Sacramento Woman Who Filed 13 Bankruptcies Pleads Guilty To Fraud
A California woman has pleaded guilty to bankruptcy fraud after filing 13 bankruptcies from July 1999 to January 2006. Martha Montoya, a Sacramento resident, sought bankruptcy protection so that she could delay the payments of past due rents and continue living in rental homes for free.
Prosecutors say that she took advantage of the Bankruptcy Code’s automatic stay provisions after her landlords acquired judgments against her for rents owed. The landlords had also won the right to evict her family. Because she was under bankruptcy protection, however, the landlords could not collect the past due rents, evict her, or execute the judgments.
When an individual or a company files for bankruptcy, an automatic stay stops actions against you filed by many creditors, including Nolo.com):
· Utility disconnections. If you're behind on a utility bill and the company is threatening to disconnect your water, electric, gas, or telephone service, the automatic stay will prevent the disconnection for at least 20 days. (Also, bankruptcy will probably discharge the past due debts for utility service.) Although the amount of a utility bill itself rarely justifies a bankruptcy filing, preventing electrical service cutoff in January in New England might be justification enough.
· Foreclosure. If your home mortgage is being foreclosed on, the automatic stay temporarily stops the proceedings, but the creditor will often be able to proceed with the foreclosure sooner or later. If you are facing foreclosure, Chapter 13 bankruptcy is usually a better remedy than Chapter 7 bankruptcy, if you want to keep your house.
· Eviction. If you are being evicted from your home, the automatic stay may provide some help -- but the new bankruptcy law makes it easier for landlords to proceed with evictions. If your landlord already has a judgment of possession against you when you file, the automatic stay won't affect these eviction proceedings; the landlord can continue just as if you hadn't filed for bankruptcy. And if the landlord alleges that you've been endangering the property or using controlled substances there, the automatic stay won't do you much good, either. In other cases, the automatic stay might buy you a few days or weeks, but the landlord will probably ask the court to lift the stay and allow the eviction -- and the court will probably agree to do so.
· Collection of overpayments of public benefits. If you receive public benefits and were overpaid, normally the agency is entitled to collect the overpayment out of your future checks. The automatic stay prevents this collection. However, if you become ineligible for benefits, the automatic stay doesn't prevent the agency from denying or terminating benefits for that reason.
· Multiple wage garnishments. Filing for bankruptcy stops garnishments dead in their tracks. (And not only will you take home a full salary, but you also may be able to discharge the debt in bankruptcy.) Although no more than 25% of your wages may be taken to satisfy court judgments (up to 50% for child support and alimony), many people file for bankruptcy if more than one wage garnishment is threatened. For some people, any loss of income is devastating; also, some employers get angry at the expense and hassle of facilitating a succession of garnishments and take it out on their employees. Although federal law prohibits you from being fired for one garnishment, an employer can fire you for multiple garnishments.
According to the U.S. Department of Justice, 10% of all bankruptcy filings have some elements of fraud. In October 2005, the Bankruptcy Abuse and Consumer Protection Act became law. It helps curb bankruptcy abuses and protects those who really need bankruptcy protection. Montoya has been ordered to spend a year in prison.
Sagaria Law, P.C. represents clients in Monterey County, Alameda County, and Santa Clara County who wish to seek bankruptcy protection under the U.S. Bankruptcy Code. To set up an appointment for a free consultation, contact Sagaria Law, P.C. today.
Bankruptcy fraud yields year in prison, Centra Valley Business Times, January 11, 2007
How Bankruptcy Stops Your Creditors: The Automatic Stay, Nolo.com
Bankruptcy Fraud - Criminal Investigation (CI) , IRS.gov
Related Web Resource:
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), USdoj.gov
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