California Debt Collection Blog

Corporations and limited liability companies often threaten to eliminate debts by filing chapter 7 bankruptcy.  It is important to understand that corporations and limited liability companies cannot discharge debts via chapter 7 bankruptcy. When an entity files chapter 7, Bankruptcy Code § 362 prohibits creditors from taking collection steps.  A chapter 7 trustee is appointed and asked to identify and liquidate the entity's assets.  The proceeds are then distributed to creditors. When the trustee's work is complete, the bankruptcy case will be closed.  At that point, the automatic stay terminates and creditors may immediately reinitiate their collection ...

A bank levy allows the creditor to “sweep” the funds in a debtor’s account.  To levy a debtor’s account, a creditor was typically forced to serve a Notice of Levy on the exact bank branch where the debtor’s account was located.  The bank levy would have no effect on funds held at the same bank but a different branch.  This made life difficult for creditors.  Not only did creditors need to know the debtor's bank, but also the exact location/address at which the debtor opened the bank account.  Acquiring this level of detail can ...

One of the first things a debtor often does in an attempt to hide his/her assets is to move cash to a spouse’s bank account thinking his money is safe from creditors. This may be true in some states, but not in California. In California, Code of Civil Procedure § 700.160 allows a creditor to levy on bank accounts in the name of the debtor’s spouse, whether alone or together with other third parties. Civil Code § 5120.110(s) goes even further.  It provides that it is not even necessary to ...