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San Francisco Bankruptcy Law Blog

Bankruptcy and paying discharged debts

Individuals in California who are declaring bankruptcy may wonder if they can still pay a discharged debt. They may wish to pay a debt if they feel personally responsible for it. For example, it might be a personal debt to a friend or family member or to a local business.

It is possible to repay a discharged debt after bankruptcy even if the creditor has no legal means of pursing the payment. However, after bankruptcy, an individual is not obligated to pay any debts that were discharged. If a creditor persists in trying to collect, the individual can report this to the court. There may be a fine if the creditor violates the court injunction.

Debtor rights against debt collectors

Many people who are delinquent on their debts in California are subjected to abusive and harassing debt collection practices by third parties who have either been retained by the original creditors to collect on the debts owed or who have purchased those obligations. People often receive repeated phone calls, and collectors will sometimes call at inconvenient hours and engage in other harassing practices. Victims of abusive third-party collections practices may have recourse, however.

The behavior of third-party debt collectors is regulated by the Fair Debt Collection Practices Act,, a federal law that prohibits a number of collection practices. Collectors are forbidden from making repeated phone calls, discussing the debtor's account with third parties, using abusive language, lying or threatening criminal prosecution. The law sets a statutory penalty of $1,000 for each violation committed by the offending party.

Are there any protections available for medical debt?

California residents may be interested in learning more about what action the state is taking to protect consumers from medical debt. A significant number of families are struggling with debt primarily due to their outstanding health care bills. The federal government has taken some steps to alleviate these hardships, but states have more power in protecting residents from over-aggressive collection practices. Many of the laws are designed to assist people who earn lower income, are uninsured or are underinsured.

The four types of state protections include protections against balance billing, hospital billing and financial assistance laws, legal agreements with hospitals about fair prices and debt collection and protections from certain collection practices of medical debt. Some of these laws are designed to prevent people from losing their homes due to outstanding medical expenses. The laws also regulate the manner in which patients may be billed by hospitals and out-of-state providers.

Bankruptcy agreement sends assets of Aereo Inc to auction

A high profile bankruptcy court ruling highlights legal challenges faced by the technology industry, especially in high tech San Francisco, California. The technology assets of Aereo Inc, a former internet video streaming company, are headed to the auction block. The ruling came from the U.S. Bankruptcy Court in Manhattan as part of an agreement with television broadcasters to sell Aereo's assets. The assets to be auctioned were used in its TV streaming service that was shut down for copyright violations.

A decision of the U.S. Supreme Court effectively ended the video streaming company's business. The court ruled that Aereo had violated the copyrights of broadcasters including CBS, ABC, NBC and Fox. Aereo had used antennas to receive television broadcasts and then stream the content on the Internet to subscribers for $8 to $12 a month. Aereo filed for bankruptcy in November, five months after the legal decision unraveled its business model.

Chapter 13 voluntary reorganization in California

People who are considering bankruptcy often do not understand the various chapters available to them. For some, a complete liquidation through chapter 7 makes the most sense. Others, however, may find it more beneficial for their particular case to proceed through a chapter 13 voluntary debt reorganization.

As opposed to a chapter 7 liquidation, the estate's assets are not liquidated in a voluntary reorganization. Instead, the individual debtor proposes a debt repayment plan. He or she will be required to make the payments according to the plan for a period of between three and five years. The proposed plan must be approved. After the petition is filed, the trustee will be appointed and the creditors notified. At the creditors' meeting, the creditors will have the ability to question the debtor under oath and to object to the plan.

How do federal statutes and re-aging relate to credit card debt?

Debtors in California may be interested in learning more about the federal laws governing credit card debt and re-aging. The Fair Debt Collection Practices Act establishes the mandates and the appropriate jurisdiction for how debt collectors collect outstanding balances or take legal action against debtors. Section 811 of federal law states that collection companies have the right to take legal action in the jurisdiction where the consumer authorized the agreement with their signature, or where the consumer resides.

In some contract agreements, credit card companies design the terms of service so the laws governing the agreement to be in the jurisdiction of the issuer instead of the consumer. If a creditor is successful with obtaining a favorable judgment for repayment of debt, the information may remain on the debtor's credit report for up to seven years. If the debtor files for bankruptcy, the information remains on the credit report for up to 10 years.

Understanding secured debt and unsecured debt

California residents who are in debt may be interested to learn the difference between secured debt and unsecured debt. Because each type of debt will have different consequences for nonpayment, understanding the difference may be important for a person who is working on a debt repayment plan.

A secured debt is a type of debt that is attached to a physical object like a car or a house. If a borrower does not pay a car loan, for instance, the lender can seize the person's car. A mortgage, which is also a secured debt, works the same way as a car loan. If the borrower fails to make mortgage payments, the lender can seize the person's house in a foreclosure.

How to deal with credit card debt

Credit cards are more popular than ever before. In California, millions of people may overspend when swiping for that next purchase. It's all too easy to put thoughts of repayment off for another day until credit card debt becomes a real problem. Fortunately, there are several ways to deal with credit card debt when things get a little out of hand.

The best way to deal with credit card debt is to avoid it altogether. With diligence and planning, anyone can use credit cards responsibly and avoid racking up a great deal of interest-bearing debt. Keeping track of all credit purchases in a spreadsheet is the best way to track and monitor spending. Relying on bank statements to keep track of spending is not as effective because purchases may not show up for several days.

Issue of shared credit cards and bankruptcy

California residents who are considering filing Chapter 7 bankruptcy may want to become aware that shared credit card debt will become the responsibility of the other person if that person involved in the filing. Discharge of a debt in bankruptcy does not make the debt go away. Discharge simply absolves the bankrupt debtor of liability for the amount.

Creditors are free to go after another person who is jointly responsible for the credit card debt in order to collect on the account. The success of the credit card company will depend on whether the person is listed as a joint account holder or if they are simply an authorized user on the bankrupt debtor's account. If they are an authorized user, they can contact the company, explain they are an authorized user with not liability for the balance.

Health insurance may not eliminate medical debt

California residents facing medical bills may know that paying what health insurance does not cover might lead to unexpected debt and financial hardship. According to one study, individuals with private medical insurance whose copays were more than five percent of their overall income experienced difficulties in paying their living expenses and obtaining additional medical care. This ricochet effect may impact other financial areas.

Among those surveyed, most debtors curtailed spending for other items, affecting rent or mortgage payments, groceries and medical prescriptions. Some individuals used debt management programs to structure their debt in a way that allowed them to pay off medical bills. A survey found that approximately 11 percent of Americans took money from retirement accounts to pay off their debt while others lowered the amount they put in their children's college fund or stopped paying into it altogether.