Sacramento Bankruptcy Blog

When you owe a substantial amount on a credit card and fall many months behind, it is inevitable that you will be sued. Many clients come to me after they have been served with a lawsuit and ask what they can do.

Act Quickly

First and foremost, do not ignore the lawsuit and hope that it will go away. If you fail to answer the complaint in a timely manner, creditors can be awarded a default judgment. If a creditor gets a judgment, it can freeze your bank account, garnish your wages and put a lien on any real estate that you own. The judgment can also be reported on your credit report as a public record, even if you later file for bankruptcy.

Answering the complaint involves filing a document with the court called an “answer” and serving a copy of it on the attorney for the creditor. In the answer you can dispute any of the allegations in the complaint. If you file an answer, the creditor cannot get a default judgment, but it will still proceed with the case and seek a judgment later on.

Sometimes filing an answer is the best way to get additional time to determine your best debt solution.

Filing for Bankruptcy as a Remedy

If you qualify for bankruptcy, the lawsuit will be immediately stopped by the filing of the bankruptcy petition.

If the creditor has already gotten a judgment, you can negotiate with the creditor for the payment of the judgment. Sometime it is possible to engage in debt negotiation and pay a very discounted amount.

Even if the creditor obtains a judgment against you, it is just as dischargeable as the same debt prior to entry of judgment. However, the judgment can be reported on your credit report.

Also, if the creditor obtains a lien against your real estate, the bankruptcy will not, by itself, remove the judgment lien. In many cases, however, you can bring a special motion in the bankruptcy proceeding to remove the judgment lien.

Will Bankruptcy Stop Wage Garnishments?

Yes. As soon as a bankruptcy petition is filed, wage garnishments will come to a halt and frozen bank accounts can be unfrozen.

Contact our Sacramento Bankruptcy Attorneys  to determine the best solution to your debt problems at 916-923-2800. The Law Office of Bowman & Associates, APC works with individuals throughout Sacramento and Northern California to help them with their bankruptcy proceedings, including Chapter 7 Bankruptcy and Chapter 13 Bankruptcy filings.

In these poor economic times, unmanageable debt is a huge source of stress for many people. California state employees are experiencing work furloughs, and countless others are not able to find gainful employment.

There are ways to make your debts more manageable. The first step is to be honest with yourself about your financial situation. I often meet with clients who tell me that they are afraid to look at their credit report, or to create a monthly budget. The only way to be able to move forward and take control of your debt is to fully understand it.

An attorney may be able to negotiate with your creditors on your behalf to lower the total amount of debt that you owe. You may also want to consider bankruptcy as an option to regain control over your financial health. We can assist you through all your bankruptcy questions, including filing Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.

The attorneys and staff at Bowman & Associates, APC believe that it is important to give back to the community. This holiday season, we participated in the CHiPS for Kid’s toy drive. CHiPS benefits the UC Davis Children’s Hospital, Mercy Hospital, Shriner’s Hospital, the Salvation Army, WEAVE, Head Start, Boys & Girls Club, Operation Rudolph, and other community service organizations.

We were able to donate many toys to this worthy cause, including 2 Ripstiks, a scooter, sports equipment, Polly Pocket doll houses, and several board games.

The Law Office of Bowman & Associates, APC is a Sacramento law firm concentrating in Family Law, Employment Law, Bankruptcy, Immigration Law, Criminal Law, Business Law and Personal Injury cases amongst others throughout Northern California. Our office philosophy and practice goals align with our community involvement in more ways than one.

As the mortgage crisis continues, more and more people facing foreclosure are also being forced into bankruptcy. It appears that a lot of homeowners who couldn’t make their mortgage payments have been using credit to get the cash that they need. Once the credit cards and the credit lines are maxed out, of course, these people find themselves in an even bigger financial mess.

Lately, I’ve been seeing a lot of homeowners who are considering bankruptcy but are also in the process of trying to get a loan modification with their lender because they have a foreclosure pending. A lot of them are telling me that their lender has told them that they are not qualified for a voluntary loan modification because of their high debt-income ratio. What this means is that if you owe a lot in other debts besides your mortgage, the bank may think that even though your mortgage payments are lower after your loan is modified, it would still be difficult or impossible for you to keep your home because you have other debt obligations that must be paid Although banks hate foreclosing on any property, they will do so as a last resort.

Because of the massive number of foreclosures that the banks are currently dealing with, I find that a lot of lenders are slow these days in initiating the foreclosure process even when the borrower is already several months delinquent. However, in California, once a Notice of Default is filed against the property, the 90-day statutory period begins to run and the clock starts ticking. Unless the foreclosure is stopped, by filing bankruptcy, or other legal means, the lender only needs to give 21 days’ notice after the 90-day period in setting a sale date for the property being foreclosed on. Filing bankruptcy, Chapter 7 or Chapter 13, will immediately stop the sale from going forward, and the bank will need court permission to continue with the process if mortgage payments are not being made. An experienced and knowledgeable bankruptcy attorney can explain to you how Chapter 7 or Chapter 13 may help you save your property or at least postpone the foreclosure sale so that you can look at all other possible options. In Chapter 13, it is also possible to “strip down” or remove your 2nd mortgage if the current market value is below the amount of the 1st mortgage.

Eliminating your debts may improve your debt-income ratio and this may be what your lender wants to see when considering your application for a loan modification. Of course, this is just one of the factors that they take into account when evaluating your financial information. If you are in foreclosure and burdened with a lot of debts that you can no longer afford to pay, let me help you evaluate your options.

People often ask what will happen to their car if they file for bankruptcy under Chapter 7. If you have already paid off your vehicle, then you will be able to keep your car so long as the value falls under the state vehicle exemption amount. If you are still making payments on your vehicle you have several options.

First, you may choose to walk away from your vehicle. In other words, turn it in to the lender. This may be a good option for you if your vehicle is worth much less than you owe. This will clear you of any further liability on your vehicle debt after your bankruptcy.

You may also choose to keep your vehicle. If you want to keep your vehicle you should continue making your scheduled payments. You have the option to repurchase your vehicle at its current market value from the bankruptcy for a lump sum, this is called redemption. You may also choose to enter into a new agreement with your lender under, this is called reaffirmation. You may be able to negotiate the terms to your advantage since lenders have an incentive to make you a deal when you are filing bankruptcy.

Remember, you don’t have to navigate the bankruptcy system alone. The Sacramento Bankruptcy Attorneys at Bowman & Associates are here to help you.