Tag Archives: Automatic Stay

Bankruptcy and Disability Income

Bankruptcy and Disability IncomeBankruptcy and Disability Income. Is Disability Income considered income or property of the estate? Here’s a case where the court addressed bankruptcy and disability income.

In 1995, the debtor was diagnosed as suffering from depression. When he filed his Chapter 7 petition in 2000, he was receiving approximately $11,400.00 per month from a former employer as disability insurance, while he continued to work for a subsequent employer. Four days post-petition, the debtor ceased employment. Over a year later he submitted a disability claim to his second employer, seeking benefits retroactive to 1995 (the date the depression disability began). The claim was denied as to the time prior to termination of employment, but granted going forward, from the date employment ceased. This left the Debtor with monthly payments from disability insurance of approximately $21,700.00. The Trustee sought turnover of the disability payments as assets of the bankruptcy estate. In re Stinnett, 465 F.3d 309 (7th Cir. 2006).

Affirming the Bankruptcy and District Courts, the Circuit Court initially found that an insurance contract in which the debtor has an interest pre-petition, generally consituties property of the estate. Further, payments from such insurance contract in which the debtor has an interest pre-petition, generally constitutes property of the estate. Further, payments from such insurance policies, to the extent the debtor has a right to receive and keep such payments, are proceeds of estate property, which are also property of the estate. The court then addressed the debtor’s argument that this disability payment represented post-petition personal services income, which is exempt from becoming estate property under 541(a)(6). The debtor asserted that his entitledment to the payments was predicted on his inability to obtain personal services income, making them a “substitute” for such earnings, and their equivalent. Rejecting this argument, the Court cited In re Prince, 85F.3d 314 (7th Cir. 1996), holding that the “post-commencement earnings exception should be interpreted ‘extremely narrowly’ and ‘excepts only earings from services actually performed by an individual debtor.”

Therefore, “earnings obtained solely by virtue of the inability to perform services cannot be considered the legal equivalent of ‘earnings from services performed.”

For more information about Bankruptcy and Disability Income  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

 

Bankruptcy Exemption – Bank Account

Bankruptcy Exemption - Bank AccountBankruptcy Exemption – Bank Account What amount should be used in your bankruptcy schedules when you list the account on your schedule?  The amount should be the exact amount in the account on the day you file your petition.  What happens if you have outstanding checks that have not cleared your account?  You still must disclose the total amount in the account. 

Here’s the court case regarding Bankruptcy Exemption – Bank Account: The Debtors scheduled their bank account balance at $513. The actual bank account balance on the petition date was $5,862.38. The difference was due to checks written by the debtor before they filed their petition that had not cleared before the petition was filed. The trustee demanded the Debtors turnover of the account balance on the petition date of $5,862.38. Debtors opposed the motion arguing that because the funds were no longer in the account the trustee could not obtain turnover of the petition-date balance, citing In re Pyatt, 486 F.3d 423 (8th Cir. 2007).

The bankruptcy court here disagreed.  The Court sited In re Brubaker, 426 B.R. 902 (Bankr. M.D. Fla. 2010). The Court took notice that were two schools of thought regarding the bankruptcy exemption – bank accounts.

(1) the burden is placed on the debtor to recover the money and

(2) the trustee should be responsible and have to pursue the transferees (the people the checks were written to).

However, both schools had agreed that the funds were property of the estate and that neither outcome would be good for debtors. The court held that the funds remained in the account until the checks cleared and were therefore property of the bankruptcy estate subject to the control of the debtors until they had cleared. The checks that had been written were negotiable instruments that constituted an unconditional promise to pay. Although debtors may not have had technical custody of those funds as to which they had written checks to their creditors, they did have control over the funds on the date they filed their petition.

Therefore, the debtors were ordered to turnover the funds to the trustee with no reduction for checks which the debtors had written pre-petition, but which had not cleared their account as of the petition date.

For more information about Bankruptcy Exemption – bank account, contact the Remboldt Law Firm at 404-348-4081. Free consultations can be scheduled by calling 404-348-4081.

Foreclosure Bankruptcy Laws

Foreclosure Bankruptcy LawsForeclosure Bankruptcy Laws – Foreclosures are initially stayed by a bankruptcy. But, the stay won’t apply if you filed another bankruptcy case within the previous two years and the court, in that proceeding, lifted the stay and allowed the lender to proceed with the foreclosure. Sadly, the law does not allow you to prevent a foreclosure by filing serial bankruptcies.

Even if this is your first bankruptcy, filing doesn’t stop time periods associated with the state’s foreclosure procedures from “running”. For example, once a homeowner receives advance notice of foreclosure, the home may not be sold until the notice period has ended. Filing bankruptcy won’t stop the notice period from elapsing. But the sale itself can’t happen while you are in bankruptcy unless the foreclosing party gets permission form the bankruptcy judge by filing a Motion to Lift Stay.

Even in circumstances where the stay would otherwise apply, you can lose its protection through your own actions. The stay may not protect you from collection efforts if 1) you had a bankruptcy case pending within the year before you file your current case, and the court refuses your request to allow the stay to kick in, or you don’t meet the deadlines set out in the bankruptcy code for dealing with property that serves as collateral for a secured debt.

If you are facing the threat of the foreclosure of your home you need to act quickly if you would like to use the Foreclosure Bankruptcy Laws to help you protect your home. An attorney can help you decide if foreclosure bankruptcy laws can help by discussing all your options.

For more information about the Foreclosure Bankruptcy Laws in GA – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

 

Automatic Stay Violations

Automatic Stay ViolationsAutomatic Stay Violations – When you file for bankruptcy, the automatic stay goes into effect. The stay prohibits creditors and most kinds of debts you owe them from continuing to attempt to collect the debts, unless the law or the bankruptcy court says they can.  It’s “automatic” because you don’t have to ask the court for the stay, and the court doesn’t have to take any special action to make it effective; once you file a bankruptcy, the stay is in place automatically.

Sometimes, the creditor can file an action in court to have the stay lifted (this is called a Motion to Lift Stay). However, there are times when the automatic stay does not apply and the creditor can simply begin collection proceedings without seeking advance permission from the court.  If you have questions about if a debt will be subject to the bankruptcy automatic stay, you really need to contact a knowledgeable bankruptcy attorney.

Thankfully, the most common types of creditor collection actions are still stopped by the stay – harassing calls by debt collectors, threatening letters by attorneys and lawsuits to collect payment for credit card and health care bills. Following are some of the debts which collection “may” be stopped by the automatic stay.

1. Credit Card Debts, Medical Debts, and Attorney Fees
2. Debts Associated with Criminal Proceedings
3. IRS Liens and Levies
4. Foreclosures
5. Utilities

Automatic Stay Violations – if you believe a creditor has violated the automatic stay or you have questions about the automatic stay violations or the times the automatic stay would not apply – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Bankruptcy and Cars

Bankruptcy and CarsBankruptcy and Cars

Bankruptcy and Cars.  What options do I have to keep my Car is I file Bankruptcy and I have a loan on my car? When you file a bankruptcy, you will have the option to declare your the intention to “retain collateral and continue to make regular payments” on a car loan.  You should not that the Court finds that: 1) the automatic stay expires 30 days after filing, 2)the collateral was no longer property of the bankruptcy estate, and 3) repossession of the vehicle did not violate the say after 30 days. For more information you can review the case:  In re McFall, 356 B.R. 674 (Bkrtcy. N.D.) Ohio 2006).

Under S 521(a)(2) a debtor who has financed their car, and filed bankruptcy, has 30 days to declare their intention to reaffirm, redeem, or surrender their car (or other personal property); and another 30 days after the 341 hearing to perform that intention. If the debtor does not reaffirm, redeem, or surrender their car (or other personal property) timely, then X362 (h) provides that the stay is lifted as to the property and the creditor is able to recover the car (or other collateral), since it ceases to be part of the property of the bankruptcy estate. Thus, in such cases, not only can the creditor take the collateral, but the Trustee in a Chapter 7 case also loses the bankruptcy estate’s interest in it as well and is not able to take possession of the property.

For more information about Bankruptcy and cars and your concerns regarding your car – especially if it is financed  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Wells Fargo violated automatic stay by freezing accounts

Wells Fargo violated automatic stay by freezing accounts Wells Fargo violated Automatic Stay by Freezing Accounts – Wells Fargo violated automatic stay by freezing accounts of debtors. When Wells Fargo learned of the chapter 7 debtors’ bankruptcy filing, it placed an administrative freeze on the debtor’s checking and savings account, pursuant to its national policy.

In one case, the Debtors had scheduled two accounts with the balance totaling $1,300.00. Wells Fargo’ freeze was against four accounts of the debtors totaling $17,075.06. Debtors amended to list all of the accounts and funds and claimed 75% exempt. No objection was ever filed by anyone to the claim of exemption. Wells Fargo took no action after receiving no instructions from the trustee to whom it had sent notice of the freeze. It also had refused to release the funds to the debtor in the meantime. Debtors brought a contempt action against Wells Fargo for willful violation of the stay, not withstanding the S542(b) requirement that property of the estate be paid to the trustee. The bankruptcy court ruled against the debtors after determining that S362(a) did not apply because the funds were exempted and not property of the estate. Debtors appealed.

The BAP reversed and remanded finding Wells Fargo had exercised control over property of the estate and therefore, violated the automatic stay, notwithstanding the s542(b) requirement that property of the estate be paid to the trustee. In re Mwaangi, 432 B.R. 812 (9th Cir. BAP 2010). The BAP determined that Citizens Bank of Maryland v. Strumpf, 516 U.S. 16 (1995) was inapplicable since there were no setoff rights to protect here. Next, it determined that the accounts were property of the bankruptcy estate and the bank could have paid the account funds to the trustee or released the account funds claimed as exempt to the debtors when demand was made, but it did neither. Moreover, the bank could have sought direction from the bankruptcy court by way of a stay relief motion or otherwise, but it did not. Instead, the bank close to hold the funds until a demand was made for payment that it alone deemed appropriate. The case was remanded to the bankruptcy court to dtermine if the violation was willful, and if so, the appropriate amounts of damages to be assessed under S362(K).

For more information – contact Cynthia Remboldt, FREE consultations can be scheduled by calling 404-348-4081.