People have some expectations and questions when they file for bankruptcy in California. On the top of a debtor’s list is whether they can keep their house or their car. However, outside of their residence and vehicle, one of the most expensive items people own is in their pocket. A cell phone or smartphone is an asset that you must list in your bankruptcy paperwork. Fortunately, no matter what exemptions are available, you should be able to keep your cell phone. Below, our Roseville, CA bankruptcy attorney from The Bankruptcy Group takes a closer look at how cell phones are treated in a bankruptcy.
Listing Your Cell Phone in Your California Bankruptcy Paperwork
When you sit down with one of our experienced Sacramento, CA bankruptcy attorneys to discuss your situation, they will work with you to list all your assets. Everything you own, including your cell phone, will be listed on either Schedule A/B of your bankruptcy documents. In fact, there is even a special category for electronic devices. When you list an item, the bankruptcy court expects you to be thorough. Therefore, you will not merely put “cell phone” down – you will have to list the manufacturer and model of the phone, for example, “iPhone 7.” Included in the description will be an approximate value. It is important to understand that value does not mean what you paid for the phone or its replacement cost. The fair market value is the amount you would receive if you sold your phone around the filing date. In most cases, older phones are not valuable and newer phones are still being paid-off through a service contract. Our Sacramento Chapter 7 bankruptcy attorney will ensure that your cell phone is listed on your bankruptcy schedules and exempt its value if possible.
Cell Phone Contracts and California Bankruptcies
In addition to keeping their cell phone, many potential debtors want to know what will happen with their service contract. It is a common fear that the contract will be canceled if they file for bankruptcy. However, this is not the case. Your cell phone plan is considered an executory contract in bankruptcy.
There is a special schedule in your bankruptcy paperwork where you are required to list executory contracts. Therefore, our California bankruptcy lawyer will list your service provider’s information in Schedule G. If there is any outstanding balance due, it will be listed on a separate schedule that includes all your other unsecured debts.
An apartment lease or cell phone contract is categorized as an executory contract. This means that if either party fails to adhere to the terms of the contract, they are in breach. For example, if you were not paying your monthly cell phone bill, your provider would terminate your service.
Listing your executory contracts does not mean they will be canceled. Cell phones are typically considered a necessity these days, so if you show that you can afford your cell phone bill, the court will consider it a reasonable expense.
What if I Am Behind on My Cell Phone Bill Payments and File for Bankruptcy in California?
People file for bankruptcy because they are in debt. One of the many bills you could be behind on is your cell phone bill. Perhaps you were receiving letters threatening to cancel your service. When you file for bankruptcy in California, your cell phone service provider becomes a creditor in your case and must abide by the bankruptcy rules.
When you file for any type of bankruptcy, an injunction called an automatic stay goes into effect that stops any creditor from acting against you to collect on their debt. This powerful tool will prevent your cell phone service provider from terminating your service. What happens next is a decision that you and our Folsom bankruptcy attorney. It will also depend on what chapter of bankruptcy you filed.
No matter what chapter you file for, you will be required to inform the court whether you want to be bound by the terms of your cell phone plan or terminate it. If you decide that the monthly payment is too much, you might be able to discharge any remaining balance on the contract, including any termination fees. If your phone is being paid through your cell phone plan, you would have to return your phone.
If you file for Chapter 7, you will buy yourself a short time. However, because Chapter 7 is designed to eliminate debt, you will eventually lose your service plan. However, if you have qualified for Chapter 7, your cell phone debt should be discharged entirely.
If you are behind in your payments and wish to continue using your cell phone, then you could pay the amount you are behind through a Chapter 13 bankruptcy plan while still maintaining your regular monthly cell phone payments going forward. Our experienced Chapter 13 bankruptcy lawyer will work closely with you to help determine the best course of action given your circumstances.
Call Our California Bankruptcy Attorney to Discuss Your Cell Phone and Other Assets Before Filing for Bankruptcy
One of the many misconceptions regarding filing for bankruptcy is that you will lose your possessions, including your cell phone. Fortunately, this is rarely the case. Depending on your situation, you could file for bankruptcy and keep your cellphone or use the bankruptcy to discharge an unimaginable bill. Our California bankruptcy attorney will review your circumstances to help you decide whether bankruptcy is in your best interests and explain how your cell phone will be handled. Call The Bankruptcy Group at 800-920-5351 to schedule a free, confidential consultation.