Author Archives: Ryan C. Wood

About Ryan C. Wood

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

Can I Pay the Attorney Fees After I File Bankruptcy?

By Ryan C. Wood

One of the questions I get asked the most during a consultation with a potential client is, “Can I pay some of the attorney fees now and then pay the rest after my bankruptcy case is filed?”  The question is understandable since we are dealing with filing for bankruptcy.  It would not be a stretch to say that most of our clients do not have the funds upfront to pay for the attorney fees and costs.  If they had the money just lying around they probably would not have to file for bankruptcy.  In order to understand the answer you would need to know a little bit about how bankruptcy works.  The answer would also be different depending on whether you are filing a Chapter 7 or Chapter 13 bankruptcy case.

Chapter 7 Bankruptcy Cases

Everyone you owe money to on the day you file for bankruptcy is considered to be a creditor in your bankruptcy petition.  As soon as you file for bankruptcy there is an automatic stay in place that prevents any of your creditors from trying to collect any money from you.  They cannot contact you, send you any mail, or pursue any legal action against you once they receive notice that you have filed for bankruptcy.  This is one of the most powerful tools of bankruptcy.  The automatic stay is why most people file for bankruptcy: to get relief from their debts and their debt collectors.  If you only pay some of the attorney fees prior to your Chapter 7 bankruptcy filing, your Chapter 7 bankruptcy attorney cannot legally ask you to pay the rest after your Chapter 7 bankruptcy case is filed.  The debt you owe your Chapter 7 bankruptcy lawyer is included as part of the general unsecured non-priority debt.  This is the same category your credit card debts, medical bills, personal loans, and other unsecured debts are included in.  These debts will be discharged if you are eligible for a Chapter 7 discharge.  If your bankruptcy attorney tried to collect the debt you owe to him or her, the bankruptcy attorney would be violating the automatic stay and may be sanctioned by the court.  You can always voluntarily repay the debt if you choose to do so but your bankruptcy attorney cannot ask you to repay the debt.  You need to be very wary of the attorneys who promise you that you can pay them after your bankruptcy case is filed.  You need to know your rights and be sure the attorney is not violating the automatic stay.

In addition to the automatic stay, there is a conflict of interest when you only make a partial payment to your attorney prior to the filing of your Chapter 7 bankruptcy case.  The conflict of interest arises because your attorney is now also a creditor in your bankruptcy case.  The Chapter 7 trustee and U.S. trustee looks at cases where you owe money to your attorney very carefully.  In many jurisdictions owing money to Chapter 7 bankruptcy lawyers is prohibited and your bankruptcy attorney will not be able to collect any of the remaining balance after your case is filed.  The Ninth District has ruled that “reasonable fees for post-petition services is not a dischargeable debt and may be collected in the course of the bankruptcy without violating the automatic stay.” In re Sanchez, 241 F.3d 1148 (9th Cir., 2001).  This means that your attorney may charge you for services that they provide you after your bankruptcy case is filed.  It is a good idea to make sure the fees, whether hourly or flat rate, are listed in your contract so you know exactly what you are paying for and when you will be paying for it.

Chapter 13 Bankruptcy Cases

Chapter 13 bankruptcy cases are treated differently than Chapter 7 cases.  Chapter 13 bankruptcy cases are repayments plans.  You will pay a monthly amount as part of your Chapter 13 plan to the Chapter 13 trustee.  Attorney fees here are considered an administrative expense and can be paid as part of the Chapter 13 plan.  Therefore, you would be able to pay partial attorney fees to your bankruptcy attorney and have the remaining balance be paid as part of your Chapter 13 plan.

Even if your attorney does not accept payments after your bankruptcy case is filed (and most would not), you should look for an attorney that would be flexible with their payments PRIOR to filing bankruptcy.  There are some attorneys that allow you to make monthly payments or are very flexible with the payment schedule.  Once you finish paying their fees in full they can help you file your bankruptcy case.  This is perfectly legal and is a recommended for people that are on limited income.  You should consult with these attorneys and ask them if they have flexible payment plans prior to retaining their services to help you with your bankruptcy case.

How Will Filing Bankruptcy Affect My Immigration Status?

By Ryan C. Wood

People from all over the world come to the United States because they want to chase the American dream. What is the American Dream?  It means different things to different people, but mostly it boils down to being successful in their line of work and being financially independent.  When our economy was booming a lot of people achieved this dream.  However, during our current economic downturn a lot of people saw those dreams turn into nightmares.  Houses that were purchased at the height of the real estate boom are now so far underwater that they are now practically worthless.  Speaking to a bankruptcy lawyer to file bankruptcy seems like the only way out of the financial hole. A lot of immigrants have the same question before filing for bankruptcy: “What will filing for bankruptcy do to my immigration status?”

Filing for bankruptcy alone will not affect your immigration status.  You must have committed a crime that is subject to deportation.  Under 8 U.S.C. §1227(a)(2), you could be subject to deportation if you fall into one or more of these categories: if you commit certain crimes of moral turpitude or aggravated felony, if you are convicted of owning controlled substances, if you are convicted of certain firearm offenses, miscellaneous crimes (like espionage, sabotage, treason), crimes of domestic violence, stalking, crimes against children, and trafficking (drug or human).

Crimes of moral turpitude are analyzed on a case by case basis.  A crime of moral turpitude must involve highly reprehensible conduct that was done intentionally, deliberately, willfully, or recklessly.  A crime involving ‘moral turpitude’ involves ‘conduct that shocks the public conscience as being inherently base, vile, or depraved, contrary to the rules of morality and the duties owed between man and man, either one’s fellow man or society in general.  Some crimes that are considered to be a crime of moral turpitude that pertain to people filing for bankruptcy are: writing bad checks with the intent to defraud, crimes of domestic violence, and tax evasion.

There is a long list of crimes that are considered to be aggravated felonies under 8 U.S.C. §1101(a)(43) including murder, rape, and sexual abuse of a minor.  The main ones that may pertain to people filing for bankruptcy are §1101(a)(43)(M)(i) and (ii): fraudulent transaction where the loss to the victim exceeds $10,000 and tax evasion where the loss to the government exceeds $10,000.

What you should take away from this article is that if you have not committed a crime listed above you should not be subject for removal from the United States.  Filing bankruptcy is not a crime period and is not a path to deportation.  Committing a bankruptcy crime (such as lying under penalty of perjury or committing fraud against one of your creditors) may get you deported.  As long as you do not commit a bankruptcy crime you should not have to worry about your immigration status.  If you are unsure if you fall under any of these categories, please consult with a bankruptcy attorney before you go forward.

Can My Landlord Evict Me After Filing Bankruptcy?

By Ryan C. Wood

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

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

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

Where Should or Can My Bankruptcy Case Be Filed?

By Ryan C. Wood

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

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

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

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

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

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

By Ryan C. Wood

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

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

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

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