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Affairs of the Checkbook: a Growing Problem…
When the word “infidelity” comes to mind, most people think of an extramarital affair, of a husband, wife or significant other cheating by sneaking around with another lover. In fact, America is so obsessed with the concept that there is an entire industry called daytime TV devoted to different versions of the issue. However, despite the fact that affairs of the heart receive most of the attention, affairs of the checkbook can be equally damaging and are rising in number. Financial infidelity can be defined as one member of a couple, who have consolidated their finances, lying about expenditures, credit card accounts, bank accounts and even earnings. According to Forbes, one in three Americans who have combined their finances admitted lying to their spouses about money, and another one-third of these adults said they’d been deceived.
A Personal Story
Although I have not had to deal with financial infidelity personally, the topic does remind me of a well-known story from my hometown. I grew up in Bloomfield Hills Michigan, an affluent suburb of Detroit. One of the Dads who coached my little sister’s soccer team was a well-liked and well-respected auto executive who outwardly appeared to have everything going for him. Unfortunately, this man, who we’ll call Jim, developed a gambling problem. At the time, Windsor, Canada, which is across the river from Detroit, housed the area’s only available casinos. Jim started to visit the casinos rather than going to work and eventually began to rack up large debts. His work suffered and he was fired. Rather than tell his family what happened, Jim woke up every morning, put on a suit and pretended to be heading off to work. However, rather than going to the office, Jim dutifully visited the casinos. Rumor has it that he gambled away most of his families savings before going on a spree of bank robberies to fuel his gambling habit. When he was eventually caught, the community was shocked and saddened. Jim’s family was devastated and put in dire financial straits. While this example is admittedly extreme, it provides an important lesson. The financial decisions of your spouse deeply affect you.
How a Financial Affair Can Lead to Bankruptcy
Other blogs and articles have covered the trust issues that are created by financial infidelity, so I won’t rehash them here. Instead, I want to delve into the ramifications that affairs of the checkbook can have on an innocent spouse. It is all too common in marriages for either the husband or wife to be solely responsible for managing finances. As a result, it’s not as difficult as you might imagine for one spouse to make expenditures that the other is unaware of. Similarly, large expenditures made over short period of time can fly under the radar. When joint credit is used, both parties to the loan are guarantors who are ultimately responsible for payment. If one spouse files for bankruptcy or cannot afford to make payments, the other will be solely liable. In situations where the breadwinner is the party sneaking around financially, poor decisions can wreak havoc on the more financially dependent party, especially in community property states. For example, if a wife who earns the majority of the household income spends lavishly on a joint credit card without telling her husband and the couple separates as a result, the husband will be on the hook for those purchases just as much as the wife. In community property states like California, the courts see the debts accrued over the course of the marriage as the responsibility of both parties. In the example above, the husband would have to take responsibility for his share of his ex-wife’s financial recklessness despite the fact that he earned far less money than his ex and did not spend the money himself. Situations like this often lead to one party being forced to pay the high cost associated with bankruptcy to get rid of the debt. In community property states, even if the wife were to have incurred the credit card bills on her own account, in her own name, the husband would still be liable for his portion. By contrast, in equitable distribution states, attorneys and a judge determine who owes what. In other words, in equitable distribution states, if your spouse racked up a lot of credit card debt in secret, you’re more likely to come out of your marriage not owing any of that money. Bankruptcy attorney can tell you where the story often ends: consumers who find themselves saddled with the debts of an ex-spouse are often forced to pay a bankruptcy lawyer to discharge the debt.
John O’Connor is a consumer class action attorney and founder of the National Bankruptcy Forum, a resource for consumers looking for information about bankruptcy.
Affairs of the Checkbook: a Growing Problem…
When the word “infidelity” comes to mind, most people think of an extramarital affair, of a husband, wife or significant other cheating by sneaking around with another lover. In fact, America is so obsessed with the concept that there is an entire industry called daytime TV devoted to different versions of the issue. However, despite the fact that affairs of the heart receive most of the attention, affairs of the checkbook can be equally damaging and are rising in number. Financial infidelity can be defined as one member of a couple, who have consolidated their finances, lying about expenditures, credit card accounts, bank accounts and even earnings. According to Forbes, one in three Americans who have combined their finances admitted lying to their spouses about money, and another one-third of these adults said they’d been deceived.
A Personal Story
Although I have not had to deal with financial infidelity personally, the topic does remind me of a well-known story from my hometown. I grew up in Bloomfield Hills Michigan, an affluent suburb of Detroit. One of the Dads who coached my little sister’s soccer team was a well-liked and well-respected auto executive who outwardly appeared to have everything going for him. Unfortunately, this man, who we’ll call Jim, developed a gambling problem. At the time, Windsor, Canada, which is across the river from Detroit, housed the area’s only available casinos. Jim started to visit the casinos rather than going to work and eventually began to rack up large debts. His work suffered and he was fired. Rather than tell his family what happened, Jim woke up every morning, put on a suit and pretended to be heading off to work. However, rather than going to the office, Jim dutifully visited the casinos. Rumor has it that he gambled away most of his families savings before going on a spree of bank robberies to fuel his gambling habit. When he was eventually caught, the community was shocked and saddened. Jim’s family was devastated and put in dire financial straits. While this example is admittedly extreme, it provides an important lesson. The financial decisions of your spouse deeply affect you.
How a Financial Affair Can Lead to Bankruptcy
Other blogs and articles have covered the trust issues that are created by financial infidelity, so I won’t rehash them here. Instead, I want to delve into the ramifications that affairs of the checkbook can have on an innocent spouse. It is all too common in marriages for either the husband or wife to be solely responsible for managing finances. As a result, it’s not as difficult as you might imagine for one spouse to make expenditures that the other is unaware of. Similarly, large expenditures made over short period of time can fly under the radar. When joint credit is used, both parties to the loan are guarantors who are ultimately responsible for payment. If one spouse files for bankruptcy or cannot afford to make payments, the other will be solely liable. In situations where the breadwinner is the party sneaking around financially, poor decisions can wreak havoc on the more financially dependent party, especially in community property states. For example, if a wife who earns the majority of the household income spends lavishly on a joint credit card without telling her husband and the couple separates as a result, the husband will be on the hook for those purchases just as much as the wife. In community property states like California, the courts see the debts accrued over the course of the marriage as the responsibility of both parties. In the example above, the husband would have to take responsibility for his share of his ex-wife’s financial recklessness despite the fact that he earned far less money than his ex and did not spend the money himself. Situations like this often lead to one party being forced to pay the high cost associated with bankruptcy to get rid of the debt. In community property states, even if the wife were to have incurred the credit card bills on her own account, in her own name, the husband would still be liable for his portion. By contrast, in equitable distribution states, attorneys and a judge determine who owes what. In other words, in equitable distribution states, if your spouse racked up a lot of credit card debt in secret, you’re more likely to come out of your marriage not owing any of that money. Bankruptcy attorney can tell you where the story often ends: consumers who find themselves saddled with the debts of an ex-spouse are often forced to pay a bankruptcy lawyer to discharge the debt.
John O’Connor is a consumer class action attorney and founder of the National Bankruptcy Forum, a resource for consumers looking for information about bankruptcy.
I recently saw an online advertisement for chapter 7 bankruptcy services by an attorney offering to do the work for rock bottom pricing. The attorney’s website failed to clearly indicate specific office address locations and made no mention of any relevant bankruptcy experience or applicable bankruptcy credentials. Really the website failed to disclose much at all except the attorney’s rock bottom flat rate pricing for chapter 7 cases.
There is nothing wrong with offering rock bottom pricing. In most cases, this attorney’s services might be great. However, the attorney – via his website – was quick to infer that bankruptcy attorneys who charge more than rock bottom pricing for chapter 7 cases are just ripping people off. That could not be further from the truth.
I believe this attorney’s intentions are good. I believe the attorney really thinks almost all chapter 7 cases are easy to prepare and are devoid of any complexity. If this attorney does think that, I believe it is due to a lack of experience practicing bankruptcy law and not being more well read on the intricacies of bankruptcy law.
I would be very concerned for a potential client who went to such an attorney for a chapter 7 case with tax issues, non-exempt assets, retirement accounts, or even a case where the debtor’s income is subject to the means test. The result might not be pretty. For example, if an attorney offers to get rid of huge tax assessments for rock bottom pricing via ch7 bankruptcy, I would just tell you to be very cautious and use your logic in choosing the right bankruptcy attorney to handle your case because it takes time, skill, and effort.
In practice, I have personally helped debtors who were in trouble because they either filed pro per (without an attorney) or they retained the lowest priced attorney they could find for their chapter 7 case. Oftentimes, these attorneys screw up things that are very basic in nature. However, when you screw up such fundamental things within the bankruptcy process, oftentimes there is no recourse but dismissal. In other cases, it can lead to a loss of assets that could have been protected had the case been filed properly.
Remember not all cases are the same. Some chapter 7 cases are indeed considered simple cases by most capable practitioners. Other chapter 7 cases can be very complex. There are chapter 7 cases where no capable attorney would take the case without informing the client that the case is complex and problematic from the start just to clue in the potential client on what to expect. For those attorneys who usually offer rock bottom pricing, they are often only jumping in on the practice of bankruptcy law due to our sluggish economy, and it is far from clear what level of preparation they undertook before holding themselves out as bankruptcy practitioners.
There are many good and bad attorneys out there. Remember you more or less get one shot at your bankruptcy filing. Make sure to do it right the first time around. Ask about the attorney’s success rate and types of cases filed rather than just purely how many cases filed. An attorney may have filed thousands of cases yet has a poor track record, or never handled your type of case before and lacks the resources to do so. Unfortunately, some attorneys actually lie about their credentials and how long they have practiced law. What is important is that you make sure you ask questions about YOUR case and get an answer to those questions before filing. If you only get evasive answers or generalities about your case, your questions are not being answered so find a bankruptcy attorney out there who will actually answer them and choose that attorney to help you with your case. In the end, use common sense in choosing the right attorney to handle your chapter 7 case and don’t simply go with the lowest fee approach unless you know the attorney is competent to take on your case because I have honestly seen it backfire firsthand.
By: Marshall G. Reissman, Attorney at the Reissman Law Group, P.A.
The 11th Circuit Court of Appeals recently held that debtors in Chapter 7 bankruptcy have the ability to strip off their second mortgage on their homestead property if the first mortgage is greater than the value of the home. The ability to wipe out a second mortgage in bankruptcy was previously only available to debtors in Chapter 13 bankruptcy.
Prior to this decision, many practitioners, myself included, would have counseled individuals who wanted to remain in their home, but wanted to strip off a second mortgage to file Chapter 13 bankruptcy. A United States Supreme Court decision in Dewsnup v. Timm, held that a Chapter 7 debtor could not “cram down” a partially secured debt. Cramming down a debt deals with valuing secured property to its actual value as opposed to what is owed on the collateral. This is another big reason folks file Chapter 13 bankruptcy. Many courts interpreted this decision into Chapter 7 debtors not being able to strip off wholly unsecured junior lien.
The 11th Circuit applied its “prior panel precedent rule,” which states that a later court may depart from an earlier court’s decision ONLY if an intervening Supreme Court decision is “clearly on point.” Because the decision in Dewsnup only dealt with cramming down partially secured liens and not stripping off wholly unsecured junior liens, then the 11th Circuit holding in Folendore v. United States Small Bus. Admin remains controlling precedent in the 11th Circuit.
Basically, if a junior lien is allowed under the Bankruptcy Code and is also totally unsecured under the Code, it is also voidable in Chapter 7 bankruptcy under the Code. Please call us today to see if you qualify for relief under Chapter 7 bankruptcy and if you can strip off a second mortgage.
McNeal v. GMAC Mortgage, LLC (In re McNeal) (11th Cir. 2012)
Dewsnup v. Timm, 502 U.S. 410 (1992).
Folendore v. United States Small Bus. Admin., 862 F.2d 1537 (11th Cir. 1989).
11 U.S.C. Sec. 502
11 U.S.C. Sec. 506(a)
11 U.S.C. Sec. 506(d)
By: Marshall G. Reissman, Attorney at the Reissman Law Group, P.A.
The 11th Circuit Court of Appeals recently held that debtors in Chapter 7 bankruptcy have the ability to strip off their second mortgage on their homestead property if the first mortgage is greater than the value of the home. The ability to wipe out a second mortgage in bankruptcy was previously only available to debtors in Chapter 13 bankruptcy.
Prior to this decision, many practitioners, myself included, would have counseled individuals who wanted to remain in their home, but wanted to strip off a second mortgage to file Chapter 13 bankruptcy. A United States Supreme Court decision in Dewsnup v. Timm, held that a Chapter 7 debtor could not “cram down” a partially secured debt. Cramming down a debt deals with valuing secured property to its actual value as opposed to what is owed on the collateral. This is another big reason folks file Chapter 13 bankruptcy. Many courts interpreted this decision into Chapter 7 debtors not being able to strip off wholly unsecured junior lien.
The 11th Circuit applied its “prior panel precedent rule,” which states that a later court may depart from an earlier court’s decision ONLY if an intervening Supreme Court decision is “clearly on point.” Because the decision in Dewsnup only dealt with cramming down partially secured liens and not stripping off wholly unsecured junior liens, then the 11th Circuit holding in Folendore v. United States Small Bus. Admin remains controlling precedent in the 11th Circuit.
Basically, if a junior lien is allowed under the Bankruptcy Code and is also totally unsecured under the Code, it is also voidable in Chapter 7 bankruptcy under the Code. Please call us today to see if you qualify for relief under Chapter 7 bankruptcy and if you can strip off a second mortgage.
McNeal v. GMAC Mortgage, LLC (In re McNeal) (11th Cir. 2012)
Dewsnup v. Timm, 502 U.S. 410 (1992).
Folendore v. United States Small Bus. Admin., 862 F.2d 1537 (11th Cir. 1989).
11 U.S.C. Sec. 502
11 U.S.C. Sec. 506(a)
11 U.S.C. Sec. 506(d)
The post Can I Strip off a Second Mortgage in Chapter 7? Now you Can! appeared first on St. Petersburg Law Blog.
By: Marshall G. Reissman, Attorney at the Reissman Law Group, P.A.
The 11th Circuit Court of Appeals recently held that debtors in Chapter 7 bankruptcy have the ability to strip off their second mortgage on their homestead property if the first mortgage is greater than the value of the home. The ability to wipe out a second mortgage in bankruptcy was previously only available to debtors in Chapter 13 bankruptcy.
Prior to this decision, many practitioners, myself included, would have counseled individuals who wanted to remain in their home, but wanted to strip off a second mortgage to file Chapter 13 bankruptcy. A United States Supreme Court decision in Dewsnup v. Timm, held that a Chapter 7 debtor could not “cram down” a partially secured debt. Cramming down a debt deals with valuing secured property to its actual value as opposed to what is owed on the collateral. This is another big reason folks file Chapter 13 bankruptcy. Many courts interpreted this decision into Chapter 7 debtors not being able to strip off wholly unsecured junior lien.
The 11th Circuit applied its “prior panel precedent rule,” which states that a later court may depart from an earlier court’s decision ONLY if an intervening Supreme Court decision is “clearly on point.” Because the decision in Dewsnup only dealt with cramming down partially secured liens and not stripping off wholly unsecured junior liens, then the 11th Circuit holding in Folendore v. United States Small Bus. Admin remains controlling precedent in the 11th Circuit.
Basically, if a junior lien is allowed under the Bankruptcy Code and is also totally unsecured under the Code, it is also voidable in Chapter 7 bankruptcy under the Code. Please call us today to see if you qualify for relief under Chapter 7 bankruptcy and if you can strip off a second mortgage.
McNeal v. GMAC Mortgage, LLC (In re McNeal) (11th Cir. 2012)
Dewsnup v. Timm, 502 U.S. 410 (1992).
Folendore v. United States Small Bus. Admin., 862 F.2d 1537 (11th Cir. 1989).
11 U.S.C. Sec. 502
11 U.S.C. Sec. 506(a)
11 U.S.C. Sec. 506(d)
The post Can I Strip off a Second Mortgage in Chapter 7? Now you Can! appeared first on St. Petersburg Law Blog.
Many individuals filing for bankruptcy experience various types of collections efforts prior to filing. These collections efforts can include anything from harassing phone calls and letters to law suits and even garnishment. If you, or someone you know, is currently receiving phone calls or other collections efforts you should contact an attorney immediately.
Creditors can make certain efforts to collect debts, however, some types of conduct are illegal and the debtor may be able to recover monetary damages. Even if your situation does not rise to the level of damages, collections efforts can be frustrating, embarrassing, and even costly for a debtor.
Once you choose to retain an attorney you can inform your creditors that you are represented and provide your attorney's name and contact information to the creditor. The attorney can then confirm representation and your creditor may stop contacting you. However, it is important to know that your creditor is not legally required to stop contacting you until you actually file your bankruptcy petition with the court.
Once your case is filed your creditors are not legally permitted to contact you or try to collect the debt from you. If your creditors continue to contact you please inform your attorney.
There is an exception to this general rule that creditors may not collect debts after filing. If you currently have a bank account with an institution that is also listed as an unsecured creditor (i.e. you have a debit card and a credit card with the same bank), the creditor can take the funds out of your bank account until the debt is satisfied in full. When filling out your debts you should check to see if you owe any money to your bank for anything: including, but not limited to, credit cards, overdraft fees, and/or personal loans. If you do you should inform your attorney who can provide advice accordingly.
While generally we are looking for unsecured debts, there are a handful of financial institutions that will block use of ATM or debit cards if you hold a secured debt (for example a car loan or home loan) with the institution pending a reaffirmation agreement. You should still be able to access your funds from a bank branch, but your debit card may not work. This is not the policy of every institution, but you may want to check with your financial institution prior to filing if the situation applies to you.
If you have questions, or would like to schedule a free consultation, contact a St. Louis Bankruptcy Attorney today!
Many people filing for bankruptcy choose to hire an attorney to file their petition. Bankruptcy law is very complex and changes from time to time making it somewhat difficult to navigate for a pro se debtor. It is important to remember, that even though you have an attorney you are still personally responsible for the completeness and accuracy of your petition.
Your attorney will ask you to provide a number of documents including, but not always limited to, pay stubs, tax returns, and lists of assets and debts. When you are providing information about your debts it is imperative that you provide a complete and accurate list. It is also imperative that addresses of creditors are correct. Your attorney cannot obtain all of this information for you because your attorney doesn't know what your debts are. We can run a credit report for you, but you still need to review that information for accuracy and missing information.
You will also have to provide information regarding your assets. Your attorney will then review this information and prepare your bankruptcy petition. Your attorney can only properly advise you about your case when all of the information is accurate and complete. Any missing information hinders your attorney's ability to advise you and it may adversely affect your case.
After your petition is prepared, your attorney will have you come in to review and sign the petition. This time should be used very wisely. It is imperative that the debtor thoroughly review the petition for any inaccuracy or missing information. This is the last opportunity to add creditors prior to filing. If you realize after filing that you missed a creditor there will be fees to add the creditor(s) to your bankruptcy. Undisclosed assets can cause very serious problems as the trustee may consider the failure to disclose an asset fraud.
When you sign your petition you are signing it under penalty of perjury. You alone, and not your attorney, is responsible for the contents of the petition. This is also a great time to ask any questions you may have. This is the time to make sure you understand what has been listed. You can also ask your attorney about the process and any other questions you may have. We cannot answer an unasked question.
If you have questions, or would like to schedule a free consultation, please contact a St. Louis Bankruptcy Attorney today!
I am pleased to announce Diamond Law has opened a 2nd location on the eastside of El Paso. For about a year we had a small office on the eastside opened 2 days a week, but now we finally took the plunge and opened up a beautiful (I decorated) new office to better serve El Pasoans. I always heard that El Paso was one of the largest cities per square mile in the country. El Paso covers 1013 square miles - all the more reason to add a second office.
DIAMOND LAW is no different than any other small business - in order to expand we spent money on furniture and equipment. We purchased another huge blue DIAMOND LAW sign to be recognized and to make it clear what type of law we practice we added a red lit 'Bankruptcy' sign. DIAMOND LAW is all about being on top of technology just ask Christian our IT guy. We have cameras at each location so if your lawyer happens to be on the opposite side of town - you can still have a face to face appointment. DIAMOND LAW is all about customer service. I know people say that especially in the service industry, but we do. We fight the fights in Bankruptcy Court- to protect our clients in their Chapter 7, 11 or 13 for personal and business cases. Why? - because that's our job - to protect you - by providing hard line representation. We really work hard at raising the bar and now DIAMOND LAW is proud to announce we offer free hugs.
There is one call every bankruptcy lawyer dreads getting from a client after their case has been closed. The call regarding a missing creditor - a creditor not listed on their bankruptcy schedules and now the creditor is making demands for payment or a lawsuit has been filed against the client by this creditor. It's a common mistake and one that unfortunately happens all too frequently. The Bankruptcy Courts are divided on whether or not a no-asset chapter 7 case can be reopened to add a new creditor. In the Western District of Texas where I practice, the current state of the law is you cannot discharge the claim of the creditor. If there was a distribution made to the creditors by the Chapter 7 Trustee then the law is uniform that the debtor is flat out of luck.
By the time potential clients contact a Bankruptcy Lawyer they are under a great deal of stress. Often they've stopped answering all creditor calls and trash all their mail. Obtaining a Credit Report helps a great deal, especially if it's one of the specialized reports designed for the purpose of preparing bankruptcy documents. A Credit Report is not a cure all. Not every creditor reports to one or more of the Credit Bureaus. A Credit Report lists: mortgage lender, car purchases and most but not all credit cards. Certain creditors are automatically listed on bankruptcy schedules such as the Internal Revenue Service (IRS). The foregoing types of creditors are listed because of requirements established by the local rules of a Bankruptcy Court.
There are many types of creditors and other potential claimants that do not show up on Credit Reports: small retailers; medical bills; ambulance bills; utilities; payday loans; pawned items; loans guaranteed for a family member or friend; money borrowed from a family member or friend; rent from an apartment complex or to the homeowner of the house you rented are examples of creditors not listed on a Credit Report. There are potential claimants such as those arising from of an accident which is not covered by insurance, a dispute with a neighbor over a variety of issues, unpaid tuition, are types of claims not listed in a Credit Report. If a client fails to disclose a creditor to their lawyer, this debt would not be listed in their bankruptcy. Another example of a missed creditor: I didn't think I owed the claimant anything and in fact, I think the claimant owes me.
On the business side of bankruptcy, there are potential claims by customers for warranty issues, business creditors the client guaranteed for their corporation or limited liability company. It's important to include every possible liability to your bankruptcy schedules.
The prime rule in real estate is location, location and location and in the same vein the prime rule in bankruptcy is notice, notice and notice (review, review and review). When filling out the bankruptcy questionnaire take time to reflect and think about every potential person or business who might claim you owe them money. There are two important things a client should do: first, not to rely on a Credit Report exclusively; second, take your time to reflect on who might be out there with a claim or potential claim. Remember, whether you really owe the claimant something is not the issue. The issue is giving notice to the claimant so that any potential claim is disposed in your bankruptcy. Even if you don't owe the claimant anything, you still may be faced with having to defend a lawsuit, which is expensive. This type of lawsuit can be avoided by simply providing a name, address, and some basic information.
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