Author Archives: Ryan C. Wood

About Ryan C. Wood

Ryan C. Wood is a California attorney practicing primarily in the areas of Bankruptcy Law, Business Law and generally seeking justice for under represented clients in the Bay Area.

What are Adequate Protection Payments and When are Adequate Payments Required?

By Ryan C. Wood

Adequate protection payments are paid to a secured creditor prior to the confirmation of a Chapter 13 plan or Chapter 11 plan or reorganization. As the name implies, the payment is to adequately protect the secured creditor’s interest your collateral. The most common adequate protection payments are made to creditors that use your car as collateral. There is a period of time between the filing of your Chapter 13 bankruptcy case to the confirmation or approval of your plan that the loan holder still needs to be paid. This period of time could last anywhere from two months to a year or more depending on your case. Your bankruptcy lawyer will be able to explain why there is delay in confirmation/approval or when confirmation/approval is anticipated. You are still driving your car during this period of time and therefore your car is depreciating in value. The adequate protection payments are to protect your secured creditor’s interest in the collateral during the time between when you first filed your Chapter 13 bankruptcy case to the confirmation of your plan. Once your Chapter 13 plan is confirmed your creditor will be paid based on the Chapter 13 plan filed.

Another use of the adequate protection payments are when you are behind on post-petition mortgage payments. Your Chapter 13 plan should pay back of your pre-petition mortgage arrears. You are responsible for making your regular monthly mortgage payments going forward. If you are behind on the post-petition mortgage payments your lender may file a motion to lift the automatic stay so they can proceed with foreclosure procedures on your house. Your bankruptcy lawyer should be able to set up some sort of payment plan with your mortgage lender and negotiate an adequate protection payment that is satisfactory to both parties. Your mortgage lender may then file an Adequate Protection Order with the court. This is an order signed by the court that provides the payment agreement you entered into with the mortgage lender. Failure to abide by the terms of the order may mean that your mortgage lender may continue with foreclosure proceedings.

Pursuant to 11 U.S.C. §1326, an adequate protection payment will need to be paid within 30 days of the filing of the bankruptcy petition or an order for relief. The order of relief may be granted once the secured creditor files a motion to lift the automatic stay so they can proceed to repossess a vehicle or foreclose on a home as indicated in the paragraph above. To avoid this result the person filing for bankruptcy would need to provide some sort of protection to the secured creditor in the form of payment for the asset.

How do you pay this adequate protection payment? You make the adequate protection payment to the Chapter 13 trustee as part of your Chapter 13 plan or directly to the creditor depending on your case. If you make the payment to the trustee, the trustee will then make the proper disbursements based on the plan filed with the court. Before the secured creditor could get any funds from the trustee they must first file a proof of claim with the court first. If a proof of claim is not filed they will not receive any of the disbursements. Your bankruptcy attorney should view the proof of claim for accuracy. Whether the trustee distributes the payments to the creditor before the plan is confirmed or after depends on the jurisdiction in which you filed your case. Some jurisdictions allow the payments to go to the secured creditor before the plan is confirmed, some jurisdictions allow the payments to go to the secured creditor if there is a direct order to that effect, and some jurisdictions make the secured creditor wait until the plan is confirmed before they receive their payments.

Does Filing Bankruptcy Stop My Pending Lawsuit Against Another Entity?

By Ryan C. Wood

People file bankruptcy to stop all collection activity against them, including lawsuits filed by creditors in an attempt to recover funds from the borrowers. That is the power of the automatic stay. What about if the person filing for bankruptcy has filed a lawsuit (or intends to file a lawsuit soon) against another person or entity? What happens to this lawsuit? Can the bankruptcy filer continue with this lawsuit? The short answer is yes, but you need to notify the bankruptcy court that you are currently in a lawsuit or you have the right to sue someone in a lawsuit. You must list the pending lawsuit in your bankruptcy schedules (Schedule B to list the potential asset in your bankruptcy case and Statement of Financial Affairs to indicate that you are currently involved in a lawsuit).

What happens if you do not list the pending lawsuit in your bankruptcy petition? First you should inform your bankruptcy lawyer about the lawsuit. If the lawsuit was not listed in your bankruptcy petition and you have received a discharge of your debts, the general rule is that you are stopped from continuing on with the lawsuit. This is the principle of “judicial estoppel.” You are stopped from continuing with the lawsuit because your bankruptcy petition indicated you do not have any claims against anyone and you do not have the right to sue anyone at the time your bankruptcy petition was filed. If you did have any rights you would have listed them as a potential asset in your case. You cannot say that you do not have any claims in your case and proceed to discharge all your debts and then try to go after someone in court to receive money.

In the Supreme Court case New Hanpshire v. Maine, 532 U.S. 742 (2001), judicial estoppel bars the continuing lawsuit if: (1) the positions are clearly inconsistent; (2) the bankruptcy filer and plaintiff in the lawsuit succeeded in getting the first court to accept the first position; and (3) the bankruptcy-filer and plaintiff in the lawsuit obtained an unfair advantage. The Supreme Court indicated that “it may be appropriate to resist application of judicial estoppel when a party’s position was based on inadvertence or mistake.” New Hampshire v. Main, 532 U.S. 742, 753. The 9th Circuit Appellate Court applied that rule in their case Quin v. County of Kauai Department of Transportation, No. 10-16000 (9th Cir, July 24, 2013). In Quin, the bankruptcy filer did not originally list her discrimination lawsuit in her bankruptcy petition. She received her discharge and was continuing with the discrimination lawsuit when her lawyer for the discrimination suit realized she filed for bankruptcy. Her lawyer then reopened her bankruptcy case to list the lawsuit in her schedules. She indicated she did not list the lawsuit as an asset because she misunderstood what she was required to do. The Quin court indicated that there was factual support for a conclusion of either mistake and inadvertence and remanded to lower courts to determine whether the omission of the lawsuit was mistaken or inadvertent.

If you are involved in a lawsuit against another party you need to be sure to notify your bankruptcy attorney so they can help you list the lawsuit in your schedules. Failure to do so may result in your lawsuit being stopped in its tracks and the person or company you are suing would be able to walk away.

Are My Parking or Speeding Tickets Dischargeable in Bankruptcy?

By Ryan C. Wood

Have you ever parked somewhere and come back to your car and find a parking ticket on your windshield because you were just 1 minute past the allotted time on the parking meter? Or parked somewhere you were not supposed to? Or just drove a little faster than the speed limit posted on the road? If you have received a parking or speeding ticket you are not alone. Most likely you or someone you know has received one or more parking or speeding tickets in your lifetime. Some of the fines are manageable, but if you are already in a tight financial situation this ticket may be the straw that breaks the camel’s back. If you do not pay the fine the penalty accrues until even the once manageable fine has now exploded out of control. The question on a lot of people’s mind as they are deciding to file for bankruptcy is whether their parking and/or speeding tickets are dischargeable in bankruptcy.

As with most answers you may receive from a bankruptcy attorney, the answer is “it depends.” Whether your parking tickets are dischargeable in bankruptcy depends on what chapter of bankruptcy you are filing for protection under. Parking and speeding tickets are non-dischargeable in a Chapter 7 bankruptcy filing pursuant to 11 U.S.C. §523(a)(7). This section of the Bankruptcy Code indicates that a debt is non-dischargeable if it meets all three of these requirements: 1) the debt is for a fine, penalty, or forfeiture, 2) the debt is payable to and for the benefit of a governmental unit, and 3) is not compensation for actual pecuniary loss. Parking and speeding tickets are considered fines to the government and therefore not dischargeable in a Chapter 7 case. You would therefore still be responsible for the payment of the ticket after your other debts are discharged in your Chapter 7 case.

One silver lining is that these tickets are dischargeable in a Chapter 13 bankruptcy case pursuant to 11 U.S.C. §1328(a). This section of the Bankruptcy Code does not incorporate §523(a)(7) as part of the debts that are non-dischargeable. That means that once you complete the payment of your Chapter 13 plan payments (whether you are in a 3 year plan or 5 year plan depends on your particular circumstances) the rest of your debt that has not been paid will be discharged. This includes the parking and speeding tickets. The amount you pay to your unsecured creditors in your Chapter 13 plan may range from 0 to 100% of your debt depending on your circumstances. One thing to note is that your parking and speeding tickets are only discharged if you successfully complete your Chapter 13 plan payments. If you are unable to continue in a Chapter 13 because you need to convert your case to a Chapter 7 or if you receive a hardship discharge in your Chapter 13 case, those speeding and parking tickets remain not dischargeable.

You also need to be careful in the classification of your fine. If the debt you owe is for a fine that is criminal in nature then it would not be dischargeable in your Chapter 13 case. If your speeding ticket is considered criminal in nature then it would also not be dischargeable. Whether your speeding ticket is considered criminal or not depends on your particular’s state’s laws.

You should consult with an experienced bankruptcy lawyer to determine how to proceed in your bankruptcy case. The bankruptcy attorney can help you determine whether it is advisable to file a Chapter 7 or Chapter 13 bankruptcy case depending on your circumstances.

What Should I Expect at My Meeting of Creditors?

By Ryan C. Wood

When you file a bankruptcy case you are expected to attend a “meeting of creditors” pursuant to 11 U.S.C. §341. The meeting of creditors is sometimes called the “341” because the meeting is under §341 of the Bankruptcy Code. Failure to attend the meeting of creditors may result in the dismissal of your case. The name “meeting of creditors” sounds scary to some people because they think that they are going to be surrounded by their creditors grilling you in front of everyone. This is definitely not the case. This article will help explain what this meeting is and hopefully help dispel some of your fears.

First, the person that oversees the meeting of creditors is the trustee assigned to your bankruptcy case. It may be the Chapter 7 or Chapter 13 trustee depending on what chapter of bankruptcy you filed under. The trustee is not the judge. Therefore the meeting of creditors is not a “court date” that most people often confuse the meeting of creditors with. If your case is filed correctly and under the right circumstances you may never see the judge that is assigned to your case.

Secondly, you need to be sure you show up at the meeting on time and with the right documentation. The meeting will be held in a federal building. That means you will be going through security. You should be there at least 15 to 30 minutes early as there may sometimes be a long line. You need to bring your photo identification issued by the government. This could be a driver’s license or passport or anything issued by the government that has your picture on it. You need to be sure that the identification is unexpired. If it is expired, the marshals will not let you in the building even if you are the person pictured in the identification. You will also need to bring proof of your social security number issued by the government. The most common proof is your social security card. If you do not have a social security card you may bring your recent W2 or 1099 statements or tax transcripts that have your social security number on it. Normally the trustees require this proof to be your original copies so most trustees will not accept copies of your W2 or 1099. Normally the drivers license and social security card are the only documentation you need to bring with you to the meeting of creditors unless your bankruptcy lawyer or trustee indicate they want additional documentation.

After you make it through the security, you wait in the room indicated in your meeting of creditors notice. You would wait for your bankruptcy attorney there unless other arrangements have been made. There will be a number of cases that are assigned the same date and time as yours. The trustee will call cases up one by one to be sworn in under oath. Everything you say is recorded so if there is something the trustee asks you that you do not understand, ask the trustee to rephrase or repeat the question. Normally in a Chapter 7 no asset case, the trustee will ask about 5 minutes worth of questions. The questions are fairly easy. They would ask questions like: “Were you personally familiar with the information contained in your petition?” “Did you personally sign the petition?” “Is everything in your petition true and correct?” “Are all your assets and debts listed in the petition?” “Are there any changes you need to make in your petition?” “Have you filed for bankruptcy before?” “Have you transferred or sold any property in the past XX years?” “Have you filed all your tax returns?” Most of these questions only require a yes or no response. There is no need to give a long story. As I have indicated previously, everything is recorded. Even if you think the information you are providing is harmless, it may end up hurting you later as it can be used against you. In a Chapter 13 case, the trustee may ask additional questions regarding your Chapter 13 plan and whether you are on time with mortgage payments. They may ask if you are able to make the payments proposed in your Chapter 13 plan. Your bankruptcy attorney would most likely deal with all the Chapter 13 plan questions the trustee may have.

After the trustee finishes with the questioning, it is now time for any creditors to ask questions. Most of the time, creditors do not even show up. The creditors normally show up only if they believe that there has been some wrongdoing on your part and they want to prove that their debt is non-dischargeable so they ask certain questions related to your ability to pay those debts.

I see a lot of my clients get very nervous prior to the meeting of creditors because they believe they will be grilled and embarrassed in front of everyone. After the meeting is over, the most common comment I get is, “That’s it? Wow, that was a lot easier than I thought.” The best advice I can give to people going into a meeting of creditors is to relax and answer the questions truthfully and honestly and if everything in your petition was completed correctly, it should be a fairly easy process.

New San Francisco and Oakland Divisions Model Chapter 13 Plans

By Ryan C. Wood

The Chapter 13 Plans for the Oakland and San Francisco Divisions of the Northern District of California have undergone a significant makeover. The Oakland and San Francisco Divisions are using a new Model Chapter 13 Plan effective August 1, 2013. The Oakland Division’s Chapter 13 Plan went from being a one page plan to a five page plan. Oakland is the division with the biggest change in terms of the way the plan looks, but the way the Chapter 13 plans are administered have not significantly changed. The San Francisco Division has about the same amount of pages but the Chapter 13 plan has been reorganized.

An important reason to hire a bankruptcy attorney is to make sure the process is completed correctly and part of that is using the correct forms.  The forms do in fact change from time to time.  Most of us bankruptcy attorneys use software to draft the bankruptcy petitions and receive regular updates to make sure the proper forms are being used.  This is a question you should ask your attorney about.  Do you use a software to prepare bankruptcy petitions.

The new Model Chapter 13 Plans for the Oakland and San Francisco Divisions are laid out and organized by classes. Class 1 is for secured claims that have arrears. This is where you would include your mortgage arrears if you want to pay them back in your Chapter 13 plan. Class 2 is for secured claims that are being modified in your Chapter 13 plan. This is where you would include a vehicle that you are “cramming down” to its fair market value or junior liens that are wholly unsecured. You should consult with bankruptcy attorneys if do not know what this means and you think that this may be beneficial to you. Class 3 claims are for secured claims in which you are surrendering the collateral. If you want to surrender your vehicle or house for whatever reason this is where you would include that claim. Class 4 claims are for secured claims that you are current on and what to pay directly to the creditor. A bankruptcy lawyer can explain to you the significance of either paying the claim through the Chapter 13 plan or paying the claim directly to the creditor outside the plan. The benefits of each one are dependent on your particular circumstances. Class 4 is also where you would include claims you are trying to obtain a loan modification for. If you are in the process of obtaining a loan modification for your mortgage and you want the arrears to be taken care of as part of your loan modification, then you would include them in Class 4. Class 5 is for unsecured priority claims. This is where you would include the claims you owe to the taxing authorities like the Internal Revenue Service and Franchise Tax Board. These are the taxes that are non-dischargeable. You would also include any child support or alimony arrears or other claims that are considered a priority claim. If you do not know what is considered a priority claim, contact an experienced bankruptcy attorney for guidance. Class 6 claims are designated for unsecured claims that would be pain in full even if the other nonpriority unsecured debts are not. You are essentially saying that the creditors in Class 6 deserve special treatment and you would need to indicate why they should have special treatment. Lastly, Class 7 claims are for all other unsecured nonpriority debt. This is where the claims for your credit card debt, medical bills, personal loans, and other unsecured debt would be listed.

The new Model Chapter 13 Plans for the Oakland and San Francisco Divisions may take some getting used to, but be sure to use the correct plan or it can be rejected by the court and you would need to file a new one. Chapter 13 bankruptcies are normally more complicated and it is highly recommended that you retain experienced bankruptcy attorneys to help you through the process.

AS OF DECEMBER 1, 2017, A NEW MODEL PLAN WAS APPROVED BY THE FEW HUMANS TAKSED WITH THIS FOR THE NORTHERN DISTRICT OF CALIFORNIA AND NOW WE HAVE A DISTRICT WIDE PLAN THAT MUST BE USED. THE MODEL CHAPTER 13 PLAN IS THE SAME IN THE OAKLAND DIVISION, SAN FRANCISCO DIVISION, SAN JOSE DIVISION AND SANTA ROSA DIVISION FOR THE NORTHERN DISTRICT OF CALIFORNIA. OF COURSE THE ADMINISTRATION OF THE “MODEL PLAN” IS DIFFERENT GIVEN THERE ARE DIFFERENT TRUSTEES AND DIFFERENT JUDGES. RESULTS CAN VARY WIDELY DEPENDING UPON THESE HUMAN FACTORS.