Please note that I will be out of the office for most of the period August 8 through August 26, and that the office will be officially closed the week of August 22 through 26, 1994. Although there will be staff present during that time period, and I will be available to handle emergencies only, calls to the office August 22-26 will be handled by machine and/or answering service.
Fellow attorneys practicing in the Los Angeles area have brought to my attention an incredibly convenient consumer service which has seen tremendous popularity and acceptance among their clients. It gives me pleasure to pass along to you this useful guide, and helpful information. This public service is offered through the L. A. County Bar Association. It is available 24 hours a day, and can be accessed at (213) 243-1500. The service is referred to as the Smartlaw Information Line and permits the caller to access a number of prerecorded messages and lectures on particular legal fields and topics. Calling the number will then be followed by a request to dial "1" on a touch-tone phone. You will then be asked to enter the three-digit number of the legal message you would like to hear. Dialing "123" will give you an audio directory. I have taken the liberty of attaching a printout of the directory.
California Civil Code Section 1950.9 has been amended. One of the amendments affects the landlord’s duty to account for use and return of "security deposits". The old statute required two weeks. The new statute now allows the landlord three weeks to return to your security deposit and an itemized statement of any deductions. A further change now allows for recovery of up to $600 (up from the previous $200) in addition to the disputed security deposit amount if you can prove the landlord kept any portion of the deposit in "bad faith". However, always remember the best way to prevent security deposit disputes is at the beginning of the leasing process: 1/ by inclusion of a signed "rental checklist" detailing the condition of the property; 2/ taking a few photographs; and, 3/ having an independent witness verify in writing the condition.
The essence, the reason for filing of a Petition for Chapter 7 bankruptcy, is to obtain a discharge of all unsecured debts, keep possession and ownership of exempt assets, and, perhaps, renegotiate the terms of existing secured debts. These goals operate under the stated policy of providing a debtor a "fresh start" with respect to his or her finances. Following interview and completion of a number of worksheets, reviewing some documents, the attorney will then complete the Petition and Schedules. After an additional interview and signing, the paperwork is filed with the Bankruptcy court. The trustee in bankruptcy reviews the paperwork.
In most Chapter 7 bankruptcies there will be a determination of "no assets" available for enforcement of debts. The clerk schedules a court appearance, at which time the client(s) are asked questions by the trustee concerning their paperwork. Assuming no complications, a "formal discharge" will follow in about 8 to 12 weeks, issued by the actual federal District Court, of which the Bankruptcy Court is a part.
Automatic Stay The moment a bankruptcy proceeding is filed, there goes into effect something known as the Automatic Stay which is provided for by Section 362 of the United States Bankruptcy Code. The Automatic Stay is an automatic restraining order (automatic because it goes into effect automatically once a case is filed) against any creditor suing you, garnishing your pay, levying on your bank account, foreclosing, repossessing, or taking any action against you while you remain in bankruptcy (excepting foreclosure or repossession by secured creditor upon motion to the court). The Automatic Stay continues until the date the case is discharged, which is usually three and one half ( 3 1/2) to four (4) months after it was filed.
Dischargeability Chapter 7 Bankruptcy basically discharges your unsecured debts. However, some debts, by law, are not dischargeable. Student loans where the first payment was not made more than seven (7) years from the date you filed your petition, recent taxes for returns that were due less than three (3) years ago and filed less than two (2) years ago or for which an additional assessment of taxes (audit) has been made within 280 days of the filing are also not dischargeable. Fines or penalties to a Governmental entity, such as speeding tickets and other Governmental fines, are also not dischargeable in bankruptcy. Likewise, an obligation for spousal support, child support or an order to pay attorneys fees to a former spouses’ attorney are not dischargeable.
There is a new category opening up for which creditors are filing complaints in the bankruptcy court to have a determination made that their debt should not be discharged in bankruptcy. This situation occurs where credit card bills are "run up" in the few months prior to the bankruptcy filing. Any cash advances within twenty (20) days of the bankruptcy filing which exceed $1,000.00 in total are presumed not dischargeable. Likewise, any purchases of luxury goods on credit made within forty (40) days of the filing are also presumed not to be dischargeable.
However, simply because a purchase was made more than forty (40) days before the bankruptcy filing does not assure you that a creditor will not make a motion or file a complaint before the court to have their debt ruled to be not dischargeable. If you have used your credit cards within four (4) to five (5) months of the bankruptcy filing, particularly for cash advances, or if your spending habits have changed dramatically on your credit cards in the last four (4) to five (5) months before you filed (for example: you usually charged $300.00 per month on one card and that increases to $1,500.00 per month for the month just prior to the filing), that creditor may file a complaint stating that you have abused your credit privilege and have obtained extensions of credit or purchased things on credit using their credit card knowing that you were insolvent and knowing that you could not repay the bill.
Secured creditors If you have secured debts, other than your house payment, (car loans, furniture loans, appliance loans, and entertainment center loans), these debts are secured and you have basically two (2) choices with how to deal with these secured debts. First, you may return the security (car, furniture, appliances, stereo, etc.) to the creditor and you will owe them no money. Secondly, you can sign a reaffirmation agreement with the creditor and keep the merchandise. A reaffirmation agreement is a new agreement, entered into after the bankruptcy is filed, to pay a secured debt which otherwise would be discharged by the bankruptcy. If you elect to keep the security and sign a reaffirmation agreement, you should be very sure that you understand that you are "reviving" the debt to the creditor and in the event that you do not continue to make your payments on the merchandise and the creditor repossesses and sells the merchandise for less than you owe, that creditor can sue you for the difference between what you owed them and what they got when they resold the merchandise.
Therefore, you should not sign a reaffirmation agreement for any amount that is greater than the value of the property that you are keeping or you are immediately putting yourself into a position where there is a deficiency for which you will be responsible. Additionally, some things you may have purchased from Sears or Montgomery Ward, such as appliances, furniture and other "hard items" are secured, and if you wish to keep those items, you will be asked to reaffirm with Sears or Montgomery Ward for the fair market value of the items. This will be taken up at your First Meeting of Creditors or at some time thereafter in the process.
Pre-bankruptcy planning Legitimate pre-bankruptcy planning involves control of income and assets so as to ultimately make the most efficient use of the laws in order to obtain a discharge without "challenge" or objection; to maintain as much exempt property as possible, and perhaps the best terms on secured debts with property you desire to keep.
Some helpful hints include: 1/ You can stop creditor contact. Under federal law, you have the right to tell a collection agency to stop contacting you. If you make such a demand in writing, all contacts must stop except under limited exceptions (inform you of a lawsuit, ending of collection efforts.) 2/ Suspend use of all unsecured credit lines and charge cards, and make best efforts to reduce your indebtedness. The idea is to be able to show that your use of the credit lines ended once you realized income was not keeping up, that you knew you were insolvent and would have to petition. 3/ If you must use unsecured credit lines, do not do that which is unusual for spending and income patterns, and certainly avoid use within the crucial time period just preceding filing. Excessive cash advances, unusual purchases will be challenged. 4/ A legitimate use of income/property is a reduction of debt encumbering exempt assets which either takes advantage of the exemption level or brings the equity in the asset within that protected by the exemption. Those assets which may have value in excess of liens, encumbrances and exemption levels under the law may be liquidated, with that excess being used to pay down other indebtedness where the entire exemption has not been used. This is a fair use of one’s property. (I will make a chart summarizing California property exemptions to any client that call’s and requests.) For instance, the California exemption for vehicle equity is $1,200. You may have a vehicle with $6,200 in equity (value after payoff). Credit counseling would include sale and/or payoff of the balance, and use of the equity to reduce indebtedness on your home which is entitled to up to $75,000 in equity exemption. There are very often a number of alternatives.
The California Supreme Court has set forth new burdens on those alleging wrongful discharge lawsuits. A significant new limit on the doctrine of "constructive discharge" has been spelled out, making it more difficult for a worker to claim they were forced by their employers to quit their jobs. The justices have held in Turner v. Annheuser-Busch that it is not enough for employer liability that an employer ‘should have known’ about intolerable working conditions that caused an employee to quit. A worker must be able to prove the employer actually knew of intolerable conditions yet did not correct them. The fallout from the decision will be wide. The holding has significance in other areas such as unemployment compensation. In this writer’s opinion, this area of law has become so difficult in terms of successful presentation of an injured party’s case, that virtually no law firm except those exclusively devoted to this field will have the resources to represent claimants. Business law, matters
Your case, your file
Attorneys must return client documents and files upon conclusion of employment. According to Rule 3-700 of California’s Rules of Professional Conduct, it is the responsibility of a member of the bar, on termination of employment, to release to the client "all the client papers and property". The rule, in subsection (D)(1), goes on to specify that the lawyer is required to return the documents "whether the client has paid for them or not." It is backed up by the State Bar Act, Professions Code Section 6068 (n), which makes it one of the duties of an attorney to provide copies of documents to clients. Violation of the rules can subject an attorney to up to three years’ suspension; while violation of the State Bar Act can bring disbarment. If you have one of these kinds of situations, it is best to seek the help of the local bar organization, the State Bar, or a family/friend attorney for informal assistance. Realize that retaining another attorney to get your file may result in consultation, phone call and letter writing charges.
Going to trial, words for the wise, from those who have been there. . . and lived
Being involved in a Superior Court lawsuit destined for trial can be a difficult experience. There is anxiety if you are being sued, hopefulness if you are bringing the suit. You must be prepared to "step up to the plate" if you expect to deal realistically with the process. Otherwise, you will be destined for "rage and depression". This will be especially prevalent in those situations where (predominantly business disputes not controlled by strict arbitration agreements), you are funding the presentation out of pocket as opposed to proceeding on a contingency fee basis.
For your peace of mind, try to remember:
"May you be involved in a lawsuit in which you know you are right." ---Spanish Gypsy Curse --"
If you want revenge, dig two graves." --Anonymous
With best regards, Gerald Spala August 5, 1994