How Filing Bankruptcy in 2013 Provides Enhanced Asset-Protection

Happy New Year! New Year New Life

Many individuals will start the New Year resolving to improve their financial affairs. Though bankruptcy is a great tool, which generally includes benefits such as the discharge of credit card and medical debt, a new exemption scheme, effective January 1, 2013, will give potential filers even more to be excited about.

Exemption Basics

A key protection offered by the Bankruptcy Code is found in Section 522. This section details a debtor’s rights regarding exempt property—property that is shielded from liquidation.

Exemptions are statutory provisions that generally protect individual assets from liquidation based on an assigned dollar value. For example, pursuant to CCP § 703.140(b)(3), debtors are permitted to shield up to $600 per “household” item.  In other words, you can prevent creditors from seizing any of your appliances or furnishings if they are worth less than $600/item.  Under CCP § 703.140(b)(2), you can shield up to $4,800 of the fair market value of your motor vehicle.  There are numerous exemptions that apply in different contexts and can even apply in conjunction with each other.  A vehicle that is valued at $6,000 can be fully protected by combining the Motor Vehicle (b)(2) exemption with the “Grubstake” (b)(5) exemption (see below).

The bottom line is that a careful application of the exemption statutes can often allow debtors to retain their assets during and after a bankruptcy filing.

The 2013 Exemptions

The assigned exemption values change every three years to account for inflation. On January 1, 2013 a new exemption scheme became effective allowing debtors to take advantage of even stronger protections. Whereas a person filing for bankruptcy protection in California on December 20, 2012 would have been able to exempt up to $23,250 in “any property” under CCP § 703.140(b)(5) & (1), a debtor that filed on January 15, 2013 would have been able to exempt up to $25,340 under the same statutes—a $2,090 difference!

More Than a “Fresh Start”

The Bankruptcy Code and the attendant exemptions were created to give filers a “fresh start.”  They were designed with the idea that a person free from burdensome debt would be a more productive member of society.  But the protections offered by the exemptions, particularly the new valuations, provide more than a fresh start—they provide an invaluable tool and an opportunity.  Instead of rewinding and requiring individuals to begin their lives anew, the exemption scheme allows debtors to carry on—without the worry of losing invaluable possessions.

-Caroline M. Reebs, Attorney-at-Law

The Law Protects You from Stalkers AND “Stalking” Debt Collectors

Usually when someone receives dozens of phone calls at all hours of the day, all by the  same person who also troubles the victim’s family, friends and neighbors, we have a word for it: STALKER! And stalkers, as we all know, are criminals.

But suppose the same scenario applies with just one difference: the “stalker” is a debt collector. Most people would be much less likely to think of the behavior as criminal. But in a sense, it is. Maybe it’s not as scary (except to your pocketbook), and maybe it’s not as creepy (although often extremely creepy tactics ARE used), but it’s every bit as illegal — in that the debt collector can be hauled into court and face stiff penalties. However, it’s not the police who do the job: If you’re the victim, it’s YOU. You can take action against the debt collector and, if you’re successful, you can collect as much as $1,000.00 in fines and you can recover your attorney’s fees and court costs — all thanks to something called the FDCPA (here) and its cousin, the Rosenthal Act.

The list of debt collector no-no’s is much too long to post here, but we can briefly mention the most typical abuses. If you notify them in writing to “cease further communication,” their phone calls have to stop; the same goes if you tell them your attorney’s name and that doesn’t even have to be in writing!

Whether or not you notify them, they’re NEVER allowed to:

  • call before 8 AM or after 9 PM
  • leave the phone ringing for a long time
  • contact anyone else except to ask about your whereabouts (and then only once per person)
  • mention your debt to anyone else
  • send you a postcard of any kind, or an envelope that makes it obvious you’re in debt, or is marked to appear as though it’s from a lawyer or the government or a court

While they are allowed to call you fairly often, they must never use threatening or abusive language, nor speak to anyone but you, your spouse, your legal guardian or your attorney. They can’t suggest you’ve committed a crime or are going to prison, nor can they threaten anything that they don’t intend to do. In fact they can’t do anything that is (legally) harassing or oppressive or abusive or unfair or unconscionable.

But what if they do?  Here’s what: Take them to court. If you’re successful (keep good records of the calls and letters, to be sure you can document the offenses and increase your chance to win), they could be obliged to pay you as much as $1,000.00 in fines plus your attorney’s fees and legal costs. Contact the Mlnarik Law Group if you think you have a case and together we can get that stalker to obey the law!

Jim Erickson, Associate