The filing of a voluntary or involuntary petition creates an “automatic stay,” which operates to enjoin creditors in most instances from taking further collection efforts against the debtor and the debtor’s property. [11 U.S.C.A. § 362(a)] The stay is “automatic” in that it is self-executing, and as such no court action is required for it to become effective. The automatic stay provisions under the prior Bankruptcy Act withstood the challenge that the stay is a deprivation of a creditor’s rights without due process of law. However, note that the automatic stay is significantly broader in scope under the Bankruptcy Code.
While the automatic stay provision of 11 U.S.C.A. § 362(a) prohibits creditors from proceeding against the debtor or the debtor’s property for payment of prepetition debts, the stay generally does not operate in favor of codebtors, such as a guarantor, endorser or comaker. The codebtor’s recourse in such a case may be to seek an injunction against further collection under 11 U.S.C.A. § 105. Note, however, that co-debtors of a Chapter 13 debtor’s consumer debt are protected under the co-debtor stay provisions of 11 U.S.C.A. § 1301.
The automatic stay, therefore, provides debtors with immediate breathing room from creditors and is of particular significance where, for example, the Internal Revenue Service is considering enforced collection action. The Internal Revenue Service, like any other creditor, cannot collect monies under a wage or bank levy once a bankruptcy petition has been filed. Where an installment payment agreement has been entered into the Service, and the taxpayer subsequently files bankruptcy, the taxpayer/debtor is not under a legal obligation to continue making payments, nor can the Service demand payments under the installment agreement. Likewise, where payment under the installment agreement was set up as either an automatic payroll or checking account deduction, the government is not entitled to continue to collect by those means once the bankruptcy petition is filed.
A Bankruptcy Adversary Proceeding is a lawsuit related to bankruptcy. The person bringing the Adversary Proceeding is known as the plaintiff and the person being sued is known as the defendant.
A bankruptcy case may contain zero, one or more adversary proceedings.
Adversary proceedings are initiated by filing a “complaint” with the Bankruptcy Court in San Diego.
Adversary proceedings may be filed by the Bankruptcy trustee, the debtor, a creditor or by other parties. Examples include: (1) a creditor filing an adversary proceeding to challenge discharge of the debtor; (2) a debtor filing an adversary proceeding against a creditor as a response to a violation of the automatic stay; or (3) the trustee filing an adversary proceeding against a third party related to the transfer of an asset by the Debtor to the defendant prior to the Debtor filing Bankruptcy.
There are six different types of bankruptcy (or chapters). Most people in San Diego file for bankruptcy under Chapters 7, 11, or 13 and use experienced bankruptcy lawyers.
A San Diego Chapter 7 allows a debtor to discharge their non-exempt assets (a home or car are often exempt from bankruptcy). A trustee appointed by the court sells the debtor’s non-exempt assets and pays the proceeds to the creditors. Chapter 7 is available to individuals and businesses. While the Bankruptcy Code will allow the debtor to keep certain “exempt” property, the trustee will sell the debtor’s remaining assets.
Thus, the filing of a bankruptcy petition under Chapter 7 debt relief may result in the loss of property.
Most people in San Diego go to a bankruptcy lawyer to:
STOP foreclosure on your home
STOP wage garnishment
STOP harassing credit card companies
STOP overwhelming medical bills
STOP IRS tax liens
STOP judgement collection
San Diego debt relief lawyers can make advise whether Chapter 7 is right for you!
Partnerships and corporations usually file Chapter 11, which provides for a reorganization of a business. An important benefit of Chapter 11 debt relief is the ability to continue operating a business while a payment plan is implemented and confirmed by the court.
Chapter 13 in San Diego enables individuals with regular income to develop a debt relief plan to repay all or part of their debts. Under this bankruptcy chapter, debtors propose a repayment plan to make installments to creditors over three to five years.
Congress intended Chapter 13 of the Bankruptcy Code to be utilized for San Diego debt relief by individuals with regular income for the purpose of adjusting the debts of all creditors in payment of those debts over an extended period of time. Chapter 13 was designed to protect overextended individual wage earners desiring to repay their debts through the automatic stay and provide financial relief through a fresh start. In essence, a Chapter 13 bankruptcy plan is a contract between the debtor and the debtor’s creditors that enables the debtor to extend and adjust his debts. Upon completion of a Chapter 13 plan by your bankruptcy lawyer, the debtor is entitled to a broad discharge of his or her obligations.
At Thompson | Wedeking, we are bankruptcy lawyers who have helped thousands of people in San Diego get the debt relief they deserve. Call us TODAY at 619.615.0767 to stop harassing creditor phone calls, foreclosure, or wage garnishment..
Don’t Miss Out On The Most Powerful Tool In Consumer Bankruptcy
As a San Diego Chapter 13 Attorney, I can tell you that because of the decline in housing values, we have seen a little known bankruptcy rule gain incredible momentum and power. I submit to you, without hesitation, that this rule is the most powerful tool in consumer bankruptcy right now. This rule is known as “lien stripping.” Lien Stripping is the ability of the bankruptcy court to convert secured debt into unsecured debt. If the debt is unsecured, then it can be eliminated at the time of discharge. That’s right, eliminated at the time of discharge.
There are a couple of conditions on this process, so let’s see how this works. First, let’s assume you own a home (even though this may work with other debts) and that home is worth $300,000.00. The home was probably worth quite a bit more a few years ago. Next, we look at what you owe on the home. Let’s say you owe $310,000 on a first mortgage and $90,000.00 on a second mortgage for a total of $400,000.00 in debt.
In this particular case, our San Diego Chapter 13 lawyers would make a motion with bankruptcy court to strip away the second mortgage. That’s right! Because there is no equity in your home, the second mortgage lacks any security. It is, therefore, unsecured and dischargeable. Before the Chapter 13 filing, you were $100,000 upside-down on your property. After the Chapter 13 bankruptcy you are only $10,000 upside-down. How powerful is that?!
Our Award Winning bankruptcy attorneys have been helping people get rid of their 2nd mortgages since 1976. We recommend that all homeowners who have two mortgages, and are upside-down on their property, give us a call for a free consultation. We can give you all your options and see if a Chapter 13 can help you reduce your mortgage payments and get you close to having positive equity in your property. You really can take advantage of low home prices. Call our office today for a free confidential consultation, download a copy of our FREECalifornia Guide to Bankruptcy or find out how you can become a client right away!