Contra Costa Bankruptcy Attorney | Contra Costa Bankruptcy Lawyer

What is bankruptcy?

Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court and obtain a "fresh start" with regard to their finances.

Who can file a Chapter 7 bankruptcy petition?

In California, almost any individual, partnership, or corporation may file a Chapter 7 bankruptcy petition if he or she resides, has a domicile, a place of business, or property in the United States. However, if you were granted or denied a Chapter 7 discharge in a prior case within the last 8 years, you might not be entitled to receive a discharge in a subsequently filed Chapter 7 bankruptcy.

What happens if I file a Chapter 7 bankruptcy?

In California, filing a petition with the bankruptcy court commences a Chapter 7 bankruptcy proceeding. The person filing a Chapter 7 is referred to as the "debtor." The debtor is required to disclose to the court all of his or her property and debts and turn over all nonexempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. The debtor then receives a discharge of all dischargeable debts.

What is the general process in consumer bankruptcy cases?

In a Chapter 7 bankruptcy case, we will file several forms with the bankruptcy court disclosing your personal and real property, your income and expenses, debts and property transactions. The Bankruptcy Court will appoint a person called a "Trustee", who is assigned to oversee your case. About 30 days after your case is filed, we will accompany you to the "Meeting of Creditors" where the trustee reviews your case, verifies your identity, and may have a few basic questions. Despite the name, creditors rarely attend. The meeting lasts only a few minutes. A couple of months later, you should receive a notice from the court that "all debts that qualified for discharge were discharged."

What information is required at the time of my initial appointment?

A List of Creditors setting forth a pretty good idea of who your creditors are and how much you owe. If bankruptcy is the right option for you, we will help you get a copy of your credit report.
A copy of your most recent pay stub showing net and gross income and year-to-date earnings. Additionally the attorney will ask you for your gross earnings for the prior two (2) years. If you are self employed, then a month-to-month Profit and Loss statement will be required for the past six (6) months.
The payoff amount on any automobiles that you are financing. Please provide information as to mileage on the vehicles.
Copies of all judgments and lawsuits and liens pending against you. If your wages are being garnished, a copy of the wage garnishment order and your employer's fax number will expedite our office stopping this action.
Any and all information you have regarding student loans, tax obligations or co-signed obligations, if applicable.
A payoff amount on any real property that you are financing.
A copy of any Trust instrument in which you have a beneficiary interest.
If you are married and filing a separate case, a copy of your spouse's paycheck stub showing net and gross income.

Will bankruptcy stop creditor calls?

When we help you file for bankruptcy, we ensure that an "automatic stay" goes into effect and is enforced. The automatic stay prohibits virtually all creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections. Most importantly, once you have retained an attorney, the creditor will be referred to your bankruptcy attorney, and then, by law, the creditors will cease their harassing calls.

How long after filing will the creditors stop calling?

Once a creditor becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a few days. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number.

In urgent cases, we will contact the creditor immediately upon filing the bankruptcy petition, especially if a lawsuit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy, it may be liable for court sanctions and attorney's fees for this conduct.

Who notifies the creditors?

After the bankruptcy petition is filed, the court mails a notice to all the creditors listed in the schedules. This usually takes a few days.

Who deals with my creditors during the bankruptcy?

We will deal with your creditors once you officially retain our office for representation.

Do I have to keep paying my bills after I file bankruptcy?

In addition to your recurring expenses such as utility bills (you don't want your power cut off!) you must continue to pay certain creditors. You must continue to pay your secured creditors even after you have filed bankruptcy. Secured creditors are usually the lender(s) on your house and / or car. If you don't make your regular house payment, the bank or mortgage company will foreclose. If you don't make your car payment, the lender will repossess the car. Foreclosure or repossession during a bankruptcy does require pre-approval of the bankruptcy court, but such pre-approval is routinely granted.

Unsecured creditors, usually credit cards, you need not continue to pay, at least temporarily. Some credit card debt(s) may not ultimately be dischargeable at all. For instance, Sears, unlike most credit card issuers, has a provision on its charge slip which gives it a secured interest in whatever you bought with their card. In a Chapter 7, you will pay none of the unsecured creditors. In a Chapter 13, unsecured creditors will be paid by the bankruptcy trustee through the plan. You will not pay the unsecured creditors directly. You must, however, make your Chapter 13 plan payments in full and on time. Failure to do so may result in the trustee requesting your case be dismissed. The first plan payment is generally due thirty days after the filing of the Chapter 13 Plan and Schedules.

How much does it cost to file bankruptcy?

That depends on which Chapter you file, and also on how complicated your case is.

Your attorney will charge a fee for his or her services in the bankruptcy proceeding. The range of fees charged is almost as varied as the complexity of cases. Fees can be as high as $2000.00 in a Chapter 13 without requiring special orders from the court. Generally, a Chapter 7 proceeding will be much simpler and therefore usually much less expensive than a Chapter 13. However, even a Chapter 7 proceeding can be complex if there are very many creditors, liens to be expunged or certain other complications. After a brief consultation with an attorney, he or she should be able to give you an approximate amount for representation. Adversarial proceedings can complicate your bankruptcy significantly and often are not included in the base fee charged an attorney.

How are attorney's fees paid?

In a Chapter 7, generally your attorney's fees must be paid up front before the filing. This makes sense because in a Chapter 7, a promise made before filing the case to pay attorney's fees after filing makes the promise dischargeable, too. In a Chapter 13, your attorney's fees can be paid either before the filing or as part of the repayment plan. For Chapter 13 cases, the installment payment plan is the preferred choice of most clients since it requires less up-front cash.

Will my employer or landlord find out about my bankruptcy?

Bankruptcy petitions are public records. However, under normal circumstances, unless your employer or landlord is a creditor, it will not know you filed a bankruptcy petition. However, if your employer or landlord is a creditor, it must be listed as a creditor on the schedules and will receive notice of the bankruptcy proceeding.

Can my employer fire me for filing bankruptcy?

No. The law prohibits government units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.

My spouse and I are thinking about a divorce but need to file bankruptcy. How are divorce and bankruptcy related?

In California, all debts incurred during marriage are equally the responsibility of both the husband and the wife, it is common that in the divorce proceeding they may reach an agreement that spells out who will pay which debts and in what amounts. Trouble brews when after they have finalized the Judgment of Dissolution (Divorce), one spouse files bankruptcy and the creditor(s) can no longer proceed against the spouse who filed bankruptcy. What's a creditor to do? Go after the other (non-filing) spouse for all the debt. The agreement in the divorce case does not "bind" the creditors: it only affects the relationship between the two spouses. These situations are messy, and the non-filing spouse may need legal help in forcing the other spouse to make good on the agreement entered as a Judgment in Family Court.

My spouse and I are separated and may be getting divorced (or there is already a divorce proceeding pending but not yet final.) We have a lot of debt together. What should I/we do?

If your marriage has not legally ended, you and your spouse may file bankruptcy jointly. A joint filing is usually advisable to maximize the homestead exemption, and/or just to save money on attorney and filing fees. Once the "marital status" has terminated though, you and your spouse may not file jointly, but instead must file individually. Timing, therefore, is everything. Of course, a joint filing assumes you and your spouse can put aside the differences resulting in the divorce in the interest of financial self preservation. You might be surprised how often divorcing spouses accomplish this degree of cooperation. The attorneys in the divorce case are, or at least should be, well aware of the consequences of bankruptcy in divorce.

Does the spouse of a married person also have to file bankruptcy?

No. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable, it might be advisable to have only one spouse file.

Can I keep any credit cards?

Under some circumstances you may be able to keep some credit cards if the creditor agrees. There are many factors that must be considered, including the credit card balance at the time of the bankruptcy, what terms the credit card company is willing to accept and your ability to pay the present and future credit card debt.

Will I have to go to court?

About 30 to 40 days after filing the bankruptcy petition, you will have to attend a hearing presided over by a bankruptcy trustee. This hearing is called the First Meeting of Creditors. The trustee is not a judge, but an individual appointed by the United States Trustee to oversee bankruptcy cases.

At the First Meeting of Creditors, the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts and other matters. Creditors will also be permitted to ask you questions; although in the majority of cases creditors do not attend the meeting. Keep in mind that in most creditors never attend the hearing.

If we are retained to represent you, we will appear at the First Meeting of Creditors with you. After the initial meeting, you normally do not need to return to court. However, if a creditor or the trustee files a motion or an adversary action, you may have to appear in court.

What should I do to prepare for filing bankruptcy?

First, you should consult with a bankruptcy attorney. An attorney can help you plan for the bankruptcy, decide when to file a bankruptcy petition, or even avoid filing for bankruptcy. A few specific items are worth mentioning:

1. If you intend to file bankruptcy, you should stop using your credit cards. If you borrow money with the specific intent of discharging the debt in bankruptcy instead of paying it back, the debt may not be dischargeable.

2. Don't transfer your assets to friends, family and business associates to protect the assets from your creditors. The transfer may be considered a fraudulent conveyance. If it is, you may lose both the property and your right to a bankruptcy discharge.

3. Don't destroy any business or financial records. You can lose your right to a bankruptcy discharge as a result.

4. Carefully choose the creditors you pay. Some creditors, such as landlords, secured creditors, and some utilities should be paid under most circumstances. If you pay a credit card debt that eventually will be discharged, you may be throwing money away. We can advise you on what debts should and should not be paid while you prepare to file a bankruptcy petition.

Do I have to disclose all my assets?

Yes. If you knowingly and fraudulently conceal an asset from the court you have committed a felony and can be fined up to $500,000 imprisoned for up to five years, or both. In addition, the court can deny you your discharge, or dismiss or convert your bankruptcy proceeding.

Do I have to attend Credit Counseling to file for Chapter 7 Bankruptcy protection?

Yes. Under new bankruptcy legislation enacted in October, 2005, before you can file a petition under the bankruptcy code under either Chapter 7 or Chapter 13, you must seek Credit Counseling first. The process takes about a 30 minute phone interview.

Do I have to attend a Financial Management Course or receive a Discharge under Chapter 7 Bankruptcy or Chapter 13 Bankruptcy?

Yes. Under new bankruptcy legislation enacted in October, 2005, before the court will sign off on your discharge, you must attend a course on financial management.

Questions Concerning Treatment of Debts in Bankruptcy

Does a bankruptcy relieve me of all my debts?

The policy of bankruptcy law is that the honest debtor who is in debt beyond its ability to repay its debts should receive a fresh start. However, some debts must still be paid.

Generally speaking, the following debts will not be discharged: taxes; spousal and child support; debts arising out of willful misconduct and/or malicious misconduct by the debtor; liability for injury or death from driving while intoxicated; nondischargeable debts from a prior bankruptcy; student loans; criminal fines and penalties and forfeitures.

Secured debts generally must be paid if the debtor intends to retain the collateral securing the debt. If they are not paid, the creditor will usually take the necessary legal steps to recover the property.

Will bankruptcy stop a wage garnishment?

Yes.

Will bankruptcy stop a foreclosure?

Temporarily, yes. However, the lender is entitled to seek relief from the automatic stay to allow it to continue foreclosure proceedings. Usually, to keep a home that is in foreclosure, the debtor will have to reach an agreement with the lender and resume making payments. Click here to learn more about foreclosures.

Will bankruptcy stop an eviction?

It may delay it, but the owner is entitled to possession of the property and will be able to resume eviction proceedings with court approval or after the discharge.

Filing a Chapter 7 solely to avoid an eviction might be considered an abuse of the bankruptcy law. If the Bankruptcy Court finds that this is true, then the court can immediately dismiss the bankruptcy and impose other legal and monetary sanctions on you.

Will bankruptcy stop a judgment?

Most judgments can be disposed of in a Chapter 7. Some judgments cannot be, but these are relatively limited. A judgment for an intentional tort, like assault, or for intentional or fraudulent misconduct, say, misappropriation of funds belonging to someone else, probably won't be affected by a bankruptcy. On the other hand, judgments for ordinary negligence, such as a personal injury judgment resulting from an auto accident, for example, can still be discharged in a Chapter 7 or treated as a nonpriority unsecured debt in a Chapter 13. There is often a hidden problem with judgments, though, if a lien has been filed as a result of the judgment. You must make your attorney aware of any lien or judgment so that the attorney can solve the lien problem at the same time as he or she deals with the judgment. They are two separate issues.

Will a bankruptcy remove a lien?

Certain liens may be removed, but this requires a motion to be filed with the court. The procedures are complex and are best done with an attorney.

Will bankruptcy discharge my obligation to pay community debts after dissolution of marriage?

With a few exceptions, you may be discharged from all dischargeable community debts. In some circumstances, you may still be liable to your spouse if he or she pays the debt, or files a complaint against you in bankruptcy court.

Can I discharge spousal/child support dischargeable?

Spousal support and child support payments generally are almost never dischargeable.

Can I discharge student loans?

Generally, student loans are not discharged in bankruptcy. Although there are possible exceptions to this general rule:

1. The student loan may be discharged if it is neither "insured or guaranteed by a governmental unit" nor "made under any program funded in whole or in part by a governmental unit or nonprofit institution."

2. The student loan may be discharged if paying the loan will "impose an undue hardship on the debtor and the debtor's dependents."

The facts of the particular case will determine dischargeability. If a student loan falls into one of the three exceptions, discharge of the loan is not automatic. The debtor should file an adversary proceeding in the bankruptcy court to obtain a court order declaring the debt discharged.

If I co-signed for a debt, does bankruptcy affect the obligation?

If the debt is a dischargeable debt then you will not have to pay it. Your co-signer will become primarily responsible for the debt.

What if I do not list a creditor on the bankruptcy papers?

You are required to list all creditors. If you intentionally omit a creditor from your schedules, it is perjury and you may lose your bankruptcy discharge. However, if a creditor is not known to exist at the time the schedules are filed, you may amend your schedules at any time the case is open to add an additional creditor.

Questions Concerning Assets and Exemptions

What is an exemption?

Certain property is protected from creditors in bankruptcy. This property is known as exempt property.

What property is exempt?

Exactly what property is protected depends on the exemption scheme chosen. California has two schedules of exempt property. Determining what property is exempt requires a complete understanding of the laws governing residency and the California exemption laws.

What happens to my personal property, real property and other assets?

All of the property you own at the time of the filing bankruptcy, and your right to receive property in the future, become the property of the bankruptcy estate. This means that the bankruptcy trustee may take control of this property and liquidate it to satisfy your creditors.

Certain property is exempt and you will be able to keep that property. California has two schedules of exempt property. The set of exemptions you should use depends on the nature and value of your property. Often, all of your assets can be protected.

Can I keep my home and automobile?

In many cases, you can retain your home and automobile in a Chapter 7 bankruptcy proceeding. You will keep your home or automobile in a Chapter 7 if:

1. you are current in making payments on a loan secured by the home or automobile; and

2. the home or automobile does not have equity (a liquidation value in excess of the amount owed to creditors with liens against the property) in excess of what you are allowed to exempt.

In the event you want to keep your home or automobile, you must continue to make payments after your petition is filed.

Are pension plans and 401(k) plans exempt?

The United States Supreme Court has held that pension plans, 401(k) plans, and other "ERISA-qualified plans" are generally "excluded" from the bankruptcy estate.

Are IRA accounts exempt?

Unlike 401(k) plans, IRA accounts are not ERISA-qualified plans and are only exempt to the extent necessary for the support of the debtor and their dependents.

Life After Bankruptcy

Will the fact that I filed bankruptcy appear on credit reports?

The bankruptcy will be listed in credit reports for a period of up to 10 years.

After bankruptcy, can I obtain new credit?

Yes. The decision of whether to extend you credit belongs to each particular lender. However, the fact that you filed bankruptcy, if properly explained, can be less damaging than a history of unpaid accounts.

How can I re-establish credit after bankruptcy?

You may be able to obtain a secured credit card, where the credit limit is based upon the amount of security given, or obtain credit using a co-signer not long after your case is discharged.

How long does it take to rebuild credit?

Most times, it will take a few years to substantially rebuild your credit. Most people will qualify for a mortgage a few years after filing for bankruptcy.