Author Archives: Ryan C. Wood

About Ryan C. Wood

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

What Should I Expect at My Meeting of Creditors?

By Ryan C. Wood

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

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

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

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

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

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

New San Francisco and Oakland Divisions Model Chapter 13 Plans

By Ryan C. Wood

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

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

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

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

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

Judgment Liens and Filing Bankruptcy

By Ryan C. Wood

One of the main purposes of filing bankruptcy is to obtain the bankruptcy discharge. A discharge of your debts in bankruptcy releases you from personal liability for the payment of the debts. There are certain debts that cannot be discharged in bankruptcy (such as child support obligations, student loans (Undue Hardship Discharge exception), recent tax obligations, etc.). In addition to these nondischargeable debts, if you have any secured liens on your property (such as mortgages or car liens), those liens survive the bankruptcy. If you do not pay for the mortgage or the car, the house or car can be foreclosed or repossessed because you used your house or car as collateral for the debt. What happens if you have a judgment lien prior to the filing of your bankruptcy case? Is this judgment lien enforceable after your bankruptcy case is completed and the order of discharge entered? It depends.

Judgment Liens on Real Property

Judgment liens attached to your real property prior to the filing of your bankruptcy case can be avoided if they impair your exemptions. Your bankruptcy attorney should be able to help you file a motion to avoid the judgment lien if this is the case. This can be done in either a Chapter 7 or Chapter 13 bankruptcy case. If the judgment lien is avoided the lien is extinguished and is not enforceable after your bankruptcy case is completed and the order of discharge entered. If the lien cannot be avoided because it does not impair an exemption and there is sufficient equity in your home then the judgment lien remains even after your bankruptcy case is completed. If you have no equity in your home, you owe more on your mortgage than the house is worth, you can strip off judgment liens when filing a Chapter 13 bankruptcy. Your bankruptcy lawyer can help you file a motion to value the real property and strip off the judgment lien along with other junior liens like second mortgages or equity lines of credit in a Chapter 13 bankruptcy case.

Judgment Liens on Personal Property

If you did not own any real estate at the time you filed your bankruptcy case then whether or not the judgment lien attached to personal property depends on the jurisdiction you live in. If the lien did attach to personal property then you can file a motion to avoid the lien if it impairs your exemptions. If the judgment lien did not attach to any personal property, the lien is extinguished once you receive a discharge of your debt. The judgment lien cannot attach to any property you acquire after your bankruptcy case is closed. If any judgment creditor attempts to collect on the lien it would be a discharge violation and the judgment creditor can be subject to sanctions from the court.

My Title Company Refuses to Close on my After-Acquired House

There have been instances where the title company refuses to close on a new house that is acquired after your bankruptcy case is completed until the judgment lien is satisfied. That is contrary to the bankruptcy laws, especially 11 U.S.C. §524 that states that a discharge in the bankruptcy case voids any judgment and operates as an injunction for any commencement or continuation of any collection activity against the bankruptcy filer. If the title company refuses to close on your house for this reason, you have several different options: (1) explain to your title company or their attorney that their actions violate 11 U.S.C. §524 and are sanctionable, (2) fire your title company because they do not know what they are doing and hire a new title company, (3) file your discharge order in the county where the judgment lien is filed, (4) contact the judgment creditor and have them release the lien, (5) if the judgment creditor tries to place the lien on the after acquired property they can be sanctioned by the court for a discharge violation, or (6) reopen your case to file a motion to avoid the lien. Please be aware that in some jurisdictions the motion to avoid lien will be denied because the bankruptcy filer did not own any property on which the judgment lien had attached before the bankruptcy and therefore there was no lien for the bankruptcy filer to avoid. See in re Hamilton, 286 B.R. 291.

Rapper DMX Files for Chapter 11 Bankruptcy Relief

By Ryan C. Wood

Rapper DMX filed for Chapter 11 bankruptcy relief on Monday, July 29, 2013 in the Southern District of New York. The bankruptcy case number is 13-23254. He filed his bankruptcy case under “Earl Simmons” aka DMX aka Dark Man X. He previously filed a Chapter 13 bankruptcy petition back in August of 2009, but the case was dismissed. He also filed a Chapter 7 bankruptcy petition in December of 2009 but did not receive a discharge of his debt.

According to his filed petition and list of 20 largest creditors he has debts like most other consumers: he has small medical debts, credit card collection and other types of collection activity. He also has multiple judgments filed against him that exceed over $400,000. He owes American Honda Finance a little over $21,000 for an unsecured car loan. His largest debts are his family support obligations: one where he owes more than $1.24 million and another where he owes a little over $84,000.

It seems like there are more and more professional athletes and movie stars seeking the advice of bankruptcy lawyers to file for relief. The mortgage meltdown took down a number of wealthy athletes the last few years. Child support and unpaid taxes are also issues that celebrities have issues with, especially retired athletes. Once they retire and they do not receive a check each month cash flow tightens up real quick. Too many fancy leased cars and extravagant homes do not help either. Hopefully DMX will bounce back strong as ever from his bankruptcy filing.

Everyone files for bankruptcy to obtain a “fresh start” in their lives. Everyone makes mistakes whether they are financial or otherwise. The key is recognizing those mistakes and doing something about it. Filing for bankruptcy is not a shameful action. Ask any bankruptcy attorney, the need to file bankruptcy can truly happen to anyone. It can happen to someone that was rich and famous and made some bad investment decisions. It can happen to someone that has to support a family of five working a minimum wage job living from paycheck to paycheck. I always tell my clients that it is a business decision they make when their debts exceed their ability to repay them. Everyone has the chance to correct their mistakes and should not be held prisoner by their debts for the rest of their life. Everyone deserves a second chance for a “fresh start.” Once you get rid of the toxic debts you are free to begin again like DMX will be able to.

Amended Tax Returns and Discharging Taxes in Bankruptcy

By Ryan C. Wood

In my previous blog articles I have explained that taxes are dischargeable in bankruptcy if they meet the following requirements: 1) the taxes were due more than 3 years ago, 2) filed more than 2 years ago, 3) assessed more than 240 days ago, 4) filed in good faith, and 5) is not filed fraudulently. What happens if you have to file an amended tax return?

Taxes will become a more common reason for people to file for bankruptcy protection. Bankruptcy lawyers everywhere are seeing more and more people with significant tax debts. Our taxes are not going to decrease anytime soon either.

Everyone makes mistakes sometimes. That is human. Everyone should be allowed to correct those mistakes if possible. If you amend your tax return and you end up owing more money to taxing authorities such as the Internal Revenue Service or the California’s Franchise Tax Board, how does this affect the dischargeability of the taxes owed if you hire a bankruptcy attorney and file for bankruptcy?

If you amend your tax return you may be relieved to know that the amendment of your tax return does not change the filing date of the original return. Your tax return will still be considered to have been filed the first time you filed the tax return. For example: you have filed your 2005 tax returns on April 15, 2006. The IRS contacts you in 2009 to notify you that you have made a mistake on your return and you need to amend your tax returns. You file the amended tax returns on June 15, 2009. You file for bankruptcy on July 1, 2009. The 2005 tax debt should still be dischargeable because you filed the original tax returns more than 2 years prior to the filing of your bankruptcy case.

One thing to note is that if there are additional taxes assessed due to the amended tax return, those additional taxes will be subject to the 240 day assessment rule. For example: you owed $1,000 when you filed your 2005 tax returns on April 15, 2006. When you amended your tax returns on June 15, 2009, an additional $500 was assessed on June 30, 2009. If you filed for bankruptcy on July 1, 2009, the original $1,000 tax debt would still be dischargeable. The additional $500 taxes that were assessed would not be dischargeable yet. If you filed your bankruptcy case on February 26, 2010 or later, the entire $1,500 would be dischargeable. Taxes are complicated. Bankruptcy laws are complicated.