by Herbert Wiggins | Dec 3, 2021 | bankruptcy, creditors, debt relief, mortage, Real Estate
As of January 2021, California’s Homestead Exemption increases from a minimum of $300,000, to a maximum of $600,000. This means that many more homeowners in liquidation, Chapter 7 bankruptcy proceedings can keep their homes.
The California Civil Code will be amended as follows:
Sec. 704.730. (a) The amount of the homestead exemption is the greater of the following:
(1) The countywide median sale price for a single-family home in the calendar year prior to the calendar year in which the judgment debtor claims the exemption, not to exceed six hundred thousand dollars ($600,000).
(2) Three hundred thousand dollars ($300,000).
(b) The amounts specified in this section shall adjust annually for inflation, beginning on January 1, 2022, based on the change in the annual California Consumer Price Index for All Urban Consumers for the prior fiscal year, published by the Department of Industrial Relations.
The statute does not say whether this will apply in bankruptcy as the “automatic homestead,” or whether the debtor must file a Declaration of Homestead. Based thereon, the debtor should strongly consider filing the Declaration with the County Recorder.
by Herbert Wiggins | Nov 26, 2021 | bankruptcy, creditors, debt relief
The primary purpose of the bankruptcy stay [11 USC Sec. 362] is to protect the debtor. (In re Fuel Oil Supply and Terminaling, Inc., 30 BR 360, 362 (Bankr.N.D.Tex.1983), cited in In re Globe Investment & Loan Co., Inc., 867 F.2d 556 (1989)). By stopping all collection actions against the debtor, the bankruptcy stay acts 1) as an injunction to preserve the estate, and 2) to prevent the creditors from trying to go around the bankruptcy process to collect.
Once the debtor receive the discharge (11 USC Sec. 727), creditors are no longer able to collect the discharged debts. A creditor who, despite the discharge, seeks to collect a pre-bankruptcy debt, runs the risk of a contempt citation and punishment by the federal court.
And so it was held recently by the US Supreme Court which held that a business dispute with the debtor, that had begun prior to the debtor’s filing for bankruptcy, was discharged by the bankruptcy, and no further collection activity would be allowed.
Writing for a unanimous US Supreme Court, Associate Justice Breyer opined that the business creditors, who had initiated the lawsuit against the debtor (Mr. Taggart) had no reasonable basis to believe that the bankruptcy stay, and the subsequent discharge would not act to bar the continued litigation against the debtor. The debt was considered wiped away, and the creditors actions, seen objectively, were not only impermissible, but gave rise to contempt sanctions:
“Under the fair ground of doubt standard, civil contempt therefore may be appropriate when the creditor violates a discharge order based on an objectively unreasonable understanding of the discharge order or the statutes that govern its scope.”
Taggart v. Lorenzen, ___ U.S. ___, 139 S.Ct. 1795, 1801, 204 L.Ed.2d 129 (2019).
The facts showed that the creditors had a working knowledge of the effects of bankruptcy law, and objectively should have realized that the pre-bankruptcy debt was no longer collectible. Therefore, the Supreme Court remanded the matter back to the 9th Circuit, to impose appropriate sanctions:
“We conclude that the Court of Appeals erred in applying a subjective standard for civil contempt. Based on the traditional principles that govern civil contempt, the proper standard is an objective one. A court may hold a creditor in civil contempt for violating a discharge order where there is not a “fair ground of doubt” as to whether the creditor’s conduct might be lawful under the discharge order.”
The Takeaway: Creditors Who Know that a Debtor has Filed for Bankruptcy Should Take No Action Against the Discharged Debtor, without First Having a Very Detailed, Careful Conversation with an Attorney, Lest Those Creditors End Up Held in Contempt!!
by Herbert Wiggins | Nov 12, 2021 | automatic stay, bankruptcy, creditors, debt relief
BANKRUPTCY LAW (Importance of Automatic Stay); When a debtor files for bankruptcy, 11 USC Section 362(a)(1) automatically stays any other judicial proceeding involving the debtor. The automatic stay “plays a vital role in bankruptcy. The automatic stay aids the debtor in getting a financial fresh start. The automatic stay is “one of the fundamental debtor protections provided by the bankruptcy laws.” The stay promotes stability of the bankruptcy estate for both the debtor and creditors. In re Schwartz, 954 F.2d 569, 571 (9th Cir.1992), cited in FAR OUT PRODUCTIONS, INC. v. OSKAR, 247 F.3d 986, 994-995 (2001)
by Herbert Wiggins | Nov 4, 2021 | bankruptcy, creditors, debt relief
Telecom provider violated automatic stat of 11 USC § 362(a)(6) by calling the debtors after they filed their bankruptcy petition and mailing a copy to the provider; and then, three months after the petition date writing to the debtors demanding immediate payment. This conduct justified actual damages, including emotional distress, punitive damages, and contempt sanctions.
IN RE FREELAND, Bankruptcy Case No. 19-32309-pcm7, US Bankruptcy Court, District of Oregon, filed 8/12/2020.
by Herbert Wiggins | Oct 28, 2021 | bankruptcy, creditors, debt relief, Fair Lending, mortage, Real Estate, TRUTH IN LENDING
STANDING (Mortgage Liability): Bankruptcy Court erred in ruling that Debtor had no standing to challenge Nationstar in the latter’s claim under her Deed of Trust. She showed constitutional & prudential standing through demonstrating (1) injury in fact (2) causation and (3) redressability as to her interest in the note, for the purpose of her adversary action against Nationstar. (In re Baroni [Ch.11], CA 9 BAP, filed 11/10/2015 [argued and submitted at Malibu, CA])
by Herbert Wiggins | Aug 20, 2021 | automatic stay, bankruptcy, creditors, debt relief
BANKRUPTCY LAW (Expansiveness of Automatic Stay): Automatic stay of 11 USC Sec. 362 applies to bar actions against debtor and against the bankruptcy estate. This automatic stay protects the debtor, as well as the assets of the estate, and creditors. Actions that are barred include religious actions, such as a Jewish tribunal set up as a cross-complaint against the debtor, filed in an adversary action. The synagogue could not pursue its religious action against the debtor as long as the stay was in place.
In re Congregation of Birchos Yosef, 535 BR 629 (2015); Bankruptcy Court, Southern District of New York
Photo Credit: Beth Din of Benghazi, 1930, Unknown author, Wikipedia
