should be free of some or all of the debt which burdened you prior to bankruptcy. Now what? There are several steps you should take to maximize the benefit of your successful bankruptcy.
First of all, check your credit score and your credit. You should wait at least 60 days from bankruptcy completion to do this. For individuals, this means obtaining your credit reports from Experian, Equifax and Transunion. If you go to www.annualcreditreport.com, you will find links to these 3 bureaus. If you are an incorporated entity such as an LLC or corporation, you should order a credit report from Dun & Bradstreet at this link: https://creditreports.dnb.com/m/home?serv=UP-HP-07082014-new28
Closely look at the report and make sure all debts which should be discharged in the bankruptcy are listed as such. If not, follow the instructions to dispute the line item, and include references to the bankruptcy, including case number, court location, filing date, chapter and discharge date. Your credit score may be significantly lower now than prior to filing, especially if you had a high credit score at that point. There may be little to no decrease in credit score for those persons and companies with very low prebankruptcy credit scores.
The point is to begin increasing your credit score, so that for future major purchases like homes and vehicles, you can obtain credit with preferred interest rates and down payments, available to applicants with better credit scores. For corporations and LLC’s, good credit can lead to lower interest rates and better terms on business loans, leases, factoring, and the like. It is also very important to build corporate credit to avoid having to give personal guarantees for company obligations.
Rebuilding credit scores also requires you to pay your new bills on time. In this regard, it is important to keep paying current on secured obligations which survived the bankruptcy, such as mortgages, car loans and leases. You also need to attempt to obtain new credit cards and lines of credit, not because you are going to drive up your debt again, but because responsible use of credit drives up your credit score. The goal is to only use a small fraction of the total credit line, then pay it down to zero, and repeat the process to maximize the benefit. For those who cannot qualify for unsecured credit cards, secured credit cards can be obtained, and after a period of responsible use, unsecured credit may be obtained. The Bankrate website is a good resource to shop for credit cards and other credit products: www.bankrate.com .
Maintaining steady income is also an important step in obtaining good postbankruptcy credit terms, as is timely filing of income tax returns. Keep good records of your income, so that when you are ready to apply for that home mortgage or equipment loan, you have all documents available. Loan agents love the organized applicant, and prefer to see regular income and no missed payments post bankruptcy.
Far from being a scarlet letter, a bankruptcy discharge may actually help you to get qualified for credit. This is because most lenders look at your expected monthly payments in determining whether you have sufficient income to service the debt. For those with, say $60,000 of credit card debt, the lender may estimate $1200 per month in minimum payments, which could disqualify you for the loan or lease. But postbankruptcy discharge, you would have no such line item in your expected expenses.
In this way, your postbankruptcy life can be an exciting time, with much less stress and greatly increased opportunity to reach your goals by making credit work for you, instead of against you.
Michael Chekian is a certified specialist in bankruptcy law through the State Bar of California. Based in Los Angeles, he represents debtors throughout the state. (310) 390-5529; firstname.lastname@example.org