For most people, their perception of the law and the role of attorneys in general are based upon their exposure through television and movies. We have found that a majority of our clients at Modesto Bankruptcy Attorneys have never had any contact with an attorney in person, nor ever have been involved in any type of legal proceeding prior to visiting us to assist in their bankruptcy matter. The reality is that what is portrayed on television and movies is often an exaggerated view of the way the law and attorneys operate.
As attorneys, a great deal of time is spent on preparing your legal case, presenting it to the appropriate court, and then being able to handle the procedural steps to work toward a resolution of the matter. Specifically, as bankruptcy attorneys, we must be prepared for any potential issues that may cause any interference or delay in your bankruptcy proceeding. By being well-versed in the application of law and operation of the bankruptcy court, our attorneys at Modesto Bankruptcy Attorneys are able to handle any issues that arise throughout your bankruptcy proceeding and ensure that your legal matter is resolved efficiently and effectively.
In addition to reviewing and evaluating your financial circumstances in order to begin the bankruptcy process, after your case has been filed with the court, the attorney may potentially have to deal with certain matters that arise through the process of discharging your debt. These matters are generally handled by way of motions, which can be filed by your attorney, the trustee, the court or a creditor. We will discuss the most common motions that are involved during a bankruptcy proceeding below.
In all types of legal proceedings, no matter if it is a civil, criminal or administrative proceeding (including bankruptcy proceedings), a motion will function as a procedural mechanism whereby a specific party wants to request that the relevant court hears their motion and in return make a decision, direction or ruling regarding a contested issue. It is not uncommon for the need for the court to step in to make decisions to ensure that the bankruptcy proceeding is being conducted properly. In a bankruptcy proceeding, both the creditor and debtor have the ability to motion the court and have the court make a decision on a relevant issue. When a motion is being filed by an opposing party, it is paramount that you respond in writing and within the applicable timeframe.
Although it is possible for a debtor to represent themself through a bankruptcy proceeding, when motions start to become involved during a matter, it can not only become overwhelming for the individual to deal with the motion, but the consequences for failing to properly address the motion can be severe. Failing to provide a response to a motion carries the possibility of your bankruptcy case being dismissed and you losing your chance at discharging your obligations. Because of the potential consequences, it is critical to choose a highly experienced attorney who has both the experience and knowledge to not only respond to motions, but also utilize motions on your behalf to maximize your benefit.
Although the use of motions is available in a Chapter 7 Bankruptcy proceeding, they are rarely utilized and fairly uncommon. This is due to the fact that in Chapter 7, a debtor is looking to discharge their unsecured debts, which means creditors have very limited resources to receive any repayment. However, a debtor is much more likely to face motions in a Chapter 13 Bankruptcy proceeding, as Chapter 13 deals with reorganization of a debtor's debts and the creation of a payment plan. Since the creditor has an interest in understanding your financial situation in order to determine how much they will be paid on the outstanding debt, it is much more likely that a creditor may file a motion to protect their security interest to the greatest extent possible.
Although there are several types of motions that can be presented during a legal proceeding, we will focus on some of the most common motions used in bankruptcy proceedings that our attorneys deal with at Modesto Bankruptcy Attorneys.
1. Motion to Confirm
When dealing with a Chapter 13 bankruptcy, as the debtor, you will need to submit an array of financial documents and statements to prove to the court all of your income and debts in order to ensure that your debts are properly handled through the proceeding. One of the main submissions of financial documents will be your Chapter 13 Plan. The Chapter 13 Plan will clearly illustrate to the court how you will be able to repay your debt to creditors throughout the three to five-year timeframe. Remember, in Chapter 13, you are asking the court to potentially reduce your outstanding debts in favor of you being able to make monthly payments to your creditors at a reduced rate due to you having insufficient income to pay the debts outright.
Upon filing the repayment plan with the Court, it will be served to your listed creditors either by the court or by the debtor for their review. By law, the creditors are required to be notified of the repayment plan, and all terms and conditions should be clearly outlined. Once the repayment plan has been distributed, the debtor is required to file a motion to confirm. After clearly following the requisite procedures, the motion to confirm will result in the Court either accepting or denying the repayment plan. An experienced bankruptcy attorney will be able to maximize the possibility of the repayment plan being confirmed and accepted by the court, allowing you to move forward towards re-establishing your financial health.
2. Motion to Modify
After a debtor has successfully filed their motion to confirm with the court, it is a possibility that it may take a period of a few months before the plan is actually confirmed and accepted by the court. This waiting period can vary depending on the courts calendar of other bankruptcy cases as well as the complexity of your plan. Let’s assume that the plan eventually is confirmed by the Court. Since Chapter 13 can last up to 5 years, there could arise situations where the plan needs to be adjusted post-confirmation. If there is any need to modify the repayment plan, your bankruptcy attorney will be able to file what is called a Motion to Modify, on behalf of you, the debtor. For example, a debtor may need to file a motion to modify their repayment plan if their economic circumstances have changed. It is common for modifications prior to the repayment plan being fully completed.
Since a Chapter 13 repayment plan can last three to five years, there is a possibility for a debtor’s financial circumstances to change, requiring a modification to their plan. In fact, this occurrence is quite common. Any changes, for example an increase or decrease in the debtor’s income will require a modification to the repayment plan. If you find yourself in a better financial position than you were at the time your plan had been accepted by the court, you will likely be required to pay additional amounts to your creditors. Similarly, if your financial position declines, you will need to modify your plan in order to pay the correct proportional amount to your creditors.
3. Motion to Value
The value of your property will help to determine your Chapter 13 repayment plan amount. Under Chapter 13 Bankruptcy, the court requires that the value of your non-exempt property be paid to your creditors over the repayment period. In comparison, under Chapter 7 Bankruptcy, the court requires that the debtor’s non-exempt property must be liquidated or sold off and the proceeds will then be used to pay off creditors. Thus, under Chapter 13, the value of the debtor’s non-exempt property will help to determine how much the debtor will be required to repay the creditors through the repayment plan.
The more non-exempt assets, such as equity in your home over and above the homestead exemption, will lead to you having to pay more to your creditors under your repayment plan. Since the value of your property is critical in determining your repayment amount (as it is generally a debtor’s most valuable asset and has the potential to hold large sums of equity), you can file a motion to value. The motion to value will allow the court the opportunity to determine the value of your property, which is helpful in situations where the value of property is worth less than what you owe on it (ie. debtor is underwater on their mortgage). When a debtor is underwater on their mortgage, it means that the debtor may owe significantly more on a home than it is actually worth. This result can be from a decreased real estate market coupled with taking out second or more mortgages against the property such as a HELOC or home equity loan. It is under circumstances like this that the motion to value can serve to be very beneficial for the debtor, and a well-experienced bankruptcy attorney will be able to present this to the court. If successful, the motion to value can force a junior lien holder to remove their lien from your home.
4. Motion to Incur Debt
Since a debtor has had to resort to filing for bankruptcy due to the fact that they have incurred more debt than they could repay, a debtor will potentially be unable to incur additional debt. Although debtors who have filed bankruptcy are not permitted to apply for consumer credit or loans, there is a possibility that they may request permission by the court to do so under certain circumstances. The most commonly granted request to incur debt are when the debtor faces an emergency situation. An emergency can be if a debtor is in need of emergency funds, for purposes such as paying for medical treatments or making vehicle repairs. Under circumstances like these, a debtor is then able to file a motion to incur debt, and allow the bankruptcy court to decide to accept or deny the request. It is important to note the court is not likely to accept a motion to incur debt that is for non-emergency needs and a debtor should be prepared to prove to the court why this is an emergency. The court is not likely to grant a request to incur debt for non-emergency and frivolous expenses.
5. Motion to Avoid a Lien
A motion to avoid a lien can be filed to address a judicial lien that is attached to your asset, such as a home. Under Chapter 13, your creditors are required to be repaid through your approved repayment plan and are not able to hold a lien position against your property under certain circumstances. An experienced bankruptcy attorney can file the motion to avoid lien and provide you additional benefits in your case.
6. Motion for Relief from the Automatic Stay
Upon filing for bankruptcy, an automatic stay is implemented. The purpose of the automatic stay is to place a freeze on the debtor’s assets, in order for the court to then determine all creditors and approve a repayment plan under Chapter 13, or a liquidation of the asset under Chapter 7. This automatic stay prevents a creditor from claiming property or pursuing payment during the bankruptcy, and ensures that they must take their place along with the debtor’s other creditors, even if this means the creditor receives nothing. If a creditor wants to proceed with debt collection, they must specifically request it from the court by way of filing a motion to lift the automatic stay. Without having the motion approved, in addition to being unable to collect payment, the creditor is unable to contact the debtor by phone, text, email, and mail documents relating to the collection of the debt. If you are contacted by a creditor while under a bankruptcy proceeding, be sure to contact your bankruptcy attorney immediately so that they can take swift action against the creditor with the court.
7. Motion to Extend Automatic Stay/Motion to Initiate Automatic Stay
As previously discussed, the automatic stay serves to protect the debtor from debt collection while filing for bankruptcy. For a Chapter 7 bankruptcy, the automatic stay lasts for a period of 30 days after the creditors meeting. In contrast, in a Chapter 13 bankruptcy, the automatic stay lasts the entire duration of the repayment plan, to ensure that the debtor’s assets are protected while paying on their repayment plan. After the bankruptcy has been completed, the automatic stay terminates. If the debtor desires to extend the automatic stay, they must file a Motion to Extend the automatic stay and submit documentation to the Court.
For a debtor that has filed a bankruptcy after already having filed for bankruptcy two times within a year may be required to request that the automatic stay be initiated. This is done by the debtor filing a Motion to Initiate Automatic Stay.
8. Motion to Dismiss
Lastly, there are circumstances when a debtor has failed to follow requirements and terms of their bankruptcy agreement, a creditor or trustee has the option to file a Motion to Dismiss the debtor’s bankruptcy. If a motion to dismiss is granted by the court, as a debtor you now risk being personally liable to your creditors and no longer are afforded the protection of the bankruptcy court. Although a motion to dismiss is not common in Chapter 7 bankruptcy, it is much more likely to occur in Chapter 13 bankruptcies due to the extended timeframe and agreements between the debtor and creditor.
HOW CAN WE HELP?
Given the potential ramifications that failing to respond and/or inadequately responding to a motion can have on your bankruptcy matter, it is vital that you consult with a bankruptcy attorney who is well-versed and experienced in bankruptcy motions and court proceedings. At Modesto Bankruptcy Attorneys, our attorneys have the experience and expertise to not only utilize motions for your benefit, but to properly respond to motions filed by your creditors and ensure that your bankruptcy proceeding is not jeopardized.
We help clients in the following areas: Modesto, Stockton, Turlock, Ceres, Empire, Escalon, Hughson, Lathrop, Linden, Manteca, Oakdale, Patterson, Ripon, Riverbank, Salida, Tracy, Waterford.