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.

Can My Landlord Evict Me After Filing Bankruptcy?

By Ryan C. Wood

Whether or not your landlord can evict you after you file a bankruptcy case depends on whether or not you owe any rent to your landlord.  If you are current on all your rental obligations the landlord is not listed in your bankruptcy schedules as a creditor and will therefore probably never know you have filed for bankruptcy.  Even if your landlord does find out you have filed for bankruptcy it may not matter to your landlord if you do not owe your landlord any money.  Your landlord cannot evict you solely based on you filing for bankruptcy protection.

If you do owe your landlord some back rent, that may be a different story.  Whether or not you receive an automatic stay depends on whether your landlord has obtained an unlawful detainer judgment against you.  If you have filed for bankruptcy before a judgment is obtained, you have filed for bankruptcy and the automatic stay is in place then landlord cannot continue with the legal proceedings.  This relief is only temporary though.  Your landlord may file a motion for relief from the automatic stay requesting permission from the bankruptcy court to continue to evict you.  If the landlord’s motion is granted, the landlord can continue with the legal proceedings against you even though you are in bankruptcy.  If the landlord does not file a motion for relief from the automatic stay, then you would have the automatic stay until your bankruptcy case has been concluded.  Your landlord can still continue with the legal proceedings for unlawful detainer against you after your bankruptcy case is concluded.  The only thing the landlord cannot do is go after you for the back rent that was included in your bankruptcy case.  For more information about bankruptcy and evictions please consult bankruptcy lawyers in your area.

What happens if there was an unlawful detainer judgment obtained against you before the filing of your bankruptcy case?  Under 11 U.S.C. §362(b)(22), there is no automatic stay protection for you.  The landlord may continue with the eviction process.  Pursuant to 11 U.S.C. §362(l), one potential way to mitigate this process is if you file a certification with your bankruptcy petition that you are entitled to cure the entire default amount under state laws and you deposit one month’s rent with the clerk of court and the certification is served to the landlord.  Then the automatic stay will be in place for 30 days if this is done.  If you pay back all the rental arrears during this 30-day period and serve another certification on the landlord that the arrears are cured (as permitted by your applicable state laws) you will be entitled to the automatic stay for the duration of your bankruptcy process. The landlord can continue with the eviction process if you are unable to pay all the rental arrears. If the landlord objects to the certification that you filed, the court will hold a hearing within the 10 days after the filing and service of the objection from the landlord.  There will be no automatic stay available if the court upholds the objection filed by the landlord.  The ability to cure the rental arrears depends on your state’s laws.  You should contact experienced bankruptcy attorneys to help you navigate these complicated waters.

Where Should or Can My Bankruptcy Case Be Filed?

By Ryan C. Wood

Pursuant to 28 U.S.C. §1408(1) your bankruptcy case should be filed in the district court for the district in which you live, own a home, have a business, or where your principal assets are in the United States for the 180 days prior to the filing of your bankruptcy case.  The other option is to file in the district where you live, own a home, have a business, or where your principal assets are located in the United States for the longer period of time of the 180 days than any other district.  Under 28 U.S.C. §1408(2) you can also file in the district court for the district that there is already a bankruptcy case pending concerning your affiliate, general partner, or partnership.

The purpose of this rule is to make it more convenient for you and your bankruptcy lawyer to file bankruptcy in a district court that is close to where you live, own a house, conduct business, or assets.  It would not make sense for you to file a bankruptcy case in a district court where you would have to drive several hours out of your way to attend a mandatory meeting of creditors or for a hearing in front of the judge.  The other purpose of this rule is to discourage you from “forum shopping.”  Forum shopping is where you choose the district court to file your bankruptcy case because you believe that district is better than another.  It may be due to your belief that the judges or trustees are more lenient in that district.  You may even want to file in a different state because that state’s exemptions may be able to protect more of your assets.  28 U.S.C. §1408 is supposed prevent forum shopping.  There are also other rules in play that would prevent you from filing in different states to use that state’s exemptions.

In California, there are 4 Federal Districts: Northern, Central, Eastern, and Southern.  The Northern District includes the Bay Area and all the way up the western coast of California. The Eastern District includes a huge area from Chico to the north and Bakersfield to the south, and the northeastern and Sierra Nevada Mountains. The Central District includes the Los Angeles surrounding area.  The Southern District covers San Diego surrounding areas.

Our law practice is in the Bankruptcy Court for the Northern District of California.  Within the Northern District there are 4 different divisions: Oakland Division (Alameda and Contra Costa counties), San Francisco Division (San Mateo and San Francisco counties), San Jose Division (Santa Clara, Santa Cruz, San Benito, and Monterey counties), and Santa Rosa (Marin, Napa, Sonoma, Lake, Mendocino, Humboldt, and Del Norte counties).

To determine where you should file for bankruptcy the most common place to start is the county in which you live.  Most consumer bankruptcy filers do not own a business that is located in a different county from they live.  Also, most consumer bankruptcy filers do not have most of their assets located in a different county from where they live.  You should consult a bankruptcy attorney in your county regarding your filing options if you do own a business or have significant assets in places other than where you live.

What Happens to Wages I Owe My Employees When I File Bankruptcy?

By Ryan C. Wood

In this economy many big corporations are struggling so it is not difficult to imagine that a lot of the small business owners are struggling as well.  Numerous business owners rely heavily on credit to ensure their daily business activities run smoothly.  What happens when the credit dries up and business is slow?  Some of these business owners make the financial decision to file for bankruptcy protection.  So what happens if you are a business owner that has decided to file for personal bankruptcy protection under Chapter 7 or Chapter 13 of the Bankruptcy Code but you still owe wages to your employees?

Wages owed to employees are considered a priority debt when you file for bankruptcy.  What does this mean? It means that not all creditors are equal.  Certain creditors have priority and would get paid first before other creditors.  It all depends on how much money is available to creditors.  The creditors would need to file a proof of claim first with the bankruptcy court in order to be paid.  It does not matter if the creditor is the first one in line and would be entitled to receive all the available funds if the creditor does not file a proof of claim.  The will not be paid if no proof of claim is filed.

If you file a Chapter 7 bankruptcy case, any assets that are not protected or exempted will be liquidated to pay your creditors.  If you file a Chapter 13 bankruptcy case, creditors get paid through the availability of funds in the Chapter 13 plan.  The Chapter 13 Trustee would pay the creditors based on the priority of the debt.

Wages, salaries, or commissions, including vacation, severance and sick leave owed to employees are considered very important and therefore have a higher priority than most creditors.  The caveat is that there is a limit on the priority amount.  Pursuant to 11 U.S.C. §507(a)(4), the priority amount is limited to $10,000 for each individual or corporation that is earned within 180 days before you file your bankruptcy petition or before your business ended, whichever occurred first.  Any additional amounts owed after the $10,000 are treated the same as a general unsecured creditor.   For example: you owe $15,000 in wages to a former employee.  $10,000 would be considered priority debt.  The former employee would get this $10,000 before any other creditors.  The former employee would be paid the remaining $5,000 at the same percentage as all other general unsecured creditors.  The percentage could range from 0% to 100%.  It depends on the availability of funds in the bankruptcy case.   If the debt is earned more than 180 days prior to the filing of the bankruptcy case, then the entire $15,000 is considered a general unsecured creditor and the debt would not be considered a priority debt.

Stockton and Mammoth Lakes Chapter 9 Municipal Bankruptcy Filings

By Ryan C. Wood

Lately there has been a wave of new bankruptcy filings from municipalities in California.  Stockton filed for bankruptcy protection under Chapter 9 of the Bankruptcy Code, Bankruptcy Case number 12-32118, on June 28, 2012. Mammoth Lakes also filed for bankruptcy protection under Chapter 9 of the Bankruptcy Code, Bankruptcy Case number 12-32463, a few days later on July 3, 2012.  These bankruptcy filings leave many people wondering what happened with these towns.

Stockton

The city of Stockton has been in a decline for the past several years.  In its court documents, the City of Stockton has indicated they depleted their reserves and tried everything in their power to avoid filing for bankruptcy.  Stockton faces a growing deficit for the 2012 – 2013 fiscal year.  After reviewing the list of the city’s 20 largest unsecured creditors, it becomes very obvious that the biggest contributor to the city’s decline is the massive pension costs.  Their largest creditor is the California Public Employees Retirement System (CalPERS). CalPERS provides retirement benefits to public employees. CalPERS is owed $147.5 million.  Wells Fargo comes in a close second with a claim of $124.3 million. The debt owed to Wells Fargo is for pension obligation bonds which were used to fund the public pension plans.

Another factor in their financial crisis is the poor housing market and economy.  With housing values still heavily depressed in Stockton the city’s property tax revenues have decreased significantly.  Stockton also has a very high foreclosure rate, so property tax revenues have not yet recovered.

The city is in a very tough position and is essentially stuck between a rock and a hard place.  If they cut down the pension costs they lose the trust of their current and retired employees.  Most retired employees rely on their pension benefits to live and may not have any other sources of income.  If even a small portion of their benefits are cut it may be detrimental for the retired employees.

In many ways the city of Stockton reflects many consumers’ lives.  They are caught up with debts they cannot repay and houses that are significantly underwater.  Like the city of Stockton sometimes the only way out of the debt is to file for bankruptcy protection.

Mammoth Lakes

Mammoth Lakes chose to file for Chapter 9 bankruptcy protection to restructure the town’s obligations. According to the bankruptcy filings Mammoth Lakes tried the mediation process prior to bankruptcy.  However, the town’s largest creditor, Mammoth Lakes Land Acquisition, did not participate in the mediation process.  Mammoth Lakes Land Acquisition was granted a judgment for $42.7 million against Mammoth Lakes for a breach of contract lawsuit.  The next largest creditor is CalPERS with a claim for $4.2 million. The drastic difference between the largest creditor and second largest creditor provides some insight into why filing for bankruptcy protection was necessary after Mammoth Lakes Land Acquisition refused to participate in the mediation process.

The bankruptcy filings of both Stockton and Mammoth Lakes just go to show that municipalities, like normal everyday consumers, are not immune to bankruptcy.  Life can be going great and then a major life changing event can happen in a moment’s notice.  Events such as a loss of a job, mortgage payments increasing, or having lawsuits filed against you can make your finances come crashing down.

How is My Automatic Stay Affected if I Filed For Bankruptcy More Than Once?

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The automatic stay is one of the most powerful tools in bankruptcy.  In fact, this is why most people file for bankruptcy protection.  The automatic stay stops all collection activity against you.  This means creditors can no longer call you, send you letters, sue you in court, enforce a judgment against you, garnish your wages, levy your bank account, and place a lien on your house, stop foreclosure proceedings and repossession of vehicles.  Basically, they cannot do anything to collect the debt against you unless they have a security interest in your property.  In the event there is a security interest in your property (like your house or car) the creditors would need to file a motion with the court to lift the automatic stay so they can start or continue the foreclosure or repossession procedures to protect their interest in your property.  Of course, it goes without saying that they can only foreclose or repossess your property if you have not been making payments each month on time.

The automatic stay will take effect as soon as you file for bankruptcy.  It is called the automatic stay because the stay goes into effect automatically – you do not need to do anything other than file your bankruptcy case.  Since this is such a powerful tool against your creditors you need to be sure that you do not abuse this tool.  If you file a second Chapter 7, 11, or 13 bankruptcy case after your first bankruptcy case was dismissed (due to not filing required paperwork, not paying your fees on time, not showing up for the mandatory meeting of creditors and other reasons) within a one year time period you only receive the automatic stay for the first 30 days of your second Chapter 7, 11, or 13 bankruptcy case.  After the 30 days are up you will no longer have protection of the automatic stay to.  In order to prevent the lapse of the automatic stay in your second bankruptcy case you would need to file a motion to extend the automatic stay.  Many of our clients have unfortunately been told by various entities or people to just file they bankruptcy case on their own to stop a foreclosure or eviction.  What they are not told are the consequences of filing multiple bankruptcy cases and how it effects the automatic stay.

If you file a third Chapter 7, 11, or 13 bankruptcy case within a one year period after the first two bankruptcy cases have been dismissed there will be no automatic stay in effect.  This rule was created to prevent people from abusing the automatic stay and continually filing bankruptcy cases to get the automatic stay with no intention of completing the bankruptcy petition or obtaining a discharge of their debts.  You would need to file a motion to impose the automatic stay in order to have the automatic stay imposed in your bankruptcy case.  If you have been advised to just file a bankruptcy case on your own you could be severely limiting your ability to protect your interests and ultimately discharge your debts when filing bankruptcy.