Bankruptcy

Bankruptcy is the legal process by which a debtor obtains a “discharge” of his or her debts. It is a federal process. A discharge is an order of court stating that you no longer owe any money to your creditors. However, there are exceptions, as outlined in the United States Bankruptcy Code.

In order to initiate the bankruptcy, a bankruptcy petition (along with other papers) must be filed in bankruptcy court. Therefore, you file a bankruptcy. The bankruptcy filing can be on an emergency basis.

When you file bankruptcy (Chapter 7, Chapter 11, or Chapter 13), you are immediately given the benefit of the “automatic stay.” The automatic stay is a court order issued “automatically” staying or stopping your creditors from attempting to collect their debts against you.

Each creditor must stop collections immediately. If they file a lawsuit, the lawsuit must be stopped. If they schedule a foreclosure sale, the foreclosure sale is stopped. The same for wage garnishments, bank seizures, car repossessions, and other collection methods.

Under the new bankruptcy law, individuals must obtain a briefing from an “approved” nonprofit credit counseling agency within 180 days of their bankruptcy filing.  The debtor is required to file a certificate from the credit counseling agency, among other newly-required documents. An approved agency is one that has been approved by the US Trustee’s office in a particular federal district where the agency operates. 

The new bankruptcy law  imposes several new requirements on people who file for Chapter 7.  One new requirement is that you must receive credit counseling from an approved credit counselor prior to filing for Chapter 7.  In addition, there are income and expense limitations which may prevent you from filing for  Chapter 7.

In general, your personal property and car will not be taken so long as they are exempt under California law. Therefore, you will have what is called a “no asset” case.  If you are still making payments on the car, you will have to maintain your payments with your finance company. If you own the car outright, the value of your vehicle cannot exceed your applicable exemption amount, which is determined by California law. 

A creditor may not proceed with its lawsuit or take a judgment once you have filed for bankruptcy.  Once your bankruptcy is filed, the Law Offices of Keith F. Carr will notify your creditor for you to make sure that the lawsuit does not proceed or that the creditor does not take  a judgment.

After we have  filed your bankruptcy, the Law Offices of Keith F. Carr will notify the sheriff’s office to stop the garnishment due to bankruptcy and will take necessary steps to protect your paycheck. 

Under bankruptcy law, debt collectors may not call or write to you, call your place of employment, or contact your friends once you have filed for bankruptcy, Chapter 7, 11, and 13.

Yes. Medical bills are general debt and may be discharged in bankruptcy.

The federal Fair Credit Report Act provides that a Chapter 7 Bankruptcy may be reported by a credit reporting agency for a period of 10 years. However, look at your credit now. Judgments against you continue to be reported for a period of seven years.

In order to schedule a consultation, contact us.  The Law Offices of Keith F. Carr has offices in San Francisco, Palo Alto, San Jose, and Sunnyvale California.