What Happens to my Car if I File Bankruptcy?

By: Justin M. Kincheloe, Esq.

I hear this question often from clients who are about to file for bankruptcy.  In most cases, the debtor is able to keep his or her vehicle.  However, the answer to this question depends on a number of factors.  If the vehicle has been paid off, then the debtor is able to keep his or her vehicle so long as it can be exempted.  Exemptions are laws used to protect a bankruptcy debtor’s property from being liquidated in the bankruptcy proceedings.  Exemptions have dollar limits depending on the type of property they are being used to protect.  In California, the motor vehicle exemption and sometimes the “Wild Card” exemption allow bankruptcy debtors to keep their vehicles in a vast majority of cases.  However, if the debtor’s vehicle is worth more than he or she can protect under applicable exemption laws, then the debtor will be in jeopardy of having the vehicle liquidated (sold) by the bankruptcy trustee.

If the vehicle has not been paid off, then the debtor must continue making all payments to the lender if he or she wishes to keep the vehicle.  After the bankruptcy is filed, most lenders will require the debtor to sign a reaffirmation agreement.  A reaffirmation is basically an agreement to exclude the auto loan from the debtor’s bankruptcy.  Thus, once a reaffirmation agreement is signed, filed, and approved by the court, the lender will retain all of its rights with respect to the vehicle and may repossess the vehicle if the debtor subsequently falls behind on payments.  The lender would also be entitled to recover any deficiency amount from the debtor if the vehicle is sold at auction for an amount less than the total amount owed on the note.  This is why a debtor must give reaffirmation some thought.  If the debtor has an unfavorable auto loan with a high interest rate or is far behind on payments, it is probably a better idea to surrender the vehicle.  It is highly recommended that a debtor seek the advice of an attorney if being asked to sign a reaffirmation agreement.

There is also the rare case of redemption.  Redeeming a vehicle in bankruptcy means that the debtor pays the fair market value of the vehicle to the lender in one lump sum payment.  The vehicle is then treated as being completely paid off and any remaining amount owing on the loan is discharged in the bankruptcy.  Redemption requires the debtor to file a motion with the court to determine the appropriate value of the vehicle.

It is always a good idea to consult with a knowledgeable attorney when filing bankruptcy.  For more information about any Bankruptcy related issues, you should contact our experienced attorneys at Thompson Steinberg.

Justin M. Kincheloe, Esq.

P: 951-359-1209 x202

E: justin@tsattys.com

W: www.tsattys.com

Justin Kincheloe is a partner and co-founder at Thompson Steinberg.  He is licensed to practice in California and has been practicing consumer bankruptcy law for over three years.  Mr. Kincheloe was born and raised in Des Moines, Iowa before moving to California.  He strongly objects to the smell of musky colognes.

**The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This blog posting does not create any attorney-client relationship with the author.  For specific advice about your particular situation, please consult with your own attorney.**

Can Your Debts be Enforced Against Your Spouse?

By: Scott M. Tanner, Esq.

One of the more common misconceptions in the debt collection/debt defense industry (attorneys and consumers alike) is that a debt incurred by one spouse cannot be enforced against the assets (i.e. the wages) of a nondebtor spouse.  In fact, as a person’s earnings during marriage are community property (Fam. C. §297.5, 760), a nondebtor spouse’s earnings ARE GENERALLY SUBJECT TO ENFORCEMENT.  That said, there is a very narrow exception to this general rule where 1) The debt at issue was incurred before the marriage; AND 2) The relevant earnings are kept in a separate deposit account which the debtor spouse does not have access to; AND 3) The nondebtor’s earnings are not commingled with other community property; AND 4) The debt at issue is not a “necessary of life” (i.e. food, shelter, clothing…etc.).  Unless, this strange congruence of facts is applicable, one should expect that they are on the hook for their spouse’s debt.

All is not lost, however, an earnings withholding order alone (the typical form used to, among other things, garnish wages) will not be sufficient to reach the nondebtor spouse’s earnings, a court order upon noticed motion is necessary. CCP §706.109.  This is a significant second step in the collection process that can often take several months to accomplish.  What’s more, the same exemptions that apply to a judgment debtor’s earnings (i.e. for social security income or public benefits) apply to the earnings of the nondebtor spouse.

If you or your spouse have had your wages garnished, your checking account levied, or a lien placed on your home, call the experienced and knowledgeable debt defense attorneys at Thompson Steinberg.

Scott M. Tanner, Esq.

P: 951-359-1209

E: scott@tsattys.com

W: www.tsattys.com

Scott M. Tanner is a partner and co-founder of Thompson Steinberg.  He has extensive experience in all aspects of commercial and consumer/retail collections, debt litigation, creditor’s right, and FDCPA, RFDCPA, TCPA, and FCRA compliance and litigation.  Mr. Tanner has successfully represented business entities of various sizes – ranging from small, mom-and-pop type local businesses, to major national and multinational corporations.  He enjoys hanging his left hand out the car window while driving to court.

**The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This blog posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.**

Law Made Easy: How to Enforce a Judgment

By: Scott M. Tanner, Esq.

In simple terms, this guide takes its readers through the necessary steps to enforce a judgment, including form numbers, costs, and tricks of the trade.

This guide is intended to be general in nature and does not cover every form of judgment enforcement, simply the most common.

Background

As a preliminary matter, the first and most important step to enforcing a judgment is verifying the existence of an asset.  In order to enforce a judgment, there must be something to enforce the judgment against.  (“Assets” in this context will generally refer to checking or savings accounts, wages, or real property.)

Unfortunately, it is often asset verification (“skip tracing” as it’s referred to in the collection industry) that can prove to be the most difficult step in judgment enforcement.  Some people work very hard to maintain their privacy and, often, are very successful at doing so.

The most common techniques for verifying the existence of an asset are judgment debtor’s examinations, web/social media searches, and paid databases (i.e. LexisNexis, Accurint…etc.).

In my 10 years of experience, asset verification is the single area where an attorney and/or collection agency is the most helpful.

The Writ/The Abstract ($30-$40)

Assuming you’ve been successful in verifying the existence of an asset, the next step is to obtain a court document allowing you to execute your judgment.

In order to execute a judgment, one of two documents will likely be necessary:  a Writ of Execution (form EJ-130) or an Abstract of Judgment (EJ-001).

A Writ of Execution allows its holder to take property or money from the judgment debtor.  Writs are used to enforce judgments against bank accounts and wages.

An Abstract of Judgment allows its holder to place a lien on real property.  It is generally only used for purposes of attaching to a piece of real property.

Obtaining either of the above documents is relatively easy; fill the relevant form out, forward it to the court with a copy of the judgment, two additional copies of the document, a check for $30 or so (I’m not sure what the current fee is, but it’s not much more than $30) and a self-addressed, stamped envelope.

Serving the Writ/Recording the Abstract ($20-$40)

Now that you’ve obtained the relevant execution document, it’s time to put that document to use.  It is at this point in the process that judgment enforcement can become a little more complicated.

Wages:  To garnish wages submit the original Writ, an Application for Earnings Withholding (form WG-001), a check for $30 for sheriff service of the document, and a copy of the judgment to the sheriff of the county in which the relevant employer is located.

Bank Levy:  The steps are essentially identical to the steps for a wage garnishment, except instead of send an Application for EWO, send a letter entitled “Sheriff’s Instructions – Bank Levy.”  In this letter, detail the location of the bank, account number, and account holder’s name.

Property Lien:  Simply forward the Abstract of Judgment, a self-addressed, stamped envelope, and an additional copy of the Abstract to the County Recorder in the county where the property is located.  The fee for recording the Abstract varies ($20-$40).

The Waiting Game

The most frustrating part of the judgment enforcement process is the wait.  Due to budget cuts, many of the public entities you’ll be working with will be way behind on processing judgment enforcing documents.

As a general rule of thumb, I tell my clients to expect a wait of 3-6 months before they might expect their first payment from any of the above enforcement techniques.

What’s more, if relevant, a property lien will not be paid until the property is sold or the debtor seeks a mortgage on the relevant property.  This could be years, and, in fact, may never happen.

Assuming you’ve sent copies of each of the relevant documents to the Sheriff/County Recorder, you will receive conformed copies of each document for your records.  Save these copies as receipts.

Perhaps the subject of another legal guide, be aware that it is very possible the judgment debtor can challenge the enforcement technique you choose with a Claim of Exemption – making the process even more extended.

If you have a judgment and you need help enforcing it, call the experienced and knowledgeable debt collection/judgment enforcement attorneys at Thompson Steinberg.

Scott M. Tanner, Esq.

P: 951-359-1209

E: scott@tsattys.com

W: www.tsattys.com

Scott M. Tanner is a partner and co-founder of Thompson Steinberg.  He has extensive experience in all aspects of commercial and consumer/retail collections, debt litigation, creditor’s right, and FDCPA, RFDCPA, TCPA, and FCRA compliance and litigation.  Mr. Tanner has successfully represented business entities of various sizes – ranging from small, mom-and-pop type local businesses, to major national and multinational corporations.  He enjoys hanging his left hand out the car window while driving to court.

**The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This blog posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.**

Renters: Don’t Allow Landlords to Bully You out of Your Home!

By: Matt Thompson, Esq.

Renters in California know your rights! Even if you have violated terms of your lease or rental agreement, the landlord may not evict you without going through the necessary legal steps. This starts with notice given by the landlord then the filing of an Unlawful Detainer and ends with the Court issuing a writ of possession. Landlord self help and lockouts are illegal and a landlord who uses such tactics may be subject to fines under California law.

If you have violated the terms of your lease or rental agreement, the landlord must still give you a written notice, notifying you of what terms you are violating and giving you at least 3 days to fix whatever the problem is. If you are not in breach of any of the terms, then the landlord must give you a 30 day written notice if you have lived in the property for less than a year or a 60 written day notice if you have lived in the property for more than a year.

After written notice has been given and the landlord has waited the required time, they may file an Unlawful Detainer action. Once the Unlawful Detainer action has been filed, a hearing will be scheduled and they must give you, the tenant, notice of this in writing. You will then have an opportunity to file an answer.  If you do not file an answer or do not appear, the court will give the landlord a default judgment.

If a default judgment is entered or the court sides with the landlord, then you will be served with a writ of possession, by the sheriff, allowing you 5 days to move out voluntarily or be moved out by the sheriff

A landlord may not remove a tenant or the tenants’ property, change the locks, cut off utilities or anything else that would interfere with the tenants’ ability to access his property until they have gone through the steps required by the law.  If a landlord does use any of these unlawful methods the landlord may be subject to liability for the tenant’s damages, as well as penalties of up to $100 per day for the time that the landlord used the unlawful methods.  Know your rights and don’t let landlords take advantage of you or your situation!

Matt Thompson, Esq.

P: 951-359-1209 x201

E: matt@tsattys.com

W: www.tsattys.com

Mr. Thompson has extensive experience in foreclosures with an emphasis on post foreclosure title clearance and evictions as well as representing many large creditors in handling creditor side bankruptcy issues.  Mr.  Thompson is the sole responsible party for changing the batteries of all the smoke alarms in his home.

**The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This blog posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.**

An Offer to Compromise: Snatching Defeat out of the Jaws of Victory

By: Sam Steinberg, Esq.

The California Code of Civil Procedure contains an often overlooked but very powerful weapon in the arsenal of the litigant’s toolbox that when used properly can turn victory into defeat.

The Code of Civil Procedure, Section 998, is a cost-shifting statute designed to encourages parties to settle prior to trial and provides for penalties for a party that rejects an opportunity to settle and fails to get better result at trial.  Traditionally, California allows for the “prevailing party” to recover all costs. However, CCP Section 998 can shift the burden of incurring costs to the non-prevailing party.

For a plaintiff in a motor vehicle accident case, receiving such an offer from the defense side must be carefully considered and taken very seriously as it can easily turn a solid victory into a sound defeat.

California case law has described the cost-shifting provision of the statute as designed to “punish” the party that fails to accept a potential settlement prior to trial. If an Offer to Compromise is made and rejected and the prevailing party fails to obtain a better result at trial, “then the prevailing party is precluded from recovering its own post-offer costs and must pay its opponent’s post-offer costs, including expert witness fees, if awarded in the court’s discretion.”

Here is how the statute would work in a hypothetical situation: let’s say Driver A is rear ended by an intoxicated Driver B at a stop light on Magnolia Avenue and McKinley Street, in Riverside. Driver B is factually and legally responsible for the accident; in fact, liability is not disputed by Driver B’s attorney.  Driver B’s insurance carrier retains an attorney to defend the lawsuit brought by Driver A, and disputes damages only. Driver B’s attorney subsequently prepares and submits a 998 Offer to Compromise for a total of $50,000. Driver A turns down the Offer to Compromise and proceeds to trial and receives an award for $49,000. Although Driver A is plainly the “prevailing party” he will now be penalized for his failure to accept the settlement offer and Driver A will be obligated to pay for Driver B’s costs, including expert witness fees. Imagine now that the insurance carrier for Driver B expends $38,000 in expert costs (not an uncommon scenario for insurance industry experts). The court, using its discretion, will shift all or some of that burden to Driver A pursuant to C.C.P. 998. After Driver A accounts for medical expenses, attorney fees  and court costs, he may well be in the hole for several thousand dollars.  Although Driver A was the prevailing party, the cost-shifting statute has made him the practical loser.

Plaintiffs in motor vehicle accident cases are particularly vulnerable to this scenario because they are not usually the party to expend a great deal on expert witnesses. The plaintiff’s largest cost tends to be the attorney fees, and the language of the statute makes plain that attorney’s fees are “not costs” for the purposes of cost-shifting.

It’s the defendant (usually via the insurance company appointed defense counsel) that tends to rack up high expert witness costs. The plaintiff will likely rely on his actual treating physicians for support in pursuing his claim. Therefore, in the motor-vehicle accident context, it’s the defendant that will likely make the Offer to Compromise, having the most to gain.

There is no clear cut way to respond to an offer to compromise; each case must be considered along with its own unique facts along with a comparison to the potential recoverable damages. However, what is clear is that any such offer must be carefully analyzed so as to avoid turning a victory into a defeat.

Sam A. Steinberg, Esq.

P: 951-359-1209 x203

E: sam@tsattys.com

W: www.tsattys.com

Sam Steinberg is a partner and co-founder of Thompson Steinberg.  He has extensive experience in all aspects of insurance, insurance coverage, and insurance litigation, vehicular accidents, personal injury, construction defect litigation, and general litigation.  He has a black cat that roams his home freely.

**The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This blog posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.**

Serial Bankruptcy Filers

By: Justin M. Kincheloe, Esq.

John Homeowner is in jeopardy of losing his home to foreclosure and decides to file bankruptcy.  John doesn’t really have any other debts; he just needs to delay the foreclosure.  He doesn’t show up to his 341(a) hearing and his case is dismissed by the court about two and a half months after filing.  John is happy that he was able to buy himself some time, but is still not ready to leave the home.  The bank learns that the case has been dismissed and sets a new sale date.  John wants to delay the foreclosure again, so he files a second bankruptcy.

What John does not know is that the automatic stay (the court order that prevents creditors from making attempts to collect on a debt) in his refiled bankruptcy case will only last 30 days.  After that, the bank will be free to continue with foreclosure despite the pending bankruptcy.  This is because 11 U.S.C. § 362(c)(3)(A) only provides for a 30-day automatic stay when a bankruptcy is refiled within one year of the prior case.  If more than one bankruptcy has been filed within the last year, then the automatic stay does not go into effect at all.  If John wants to have the automatic stay extended past the 30 days, then he will need to immediately file a motion with the court and convince the judge that this second bankruptcy case has been filed in good faith (not an easy task considering John’s history).  John fails to file a motion in time and the 30-day automatic stay expires.  The bank then proceeds with foreclosure and sells the home.  It is now too late for John and he must vacate the home or face eviction.

John now has two bankruptcies on his credit record and has lost his home to foreclosure.  With sufficient income, John could have possibly saved his home by filing a Chapter 13 and repaying the arrears on his mortgage over time.  John should have consulted with a knowledgeable attorney to understand his options and the consequences.  Had he done that, he may have been able to take a more favorable course of action.

The attorneys at Thompson Steinberg can help if you are dealing with foreclosure issues.  Please call Justin M. Kincheloe, Esq. at 951-359-1209 to schedule a free consultation.

Justin M. Kincheloe, Esq.

P: 951-359-1209 x202

E: justin@tsattys.com

W: www.tsattys.com

Justin Kincheloe is a partner and co-founder at Thompson Steinberg.  He is licensed to practice in California and has been practicing consumer bankruptcy law for over three years.  Mr. Kincheloe was born and raised in Des Moines, Iowa before moving to California.  He strongly objects to the smell of musky colognes.

**The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This blog posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.**

Account Stated – Don’t Sit on Your Rights!

By: Scott M. Tanner, Esq.

If you receive a bill you don’t owe or receive a bill with a balance different than what you actually owe, OBJECT, OBJECT, OBJECT!

Among the most common tactics for enforcing any debt is the common count “Account Stated.” Generally speaking, an action on an account stated theory will alleged that some indebtedness existed between two parties and that the debtor-party, by either words or conduct, agreed with the creditor-party as to the particular amount of money is owed.  See California Civil Jury Instruction 373.

Of critical importance in establishing an action upon an account stated is the idea that silence is deemed by the court to be acceptance of the balance. “The agreement of the parties necessary to establish an account stated need not be express and frequently is implied from the circumstances. In the usual situation, it comes about by the creditor rendering a statement of the account to the debtor.  If the debtor fails to object to the statement within a reasonable time, the law implies his agreement that the account is correct as rendered.” Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600.  As such, failing to object within a reasonable time to a balance allegedly due will result in that balance being conclusively established as the balance due.

The general policy underlying an account stated theory, as is so often the case in the law, is that society should discourage parties from sitting on their rights.  The ability to challenge the balance allegedly owed to a creditor is limited.  If you see an error in any bill sent to you, it is critical you object to the bill and make clear you dispute the balance being alleged.

If you need help challenging a debt, call the experienced and knowledgeable debt attorneys at Thompson Steinberg.

Scott M. Tanner, Esq.

P: 951-359-1209

E: scott@tsattys.com

W: www.tsattys.com

Scott M. Tanner is a partner and co-founder of Thompson Steinberg.  He has extensive experience in all aspects of commercial and consumer/retail collections, debt litigation, creditor’s right, and FDCPA, RFDCPA, TCPA, and FCRA compliance and litigation.  Mr. Tanner has successfully represented business entities of various sizes – ranging from small, mom-and-pop type local businesses, to major national and multinational corporations.  He enjoys hanging his left hand out the car window while driving to court.

**The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This blog posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.**