Paradox of The Coronavirus and Severe Economic Consequences

By Ryan C. Wood

So far the response to the Coronavirus is a paradox. Look it up. There is no question the reaction is hysteria. The evidence of this hysteria is the hoarding of toilet paper. That is hysteria. Look it up. It is impossible to know what has happened or what will happen regarding the Coronavirus at this point. What I do know is the response will absolutely cause severe financial hardship for those who can least afford it regardless of the severity of the Coronavirus. Seems like if you have just followed common sense about how not to get sick and if you have a normal immune system you will be just fine. But of course why take the risk. Our leaders are at the damned if you do damned if you don’t and being proactive is about all that can be done now. Bankruptcy attorneys like me will sadly see a spike in bankruptcy filings as a result. I really doubt the proposed government relief will actually prevent an increase in bankruptcy filings as a result of the Coronavirus response. I hope is helpful, but history says otherwise.

Is This Response Worth the Severe Economic Consequences?

The point is there are far more deadly and statistically more deadly issues facing all of us each day that existed yesterday, today and will continue to exist tomorrow. I am trying to shed light on the big picture and ask if the severe economic consequences of what is taking place are on balance with the clear economic consequences. The response is arguably unprecedented in recent times but is the Coronavirus really unprecedented?

I will continue to provide updates regarding what I am experiencing as a professional on the frontline of relief for people caught up in the real economic consequences of what takes place in the world.

Reactions Seems To Be Disingenuous Given The Leading Causes of Death

What about the leading causes of death? For example many of the current restrictions are aimed to safeguard the health and well-being of all. At the same time there are countless other perfectly fine things that are very much not to safeguard the health and well-being of all. So the following may seem a little much. Is it not true though?

Heart Disease, the leading cause of death in the United States, kills 636,000 people each year or 53,000 a month or 1,767 people a day. If you add in the second and third leading causes of death in the United States we are talking about approximately 1,428,000 deaths per year or 119,000 deaths per month or 3,967 deaths per day.

Here is what I know. The leading cause of death in the United States is heart disease. Will society no longer serve deadly food and beverages? Are you really committed to safeguard the health and well-being of all? Will there be a ban on all artery clogging foods served at countless arenas THAT HAVE FOR YEARS AND YEARS contributed to the 53,000 deaths per month of United States citizens? That is 1,709 death each day due to heart disease. Or are you going to disingenuously talk about the public health while continuing to contribute and profit from serving food that contributes to the leading cause of death in the United States?

Wow, the Federal Reserve slashed its benchmark interest rate to near zero on today and said it would buy $700 billion in treasury and mortgage-backed securities in an aggressive bid to prevent market disruptions from aggravating what is likely to be a severe slowdown from the coronavirus pandemic. What about the quiet pandemics that have existed already that kill far more people each day?The point is are all of these private and public entities being disingenuous given the leading causes of death? It sure seems so. There is an entire isle at the grocery store dedicated to CHIPS and SODA. Things that make you go hmmmmmmm. There are at least 6 different burger joints, with drive-throughs, in almost each and every city in the United States. Hmmmmmm.

Are establishments that serve alcohol going to breathalyzer each person before they leave to ensure no one drives a little drunk? Or are you going to disingenuously talk about the public health while continuing to contribute and profit from the leading cause of death in the United States? Statistically over the years how many people have been killed as a result of drunk driving after leaving a restaurant or arena?

Are various arenas going to remove hotdogs, nachos and burgers and all other artery clogging foods from the menu at all arenas to help combat the number one cause of death in the United States, heart disease? Or are you going to disingenuously talk about the public health while continuing to contribute and profit from the leading cause of death in the United States?

If The Leading Causes of Death in the United States Are Heart Disease and Cancer Why Are There Not Free Tests and Better Healthcare

Heart disease and cancer kill about 100,000 Americans each month. Cancer has devastated my personal family yet I could not even get my healthcare provider to conduct any type of test or scan to see if I had any cancer or cancer markers or cancer period given I had no symptoms. I have healthcare and was refused preventative precautionary tests. Crazy. Legislation will be passed for free Coronavirus tests though? Billions of dollars will be spent to combat the economic consequences of a hysterical response to a virus that is actually not new and not as deadly and what we face each day? All this will take place without any substantive change regarding the actually leading causes of death in the United States? Are you okay with this?

Are you okay with severe economic consequences and the no doubt increase in bankruptcy filings as a result? These opinions and commentary hopefully will make you think about what is taking place and are those of Ryan C. Wood. Please take every precaution to ensure your continued health and that of the public.

Hype and Hysteria About The Coronavirus Has Already Caused Bankruptcy Filings

By Ryan C. Wood

The following provides real facts and commentary about how people die each year. I do not want anyone to get sick and die from the Coronavirus though. I do have empathy and do not support the spread the Coronavirus. Please keep reading about the leading causes of death in the United States and worldwide that existed yesterday, today and will exist tomorrow.

Update Number 9 – April 29, 2020

Facts: 320,000 people die each year worldwide from accidental drowning. Total worldwide deaths from Coronavirus as of this writing 218,000. Hospitals get paid more to treat people if they allegedly have the coronavirus. 2,195 children die each day from diarrhea.

Update Number 8 – March 29, 2020 – Preface

Can you hear that? Mother Earth breathed a huge sigh of relief. Mother Earth said to herself: “They are finally taking a break from hurting me. I can recharge and cleanse some of the hundreds of years of damage humankind has inflicted upon me.” In 2020 the world took a pause from normal activity due to the Coronavirus and humankind saw the benefits of truly cleansing their world of their own damaging activity. The world as a result was more clean for benefit of the environment and health of all life on Earth. Surfaces that were supposed to be clean were actually continually cleaned properly. Humans had a greater respect for their shared space. Year 2020 marked a turning point in global total health for the benefit of all living beings.

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It is unbelievable how social media and the media in general can influence the world today. Please keep reading for statistics about the leading causes of death and what you should be worried about once the coronavirus passes. But yes, of course the Coronavirus is not good.  At the same time there are concerning real threats to our lives we all should be concerned about just as much if not more.  How is there not a cure for cancer yet?  The flu is not good. According to the CDC 80,000 people in the United States died from the flu last year alone.  Vehicle deaths per day are not good.  Pneumonia is not good.  Heart attacks are not good.  Gun violence in the United States is atrocious.  The fact is the Coronavirus is just new and no worse or scary than what we all face each and every day of our life already.  So why are people changing their normal behavior because of the dreaded Coronavirus? Fear sells and it sells like nothing else. How will the fear now created be used?

I am all for warning about health issues. I have read and heard nothing that provides any of us should be worried. There seems to be an explanation for everything even though the mortality rate being reported is 1% or 2%. If new factual information comes out I will modify this article to say how wrong I was to even question any of this and all of the hype was well-founded. I am confident heart disease, cancer, gun violence and vehicle deaths will be far more likely to continue to be real concerns that need our undivided attention once this passes.

Center for Disease Control: “Both MERS-CoV and SARS-CoV have been known to cause severe illness in people. The complete clinical picture with regard to COVID-19 is not fully understood. Reported illnesses have ranged from mild to severe, including illness resulting in death. While information so far suggests that most COVID-19 illness is mild, out of China suggests serious illness occurs in 16% of cases. Older people and people with certain underlying health conditions like heart disease, lung disease and diabetes, for example, seem to be at greater risk of serious illness.”

OMG, you should always regularly wash your hands.  OMG, people should always just cover their mouth when coughing or sneezing. OMG, yeah give people some personal space when standing in line or in a crowd. OMG, if you have a healthy immune system you should be just fine.  OMG, stop wearing a face mask, hoarding hand sanitizer and toilet paper? OMG, if you are sick do not go to work and infect others. HAVE WE LOST ALL COMMON SENSE? NONE OF THIS IS FUNNY.  IT IS HAVING EXTREMELY HARMFUL CONSEQUENCES ON REAL PEOPLE AND THEIR LIVES. Wil all of the deaths that result from the economic fallout be reported? There will be thousands worldwide. These types of deaths are just lumped together in categories such as stroke, suicide or heart attacks. The underlying cause and contributing factor is economic stress though.

Hype, Hysteria and Information Have Already Caused Bankruptcy Filings

Unfortunately people are changing their daily behavior due to information about the Coronavirus whether accurate or not.  I have bankruptcy clients due to an entire company shutting down due to market changes caused by the Coronavirus hysteria.  The entire staff is being laid off at no fault of their own.  As a bankruptcy attorney I know all too well how circumstances that are not in control of my clients determine outcome good or bad.  It is sad that hysteria and misinformation over a not so deadly virus is and will continue to cause financial hardship outside the control of those who will feel the consequences.  I do not know the specifics about this company but the fact is hype and hysteria regarding the Coronavirus is the direct cause of the business no longer being viable.

What about the leading causes of death?  

How sad given the American Cancer Society reports 50,543 people on average die each month in the United States alone from Cancer.

How sad given the Center for Disease Control reports 5,083 people on average die each month in the United States alone from influenza. 

How sad given the Center for Disease Control estimates 4,167 people die each month in the United States alone from pneumonia.

How sad given the Center for Disease Control estimates 53,917 people die each month in the United States alone from heart disease.

How sad given the Highway Traffic Safety Administration estimates 3,054 people die each month in the United States alone in vehicle accidents.

How sad given the Center for Disease Control estimates 3,000 people die each month in the United States alone due to firearms.

How sad given according to the World Health Organization reports the top ten causes of death for the entire world are:

  1. Ischemic heart disease
  2. Stroke
  3. Lower respiratory infections
  4. Chronic obstructive pulmonary disease
  5. Diarrhoeal diseases; 2,195 children alone die each day, CDC provides that is 32 school buses of children dying each day from diarrhea ……… think about that
  6. Tuberculosis
  7. HIV/Aids
  8. Preterm birth complications
  9. Trachea, bronchus, lung cancers
  10. Road Injury

How sad given according to the Center for Disease Control reports the top ten causes of death for the United States are:

  1. Heart disease: 647,457 a year or 53,955 a month
    1. I read a cruise ship cannot enter a San Francisco port until all of the passengers are tested for the Coronavirus yet the food being served on the ship is far more harmful to society; hello heart disease
    1. Should you be more concerned about a burger joint every four blocks?
    1. Should you be more concerned about your lack of exercise ?
  2. Cancer: 599,108 or 49,926 a month
  3. Accidents (unintentional injuries): 169,936 or 14,161 a month
    • Happenstance of life is how many times more likely to kill you then the Coronavirus?  Wrong place wrong time is more likely to kill you.
  4. Chronic lower respiratory diseases: 160,201 or 13,351 a month
  5. Stroke (cerebrovascular diseases): 146,383 or 12,198 a month
  6. Alzheimer’s disease: 121,404 or 10,117 a month
  7. Diabetes: 83,564 or 6,694 a month
    • You should be more concerned about your consumption of soda
  8. Influenza and pneumonia: 55,672 or 4,639 a month
  9. Nephritis, nephrotic syndrome, and nephrosis: 50,633 a year
  10. Intentional self-harm (suicide): 47,173 a year
    • You should be more concerned about mental health and life in general for society and your fellow human

I just read that San Mateo County, where I live, declared an emergency regarding the Coronavirus.  Why do we not have an emergency declaration regarding the leading causes of death that are known? It seems disingenuous.

The Media and Social Media is Out of Control    

At this point I do not believe there is any going back.  The number of influencers and followers of other humans is here to stay.  When it comes to health and something like the Coronavirus the firestorm created by the media is not helpful and full of misinformation. You can form your own opinion of course.   

Rachel Clamp, PhD Candidate in History, Durham University, reports the Coronavirus has killed total globally about 3,000 people.  https://www.yahoo.com/news/coronavirus-black-death-spread-misinformation-143713853.html h

I highly recommend you read this excellent article about historical plagues and public reaction.  The world today seems to never be able to learn from history.  Nothing is new and if we cannot learn from history we are doomed to repeat horrible wrongs.  Horrible discrimination is taking place.    

Tangent: Hype About Bankruptcy Is Wrong Too

I repeatedly communicate that the Bankruptcy Code is the law.  Do not hate the player but hate the game.  Stop believing the hype and hysteria regarding bankruptcy. it is like suffering an illness and not choosing the a cure that exists. You can suffer for years treating the illness or cure your debt problems.  There is way too much hype regarding bankruptcy. If you do not like people filing for bankruptcy protection to seek relief from their creditors the law provides please vote for different politicians and advocate for a change in our laws.  Do not condemn bankruptcy lawyers or bankruptcy filers for merely following the law to obtain a legal discharge of debts.  Can we not all agree that life is short, nothing is perfect and generally we all are doing the best we can and circumstances outside of our control are far more powerful than any single humans’ choices?  A lifetime of hard work and dedication can be wiped out in a blink of an eye?  Hype and unfound hysteria about a virus can lead to behavioral changes that wipe out entire companies overnight?  We all need second chances given we are all imperfect beings.  Whether you file for bankruptcy protection or fail at something you must keep swinging the bat to try and hit a homerun.  Luckily we have laws that allow an orderly and legal method to clean up the mess so the game can continue.

Update Number 1 – March 11, 2020

I have received additional calls from people seeking bankruptcy due to the fallout over the Coronavirus. I file bankruptcy and earn a living doing so but I truly do not like the reality I will get more business as this saga continues. Also today the NBA announced the suspension of the NBA season until further notice. The Coronavirus is not an unprecedented virus but the suspension of the NBA season is unprecedented. This response is unprecedented. Those who work in sport arenas will not be able to pay their bills. They are not rich and are living paycheck to paycheck. Will government aid reach them or bankruptcy attorneys like me be the solution to their bad luck? I wish the world would take gun violence this serious. I wish people would drive safer each day. Why do people drive like maniacs right after getting through a traffic jam caused by a car accident? Will people exercise more and take their health more serious now?

Update Number 2 – March 15, 2020

So at this point there is no going back. Misinformation about elections/politics, health risks and what is going on in the world generally is here to stay. Regardless of the reality of risk the Coronavirus actually posed or poises the response will be the reality of whatever comes next. Deaths from Coronavirus will not be substantial and all the talking heads will cite the response as the reason and we will never actually know what the true risk poised. Do not mistake my tone for lack of empathy or wanting anyone to get sick. I do not. I have to wonder if everyone realizes that the Coronavirus is not going to go away? Are you always going to live in fear from this one way to get sick even though statistically just driving around and living life kills about 11,000 people each month in the United States alone? Wrong place wrong time; 11,000 people a month in the United States. Please research the leading causes of death in the United States versus the entire World. Diarrhea is the 5th leading cause of death worldwide killing approximately 2,195 children each DAY alone. By comparison even if the Coronavirus killed 500 people a day worldwide that would be nothing compared to what humans face everyday to stay alive.

The Federal government is passing legislation to deal with the Coronavirus hype and hysteria. Will that economic relief reach my potential clients and prevent increased bankruptcy filings? What about the top three leading causes of death in the United States: Hearth Disease, Cancer and then Accidental Deaths? Kind of seems like gun deaths in the United States is an emergency as compared to other developed countries in the world.

Update Number 3 – March 16, 2020

So the stock market dropped the most since 1987 today. Let us speculate that there are 5,000 worldwide deaths because by the coronavirus so far or 10 days worth of accidental deaths in the United States alone. Or about two and a half days of heart disease deaths in the United States alone. This is very serious. The Coronavirus. The response and the consequences of the response.

I just heard from the world media (this is a parody/joke) that all sporting event centers will no longer serve artery clogging food given they care about the public health and welfare in an effort to help combat the leading cause of death in the United States; heart disease.

I just heard from the world media (this is a parody/joke) that we will all share the world’s fresh water equally so every person on Earth has fresh water to drink from the moment they are born into this world because the world cares about public health and welfare. It is called “No Human Left Behind.” It will help prevent 2,195 daily child deaths due to diarrhea.

Update Number 4 – March 16, 2020

So this is as far from funny as it can get. In the Bay Area we now have a shelter in place order issued for the six county region that makes up the Bay Area. So does that mean that creditors will stop garnishing my clients wages given my clients have seemingly been told to not come to my office to obtain legal relief from their debts? Uh no!!!

Update Number 5 – March 17, 2020

Hopefully the shelter in place REQUEST will save the lives of the 90 people that die in car accidents each day in the United States. That is about 2,700 people each month. You are more likely to die because of the trash driving so close to you that you cannot see their license plate in your rearview mirror. You know, that person that is in such a hurry to get to the next red light so fast. So after the hype and hysteria passes are you going to drive more safe and help prevent the 2,700 deaths EACH MONTH from car accidents? Are you not going eat artery clogging foods and soda that cause heart disease and diabetes? Are will you have learned nothing from this experience?

Update Number 6 – March 22, 2020

Cannot play basketball at my local park given boards have been bolted to the tops of the basketball rims. Can I not shoot baskets by myself and get exercise?

Can let my dog poop on someone’s lawn, pick up poop, but their kids will get the residue poop on them when they go out and play in their yard next.

Can go to 7-Eleven and buy each and every item that leads to the 1st and 2nd leading causes of death in the United States. Cannot sit down in a restaurant and eat. Can hoard clean water while 2,195 children die each day from diarrhea worldwide.

Can still be one of the 1,314 murders that take place in the United States each month. Total worldwide coronavirus deaths 14,200 or 6.5 days of children diarrhea deaths. How can we share fresh water when toilet paper gets hoarded?

Please research the big picture. Who will get the $3 trillion of economic aid even though the GDP will be less in the United States and the United States is already running a budget deficit? National debt as the writing of this is $23.6 trillion or 108.8 % of GDP. What is the world GDP? $80 trillion or so. United States total population 323 million people. Those that pay taxes 123 million people.

See https://www.usdebtclock.org/

Update Number 7 – March 23, 2020

Can get killed from speeding tailgating drivers with no regard for human life contributing to the 90 people that die in car accidents each day in the United States. Seems the coronavirus scare has not helped people drive safely. Why social distance or take precautions only to drive like a manioc? That is 32,850 people per year die in car accidents in the United States.

Can run over family of eight killing mom for not social distancing contributing to thousands of pedestrians killed each year in the United States. This happened in New York. 17 pedestrians plus cyclists die each day in the United States or 6,205 a year.

I Was Never Served With The Lawsuit


By Ryan C. Wood

Yeah, I know you were not.  That does not mean a judgment, that is, a default judgment was not entered against you accruing judgment interest at 10% per annum (California Law).  You were sued and the process service company committed a fraud when serving you.  They lied about who they served and even possibly when you were allegedly served.   The process service company then sent a proof of service to the attorney that filed the lawsuit against saying you were somehow personally served with the summons and complaint.  The attorney that filed the lawsuit says great and files the proof of service with the court.  You never knew about the lawsuit so time to answer the complaint expired and the plaintiff requested and received a default judgment against your for $11,000.  The original issue was a credit account you stopped paying two or three years ago; breach of contract.  Your bank accounts can be levied on.  Your wages can be garnished.  A judgment lien can be recorded against your home or other real property if you own any.  Not good.

The lawsuit filer does have information about you that may or may not still be accurate.  You filled out an application for the credit card or some other type of credit account.  You also made payments on the debt and your checks provide additional information.  Your address, phone number and bank account information.

You are now finding out about the lawsuit because your employer received a wage garnishment notice or your bank account was levied on.  I know, this is the first you are hearing of this lawsuit.  The lawsuit was probably filed over five years ago and has now grown in amount substantially given the 10% judgment interest and addition of attorneys’ fees and expenses.  So what happened?

Top Five Indicators The Lawsuit Was Served Illegally

1.         The Debt or Judgment Is Being Enforced By a Third-Party

These are in no particular order, but the judgment will probably be held or enforced by a third-party collection agency or debt buying company and not the original creditor you did business with.  I have never dealt with this issue when JP Morgan Chase, N.A. or Wells Fargo, N.A. is the named plaintiff and sued someone for breach of contract for nonpayment on a credit card.  It is always some company you will never have heard of that bought the original debt or was assigned the right to enforce the debt.    

Why is this?  It is called capitalism.  The third-party collection agency purchased the original claim against you for less than the amount originally owed.  It is in their financial interest to make the amount owed as large as possible period.  If you try and settle with them they can ask for more money and they make more money.  If they garnish your wages they can get more money. 

It is like anything with high risk.  They have to balance out all of the claims they purchase that they get nothing on with the ones they do get paid on.   

2.         The Default Judgment Is Being Enforced 5 Years Or More After It Was Entered

Overwhelmingly the default judgment is being enforced as long as possible from the entry of the illegal default judgment.  There are two reasons for this.  The main reason is to make your ability to prove the service of the summons and complaint was illegal.  Obtaining records and other proof of your whereabouts from 7 years ago can be challenging.  If you were working at the time the proof of service says you were served at your home do you still have the pay statement evidencing this?  If you are no longer at that job will your former employer help and provide you pay statements from 7 years ago?  If you were living at an address that is different than the address listed on the proof of service do you have your rental agreement from 7 years ago?  It can be very challenging to obtain evidence of your circumstances from 7 years ago.  So they wait.  The default judgment is good for 10 years and then can be renewed.

The other reason is the judgment interest keeps accruing.  If the default judgment was only $3,500 the judgment interest here in California accrues at 10% per annum.  In 7 years that $3,500 default judgment is now includes $2,450.96 in interest for a total of $5,950.96.  Why enforce the default judgment and only receive $3,500 when we can just wait, let the interest accrue and make your ability to prove the service of the lawsuit was not proper more difficult.  

3.         The Proof of Services Says You Were Served By Substitute Service

So what is substitute service?  It is another form of personal service.  It means someone else was served with the summons and complaint other than you.  In California there are a number of requirements to substitute serve someone, but the general requirements are three or more failed attempts at serving you at your dwelling house or usual place of abode.  Then someone you live with over the age of 18 can be served instead.  The process server will give the summons and complaint to your roommate, spouse or some other person over the age of 18 that also lives in you dwelling house or usually place of abode.  Then the summons and complaint must be mailed to you at that service address as well.  A declaration of due diligence is filed with the court describing all of the attempts at service and a description of who was served on your behalf.

You can be served at your place of employment if the summons and complaint are left with your boss or someone in charge.  There are issues with personal service by substitute service at your place of employment though given the nature of it.  You can even be served personally but publication believe it or not. 

Time and time again there is a description of a human being you have no idea who that person is.  If your name is Maria Rodriguez they will insert a description of a Latino person male or female.  Yeah, I know you have no idea who that person is because they never substitute served them.  It is just a made up person.  The problem is height and age are difficult to know when just looking at someone, so there is some gray area. 

The thing is many times someone is living alone.  Or the substitute service was at an address you no longer lived.  There is absolutely no one to substitute serve.  Nonetheless there is a proof of service signed under penalty of perjury that says you were personally served and a default judgment was entered against you.

4.         The Lawsuit is a Collection Lawsuit For Breach of Contract  

I am talking about primarily collection lawsuits for various debts such as credit cards, medical debts or personal loans.  For whatever reason you stopped making payments therefore breaching the contract.  It is easy to hide a lawsuit for an unpaid debt.  It is not possible to hide a lawsuit between neighbors for building a fence on the others property or a lawsuit that is filed to actually fix a problem in real life.  The problem cannot be ignored for years and a party wants it resolved  and a lawsuit is filed to have the fence removed.  It is very easy to hide a lawsuit for an unpaid bill and have the lawsuit move forward without your knowledge. 

5.         You Find Out About The Lawsuit Due To Collection Efforts

Okay, so now 7 years have gone by and the third party collection company that can enforce the illegal default judgment comes to life.  Seven years of interest has accrued so they can maximize their profit.  You then get notice of wage garnishment from your employer’s payroll department.  Or you get a notice of levy on your bank accounts from your bank.  What is this?  It is the illegally obtained default judgment coming back to haunt you.  In California your wages can be garnished up to 25%.  It is usually crippling to most people.  Deduct 25% of your income and see if you can get by each month.  This is when bankruptcy attorneys usually get wind of this problem. 

So What To Do Now?

The first thing you need to do is investigate how the plaintiff or third-party plaintiff collector obtained the default judgment against you at all.  You will need to obtain the complaint and proof of service that were filed with the Court.  These documents in some jurisdictions were free online.  These days like many things that used to be free from the government there is a fee.  You may have to create an account and then pay around a $1.00 per page for the documents.  You need to know how and when the plaintiff and now judgment creditor alleges you were served with the summons and complaint.  First was the debt your debt?  Do you remember incurring the debt and then not paying it?  Next review the proof of service for the date, time, location and description of the person that was allegedly served.  If there are any inaccuracies or impossible circumstances listed you may or may not want to seek advice of counsel about seeking recourse.     

Getting Rid of the Default Judgment

So this is not so simple and it is not free.  If the service was illegal the process server or plaintiff should have to pay for getting rid of the default judgment.  Nothing is ever that simple though.  The first thing you must consider is what is the recourse if you are successful in getting the default judgment vacated?  Can the plaintiff just turn around and then immediately serve you properly and proceed to collect on the judgment?  If so what good is spending the time and money to get rid of the illegal default judgment?  If you get rid of the default judgment do you have funds to try and settle the debt or make payments so the plaintiff will not continue to seek a judgment against you again?  Can the case be dismissed entirely with prejudice with prejudice so you never have to worry about it again?  There are many issues to discuss as to what to do about an illegally obtained default judgment.  Everything takes time and money and there is no guarantee the Court will vacate the default judgment or make the other party pay for the time and expense to make it right.

Bankruptcy Could Be The Answer

Sadly filing for bankruptcy and obtaining a discharge could be the cheapest, quickest and easiest way to stop the wage garnishment or bank levy.  Filing bankruptcy fast enough can even get back garnished earnings or levied funds.  Please contact a bankruptcy attorney in your jurisdiction for more information about whether you qualify to seek relief from your debts via bankruptcy.  Bankruptcy will make it all go away forever by federal court order; an order of discharge.  You have to file for bankruptcy to get it though………….

Another Victim of the Title Presumption vs. Community Property Presumption

By Ryan C. Wood

While we wait for the California Supreme Court to weigh in on the legal effect of a married couple purchasing real property during marriage but taking title to the property as joint tenants sad cases continue to pile up.  Under California law two parties, whether married or not, may take title to real property as joint tenants.  The main feature or benefit of taking title as a joint tenant is the right of survivorship that comes along with it.  This is particularly beneficial to married couples as it allows them to avoid going through probate upon the death of a spouse.  The real property just passes to the surviving spouse.  California law also provides that when title is as joint tenants the one half interest in the property is the person’s separate property and not community property.  Here is where it gets crazy though.  The real property being separate property is only true under certain circumstances and not all circumstances?  In comes the community property presumption regarding property acquired during marriage.  So far various courts, not the Supreme Court of California, have held in the bankruptcy context the community property presumption wins, not how the actually legal recorded title is taken at the time of purchase.  The actual legal title is not sufficient evidence to show the married couples intent that the real property acquired during marriage be each spouses separate property. 

When married couples get divorced in community property states the community property is supposed to be divided 50/50 unless the spouses agree otherwise or there has been a transmutation of the property from being community property to the separate property of one of the spouses.  Simply put, transmutation laws cannot apply to a piece of real property acquired during marriage.  Spouses are not transferring anything when purchasing a house during marriage.  They are acquiring it and taking title as joint tenants evidencing their intent for the house to be separate property……..  Also, how is a piece of real property titled as joint tenants where each spouse owns a 50 percent interest not consistent with community property law and dividing the community property 50/50 upon divorce?  Seems like it is consistent so what is the problem?  Oh wait, this is only applicable in a divorce and not under other circumstances like filing bankruptcy?       

On November 8, 2018, the Ninth Circuit Court of Appeals entered an order certifying question to the Supreme Court of California as follows:

“Does the form of title presumption set forth in section 662 of the California Evidence Code overcome the community property presumption set forth in section 760 of the California Family Code in Chapter 7 bankruptcy cases where: (1) the debtor husband and non-debtor wife acquire property from a third party as joint tenants; (2) the deed to that property conveys the property at issue to the debtor husband and non-debtor wife as joint tenants; and (3) the interests of the debtor and non-debtor spouse are aligned against the trustee of the bankruptcy estate?”

In the meantime cases are still being decided that provide the community property presumption is what matters and not the clear and convincing evidence of a recorded title as joint tenants giving each spouse a separate property interest in the purchased home.  In a prior blog article I provide all the different cases regarding this issue.  I have listed them again at the end of this article.  A recent Ninth Circuit Bankruptcy Appellate Panel cases provides some additional feedback on this issue a couple interesting twists.  Unfortunately the same result was found; the legal taking of title as joint tenants was trumped by the community property presumption.

Why Do Bankruptcy Attorneys Care So Much About This Issue?

Each spouse has the right to file for bankruptcy protection even if married.  When one spouse files all community property and the separate property of the filing spouse is part of the bankruptcy estate.  The separate property of the non-filing spouse is not part of the assets that must be listed.  If a house of a married couple has equity of $200,000 and the title is held as joint tenants we should only have to list the filing spouse’s portion or $100,000.  Ignoring the title of the house as joint tenants and calling the house community property requires us to schedule the equity in the house as the entire $200,000 interest even though taking title as joint tenants is supposed to provide each spouse has a separate property interest.  As of right now a married couple is only entitled to a homestead exemption to protect equity in a primary residence of $100,000 pursuant to California law.  So an interpretation of the law that says the community property presumption wins instead of the title presumption creates a bankruptcy estate twice as large, not exemptable/protectable under the example above.  This creates a large obligation to creditors that would not exist if the title presumption was properly followed given title as joint tenants under California law provides the spouses interest is their separate property…

Recent Ninth Circuit Bankruptcy Appellate Panel Case

In an unpublished opinion by the Ninth Circuit Bankruptcy Panel a couple in Southern California seemingly did everything to provide the real property they acquired during marriage be held as joint tenants, separate property and not community property.  They even had a post-nuptial agreement providing additional language to strengthen their intent to have the real property be deemed separate property.  The problem is a bankruptcy case under chapter 7 of the Bankruptcy Code was filed and what a family law attorney or estate planning attorney would believe to be true simply is not the case in the context of filing bankruptcy.  There were also some cracks in the documents of this married couple and that is what makes this particular case interesting.

Facts of the Chapter 7 Bankruptcy Case Appealed

The lower bankruptcy court held regarding the character of real property owned by the debtor at the time the bankruptcy case was filed as; (1) the properties were presumed to be community property despite the fact that they were held by the couple as joint tenants, and (2) Non-filing spouse did not produce evidence sufficient to raise a genuine issue of material fact regarding the character of the ownership of the properties.  The Ninth Circuit Bankruptcy Appellate Panel affirmed the decision and agreed with the lower bankruptcy court.

The specific issues that are part of this current appeal involve a postnuptial agreement between the spouses and evidence of third party family members of the filing spouse providing down payments for the properties acquired during the marriage.  While I believe the taking and recording of title as joint tenants is clear and convincing evidence of a married couples’ intent to take the real property acquired during marriage as separate property that is not the current interpretation. 

In this chapter 7 case there were actually two different properties purchased during marriage that added complications.  The couple also entered into the postnuptial agreement after purchasing one property and not before purchasing both properties.  Unfortunately the postnuptial agreement did not include language addressing the purchase of the first property prior to the postnuptial agreement.  If the postnuptial agreement did say the purchase of the first property was to be held as separate property maybe things would have been different.  The postnuptial agreement provided the amounts paid by third party relatives would be part of the equation to determine the spouses interest in the purchased properties.  Again, there was no mention of the first purchased property though…..  The bankruptcy case was originally filed as a chapter 11 reorganization and later converted to a chapter 7 case.  This also is significant but I will not get into that other than the bankruptcy case becomes a liquidation of not exempt/protectable assets such as the two pieces of real property/houses.

Naturally the chapter 7 trustee assigned to the bankruptcy case properly sought to liquidate the bankruptcy estate and the question arose as to what is part of the bankruptcy estate.  The lower bankruptcy court held that the homes were part of the bankruptcy estate and the evidence presented did not overcome the presumption of the community property.  What is a new wrinkle from most cases like this was the postnuptial agreement.  The lower bankruptcy court held and the Ninth Circuit Bankruptcy Appellate Panel agreed that the postnuptial agreement did not apply given it was not recorded pursuant to California Family Code Section 852(b), transmutation law of assets acquired during marriage, and under California Civil Code Section 1217, that unrecorded instruments are only valid between the parties to the instrument and those have notice of it.  So the chapter 7 trustee was not bound by the postnuptial agreement and the spouses intent to hold property as separate property.  Again I argue this is a misapplication of California transmutation laws given these properties are acquired during marriage and the title is taken as joint tenants, separate property, and the recorded title is clear and convincing evidence of their intent.  This of course is not how the law is being interpreted.  So the recorded title as joint tenants does not provide notice of the spouses intent to third parties and the taking of title as joint tenants is not a valid transmutation……..

As a bankruptcy attorney I hope the Supreme Court of California comes to a different conclusion on this issue soon.  As of right now there is no such thing as taking title to property as joint tenants that creates a separate property interest in the property without creating additional documentation as to the spouses intent.  There are also not clear answers to exactly what the documentation should be for a court to hold the property title as joint tenants is separate property.  Whatever that documentation is should be notarized and recorded so that all third parties have notice of the spouses’ intent the hold the property as joint tenants and be entitled to separate property status under any and all circumstances; including filing for bankruptcy protection.    

Brace v. Speier (In re Brace), 566 B.R. 13 (9th Cir. BAP 2017)

Valli v. Valli (In re Marriage of Valli), 58 Cal. 4th 1396, 1400 (2014)

In re Obedian, 546 B.R. 409, 422 (Bankr. C.D. Cal. 2016)

Hanf v. Summers (In re Summers), 332 F.3d 1240, 1243 (9th Cir. 2003)

What Is This Request For Special Notice In My Bankruptcy Case?

By Ryan C. Wood

If you recently filed for bankruptcy protection you may have received a document in the mail entitled request for special notice.  This is a creditor requesting that all documents filed in the case be served on them so they know what is going on in the case.  You may be surprised to learn that when a bankruptcy case is filed creditors only receive the two page notice of meeting of creditors.  Creditors do not receive the actual petition, statements or supporting schedules.  If a creditor does nothing further the notice of meeting of creditors will be the ONLY document they receive until the order of discharge or order confirming a plan of reorganization is served on them later on in the case.      

Why Is This?

Quite simply just like in many areas of the law parties are required to enforce their rights.  If you snooze you lose.  Bankruptcy is a very time sensitive process.  There are a number of deadlines and some are absolute.  If you miss certain deadlines you are done for.  Creditors actually have to participate in the bankruptcy case and obtain the petition and supporting documents themselves to know what is going on and enforce their rights.   Again, creditors listed in bankruptcy petitions only receive the notice of meeting of creditors in the mail after the filing of the bankruptcy petition.  There are applicable statutes of limitations for various causes of action like breach of contract or personal injury claims pursuant to state laws.  Creditors are supposed participate in the bankruptcy process and enforce their rights just like they have to under applicable state laws when a claim exists.   Again, if you snooze you lose.

For example there are 60 days from the date of the first scheduled meeting of creditors for a creditor or party in interest to file an adversary proceeding to object to a debtors discharge or dischargeability of the underlying debt unless this deadline is extended within the 60 day period.  This is a deadline provided in the notice of meeting of creditors and is generally absolute.  If you file the adversary proceeding on day 61 the Bankruptcy Code, Federal Rules of Bankruptcy Procedure and case law supports the adversary proceeding should be dismissed as not timely filed.      

Disturbing Trend

An extremely disturbing trend is for bankruptcy trustees, judges and the clerk’s office stepping into the shoes of creditors whether knowingly or not.  It is open to interpretation as to the responsibilities of trustee’s and various unrelated parties to creditors.  This creates rights and obligations that do not actually exist though.  Whether certain amended schedules have to be served on creditors is provided for in the Federal Rules of Bankruptcy Procedure and Bankruptcy Local Rules on a jurisdictional basis.

FRBP 4003(b)

(b) Objecting to a Claim of Exemptions: (1) Except as provided in paragraphs (2) and (3), a party in interest may file an objection to the list of property claimed as exempt within 30 days after the meeting of creditors held under §341(a) is concluded or within 30 days after any amendment to the list or supplemental schedules is filed, whichever is later. The court may, for cause, extend the time for filing objections if, before the time to object expires, a party in interest files a request for an extension.

Exemptions are what protect assets and exclude the assets of a bankruptcy filer from the bankruptcy estate.  This is basic statutory interpretation 101.  So a party has until 30 days after the meeting of creditors to object to claimed exemptions or from when any amendment to the list or supplemental schedules are filed, and there is no language requiring serving on anyone with an amend Schedule C.  This is the plain language of FRBP 4003 and it is unambiguous.  If Congress wanted the amended Schedule C to be filed and served the word served would also be included.  Depending upon your jurisdiction you may have a local rule that requires service of the amended Schedule C.  Here in the Northern District of California there is no such local rule requirement.

In interpreting statutes “[t]he starting point of [the] inquiry is the language of the statute itself.”  United States v. Cabaccang, 332 F.3d 622, 625 (9th Cir. 2003) (en banc).  In so doing, we use canons of construction.  Those canons: help courts determine the meaning of legislation, and in interpreting a statute a court should always turn first to one, cardinal canon before all others.  We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there.  When the words of a statute are unambiguous, then, this first canon is also the last: “judicial inquiry is complete.”

Unfortunately some chapter 13 trustees object to approval of chapter 13 plans of reorganization and require bankruptcy attorneys to provide and pay for service of amended schedules when the law does not require it.  This phantom service requirement is costly and provides rights to creditor the law does not actually provide.  The creditor should have filed a simple one page request for special notice that takes minutes and participated in the bankruptcy case and then all documents filed would then be served on them.   Sadly bankruptcy attorneys choose to capitulate to the trustee demands for service because it is even more costly to have a contested confirmation hearing to have the court overrule the trustee’s objection to confirmation or approval of the chapter 13 plan.  Damned if you do and more damned if you do not even though the words on paper are clear as day.  See most jurisdictions have what are called no look fees or flat fees for various circumstances in chapter 13 cases.  There is the basic case fee plus add-ons like owning a home or having vehicle loans.  There are no add-ons for having to meet requirements that do not exist.  If the bankruptcy attorney and client choose to fight and have the objection to confirmation overruled the bankruptcy attorney is just going to spend a bunch of their own time and money which also will result in delay of confirmation or approval of the chapter 13 plan that may have unforeseen consequences.  This is a sad dynamic that exists and is getting worse. 

Another examples is here in the Northern District of California we have this wonderful Bankruptcy Local Rule, B.L.R. 3015-1 that provides only parties or creditors adversely affected by a plan of reorganization amendment are entitle to service of the amended plan.  Well this makes perfect sense.  If a party is not adversely affected then what is the problem?  Again, chapter 13 trustees ignore the plain language of this Bankruptcy Local Rule and create an obligation to service of an amended plan that does not exist thereby increasing costs in the bankruptcy case.

Another example of this is FRBP 3002.1 or the notice of final cure.  While this is actually a great thing because it requires a secured creditor like a mortgage lender to have provide a notice as to whether the bankruptcy filer is current on the loan or mortgage when a chapter 13 case ends it has created problems when there are disagreements over how much is still owed or that anything is owed at all.  This issue is created because of the mistaken interpretation of bankruptcy attorneys right to payment for their time.  The opinion is that all bankruptcy attorneys fees must be paid through the chapter 13 plan unless ordered by the Court.  The opinion that any unpaid bankruptcy attorney fees are discharged unless paid through the plan adds an even more troubling wrinkle to a bankruptcy attorneys duty to properly represent their client.  The Notice of Final Cure is filed after completion of the chapter 13 plan, so how would the time spent and fees reasonable earned ever be paid through the chapter 13 plan?  This issue actually came up in a case and the case was appealed to the Ninth Circuit Bankruptcy Appellate Panel.  The 9th Circuit BAP held that fees the bankruptcy attorney earned for doing their job properly could not be paid given the plan was done and in their opinion had to be paid through the plan.  This is even though FRBP 3002.1 provides: (i) Failure to Notify. If the holder of a claim fails to provide any information as required by subdivision (b), (c), or (g) of this rule, the court may, after notice and hearing, take either or both of the following actions: (1) preclude the holder from presenting the omitted information, in any form, as evidence in any contested matter or adversary proceeding in the case, unless the court determines that the failure was substantially justified or is harmless; or (2) award other appropriate relief, including reasonable expenses and attorney’s fees caused by the failure.

Section (i)(2) provides for the award of reasonable attorney’s caused by the failure to provide proper or accurate information in the notice of final cure?  Or just reasonable attorney’s fees if the notice is not filed at all?  Even if the reasonable attorney’s fees are awarded how are they to be paid when most courts incorrectly believe all bankruptcy attorney’s fees and expenses have to be paid through a plan that will now have been completed……..?  More to come on this issue.