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How Quickly Does the Postal Service Deliver Your Chapter 13 payment?
When you are in Chapter 13, you need to make your monthly trustee payments on time–especially in the first four months of the case. So it doesn’t help that our Chapter 13 Trustee in Alexandria, Thomas Gorman, gets his payments at a bank in Memphis.
Memphis Tennesee is scheduled for three day delivery from Northern Virginia.
The Postal Service tries to deliver mail from Virginia to Memphis in three days. Last year, they only hit that three-day-goal 68% of the time. (Down from 75% the year before.)
So in the first four months of your case, you can expect to have at least one payment arrive late. I’ve often seen them take over a week. And, if the Chapter 13 Trustee doesn’t like your case for some reason, late payments can push him over the edge, He will ask the judge to throw your case out.
Tracking Slows it Down
When you mail your Chapter 13 payment regular mail, it goes straight from the PO box to the bank. If you send it tracking, someone has to scan it in. That can often add another day or even two.
(I recomend mailing your checks using the bill pay feature on your banking app. That way you at least have proof the check was mailed, because your bank is mailing it. How do you know if a bill pay check arrives? When it clears your bank.)
No, You Can’t us FedEx or UPS
The bank in Memphis gets their mail at a post office box. FedEx and UPS don’t deliver to PO Boxes.
Mail Your Chapter 13 Payments Early
Mail them early. Really, mail the payments early. At least eight days before the deadline. Make sure you have the money in your account--sometimes the mail does get there quickly.
For many people, late mail delivery can be the biggest stress in getting your Chapter 13 plan approved.
The post When Does the Postal Service Deliver Your Chapter 13 payment? appeared first on Robert Weed Virginia Bankruptcy Attorney.
Chapter 7 Trustee Kevin McCarthy
Kevin McCarthy is one of the four Chapter 7 trustees in the Alexandria, Virginia, Bankruptcy court. When you file a bankruptcy case in Alexandria, the computer assigns you to one of the four trustees.
Trustee Kevin McCarthy doesn’t post his picture.
Lawyers work as Chapter 7 trustees part-time, on commission. Besides his trustee work, he’s a partner in the law firm of McCarthy and White, PC, located in McLean, VA. He focuseses his legal work on creditors’ rights. He graduated from Notre Dame in 1968 and Georgetown Law in 1974.
As a Chapter 7 Trustee, he has two sets of bosses. The US Justice Department, through the Office of the United States Trustee. And the two Bankruptcy Judges here, Judge Brian F. Kenney and Judge Klinette H. Kindred.
We paid a $338.00 filing fee when we filed your bankruptcy case. Sixty dollars of that went to Trustee McCarthy. For each case, including yours, he gets an additional $60.00 that is indirectly collected from Chapter 11 bankruptcies. (Congress thinks the bankruptcy courts need to raise enough in fees to pay for themselves. No other part of the federal court system does that.)
As your Chapter 7 Trustee, Kevin McCarthy is in charge of your bankruptcy hearing, which is called the “meeting of creditors.” There are very, very rarely any creditors at the meeting of creditors. So the Chapter 7 Trustee asks the questions. (Because the trustee is not a judge, he should be called “sir” not “your honor.”)
The bankruptcy court computer schedules fourteen hearings an hour. That’s just over four minutes per case.
Bankruptcy hearings in Alexandria are by Zoom
Trustee hearings for Kevin McCarthy are usually scheduled on Wednesdays at 10:00 AM, 11:00 AM, and Noon. You attend by Zoom. You enter his Zoom hearings by using these codes:
Meeting Id 723 721 3164, Passcode 0426782547
If you are not an experienced Zoomer, here’s some help on how to join a meeting using an ID and passcode.
(Before your Zoom hearing date, Kevin McCarthy has his own form that we are required to fill in. We’ll go over that with you when we have our rehearsal call. We are also required to send in bank statements for each of your accounts one week before your hearing is scheduled. )
That’s a permanent Zoom ID and passcode. You can test it out any evening, and it will take you to the Kevin McCarthy Trustee waiting room. That way, you’ll be sure you’ll know what to do on your hearing date.
This is what you see when you enter the Kevin McCarthy waiting room. (Except you won’t see my picture in the corner.)
The post Chapter 7 Trustee Kevin McCarthy appeared first on Robert Weed Virginia Bankruptcy Attorney.
Shocking Results: Credit Scores Drop the First Year After Bankruptcy
A couple of years after filing for bankruptcy, many people find their credit scores are worse than the day the bankruptcy was approved. I was shocked when I saw that. According to LendingTree, most people see a boost of about 69 points when they file, but their scores typically drop back down by 29 points within a year.
The good news is, your credit score will improve if you follow these tips.
Here’s How to Rebuild Your Credit
As soon as the bankrupycy is discharged, you’ll be able to get approved for credit cards, with a very small limit. Get one. Start charging one tank of gas a month and pay it in full. After maybe six months, you’ll start getting approved for higher limit cards; get maybe three or four of those. Charge a tank of gas on each once a month, and pay them all in full.
If you get offers to raise the limits on your cards, go for it! But don’t charge any more. You want to increase your limits, but don’t increase your charging; stick to the one-tank-of-gas rule.
(Some people talk about credit builder loans, where you deposit money and borrow against it, but I’m not sure that’s any better than charging gas. Our big local credit unions, PenFed and Apple, don’t offer those loans.)
Why Credit Scores Might Drop Again
There are a couple of mistakes that can cause scores to drop after bankruptcy.
First, some folks avoid credit cards altogether, but it’s essential to keep building your credit history. You don’t want bankruptcy to be the most recent thing on your credit report. (Making timely car payments doesn’t usually help your score much.)
Second, some people max out their new cards. Your credit utilization—how much of your available credit you use—matters a lot. If you’re close to your limit, your score will drop.
Keep to my simple strategy: Charge one tank of gas on each card each month and pay it off in full.
For Some People, Life Keeps Happening
Some people carefully rebuild their credit, and then, bam!, something hits them. Life can throw curveballs like job loss or health issues. People end up with ruined credit for no fault of their own. If you find yourself back in a tight spot—like facing wage garnishment—feel free to reach out for help!
For More Info
For more info, see my blog on Five Websites to Check After Your Discharge.
PS Please Give Me A Review. If this article is helpful, please give me a review.
The post Will Your Credit Score Improve a Year After Bankruptcy appeared first on Robert Weed Bankruptcy Attorney.
When we file a Chapter 7 bankruptcy petition for an individual, clients often ask which assets they will be able to keep after the bankruptcy case is closed.Oftentimes, clients own interests in LLCs or partnerships and want to know if they will lose that interest in Chapter 7 bankruptcy.Forbes recently published an article by Jay Adkisson titled “Can an LLC Interest Owned by a Debtor Be Sold by the Bankruptcy Trustee?” In this well-written article, Mr. Adkisson analyzes a recent case of first impression in the Eastern District of Kentucky, captioned Business Aircraft Leasing v. Ultra Energy Resources LLC (In re Addington).The bankruptcy court held that in a Chapter 7 bankruptcy filing, a bankruptcy trustee can sell an economic right in an LLC member's interest. In the Addington case, Larry Addington filed for Chapter 11 bankruptcy, which was later converted to Chapter 7. He owned a 36% membership interest in a limited liability company called Ultra Energy Resources, LLC. The judge in the Addington case discusses that an LLC membership interest consists of a governance interest, which includes the right to manage the LLC, vote to admit members or dissolve the LLC, and the economic rights of an LLC, which are the rights to distributions of money or property from the LLC.The dispute in the case was whether the creditor who purchased the LLC interest from the Chapter 7 Bankruptcy Trustee acquired governance interests or economic rights. The LLC's position was that the purchaser had simply acquired economic rights, and the bankruptcy court, in a declaratory judgment, held that the purchaser had indeed only acquired economic rights, not governance interests.In reaching his decision, the Bankruptcy Judge analogized to a charging lien that a judgment creditor obtained on a debtor LLC member's interest. The Addington case is one of the first to involve the sale of a membership interest in an LLC by a Bankruptcy Trustee in a Chapter 7 proceeding.Mr. Adkisson, in his article, notes that the managers of a closely held LLC are unlikely to admit the purchaser as a member unless they know the purchaser will be friendly. A few comments based on our experience:1. If the LLC is a single-member LLC, the Bankruptcy Trustee will be able to sell the member's governance and economic interest.2. Whether a governance or economic interest can be sold will often depend on the terms of the Operating Agreement and state LLC law.Individuals or their advisors with questions pertaining to the sale of LLC member interests in a chapter 7 bankruptcy filing should contact Jim Shenwick, Esq.jhsJim Shenwick, Esq 917 363 3391 [email protected] Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt!
OFFER IN COMPROMISE (“OIC”) FOR SBA EIDL LOANS UPDATEIs the SBA accepting OIC applications for SBA EIDL loans? If you search online, you'll find conflicting answers. Most results indicate noYesterday I (Jim Shenwick, Esq) called the SBA EIDL Customer Service and spoke with a representative who said the following:The SBA were doing offers in compromise on a case-by-case basis on a loan-by-loan basis”. They would provide me with no further information and my take away from the telephone call was that under the right circumstances and the right fact pattern the SBA would consider an OIC, however the SBA is looking for full repayment of SBA EIDL loans and they would be reluctant to accept discounted or reduced payments. Clients or their advisors with questions about SBA EIDL loans are encouraged to contact Jim Shenwick, Esq.Jim Shenwick, Esq 917 363 3391 [email protected] Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt!
“Now I can’t even rent an apartment”
Chuck, not his real name, talked to me last month about filing bankruptcy. He’d been trying to “resolve” his debts through one of the newer debt settlement outfits, Five Lakes.
After 18 months in a debt settlement program, Chuck can’t even rent an apartment.
He had been paying Five Lakes for eighteen months and his credit score kept going down. Why was that?
Why Debt Settlement/Debt Consolidation Wrecks Your Credit
The big idea behind Five Lakes and others is that you stop paying your debts: “Making your creditors wait for payment encourages them” to give you a better deal: in theory. Of course every month you don’t pay, the creditors ding your credit with another delinquency. And when you reach a settlement–if you do–with the first one or two creditors, the others still aren’t getting paid. They still keep reporting you as late and keep dragging your credit score down further.
Each month you are late is reported as a delinquency in credit reporting vocabulary. And the delinquencies just pile up.
Bankruptcy Stops Credit Report Delinquencies
When you file bankruptcy, your creditors have to stop credit-reporting. That means you do NOT get his with a new late report delinquency every month. Your credit takes one last hit and that’s it. You can start the process of rebuilding your credit. That’s why studies show, most people experience an immediate improvement to their credit scores after filing bankruptcy.
As soon as the bankruptcy is over–usually three and a half months in a Chapter 7–you can get new credit cards and start building good credit, while your former problems fade into the past. In a debt settlement situation, those late payment keep chasing you.
In a few years after bankruptcy, your credit can be good as new.
The post Why is Bankruptcy Better for Your Credit Score than “Debt Consolidation” appeared first on Robert Weed Bankruptcy Attorney.
SBA ENDS THE HARDSHIP ACCOMMODATION PLAN FOR SBA EIDL LOANSEffective March 19, 2025 the SBA has ended the Hardship Accommodation Plan (“Hardship Plan”) for SBA EIDL Loans.The Hardship Plan allowed SBA EIDL loan borrowers to repay the SBA 10% of the loan payment due for a period of 6 months (with no default) to give the borrower breathing room to restructure or reorganize. Under the Hardship Plan, if a borrower's monthly payment was $2,000, they could pay the SBA $200 for a 6-month period. After 6 months, the payments increased to 20%, then 50%, then 70%, and finally 90% for 6-month intervals until the loan was repaid.Under the Hardship Plan, interest continued to accrue under the original loan payment terms, causing the balance due to pay off the loan to increase during the Hardship Plan.As we noted in a prior post, the SBA also eliminated the Offer in Compromise plan (https://shenwick.blogspot.com/2025/03/sba-does-not-allow-eidl-loans-to-be.html) Fewer options now exist for the struggling SBA EIDL loan borrower.Those options appear to be:1 Loan modification: Borrowers can request modified payment terms or extended repayment periods or negotiated repayment plans with the SBA.2. Hardship deferment: Borrowers experiencing economic challenges may be eligible for temporary payment deferrals.3 Full Loan Repayment from business or personal assets, if possible.4 Liquidation of Business Assets: Close the business or sell business assets and pay off or pay down the SBA EIDL loan with the sales proceeds. The SBA loan documents require that any business assets sold and subject to an SBA loan must be paid to the SBA at the time of sale. However, the borrower will remain liable for any deficiency owing after the paydown.5 Refinancing your existing SBA loan with a private lender and use the loan proceeds to pay down or payoff the SBA.6 File for bankruptcy. If the SBA EIDL loan exceeded $200,000 and an individual or entity guaranteed the loan, both the SBA borrower and guarantor may need to file for bankruptcy to discharge the SBA loan7 Default on the SBA loan and engage in Asset Protection Planning in case of legal action by the SBA or the Treasury Offset Program. At Shenwick & Associates, we can be retained to review the SBA Borrower & Guarantor financial information to determine the best course of action. Clients or their advisers with outstanding SBA EIDL loans who have questions about what they should do can contact Jim Shenwick, Esq to discuss their situation.Jim Shenwick, Esq 917 363 3391 [email protected] Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt!
Chapter 7 income eligibility got slightly easier April 1, 2025
People making less than the median income have income eligibility to file Chapter 7 bankruptcy. Those numbers adjusted up, April 1, 2025. For Virginia, eligibility is automatic for singles under $77,420, family of 4 under $145,585.
What if I’m over the median income? You can still pass the “means test.”
You can still be eligible for Chapter 7 if you are over that median income cutoff. But you have to pass means test. The means test is a way of looking at your budget to see if you are legitimately broke.
For the means test, you need to budget carefully.
Here are some of the main budget items that can help you if you are over the median.
Child care
Help for elderly family members
Medical expenses, co-pays, prescriptions, dental work, etc.
Big car payment
Big mortgage payment
Living in a high rent county
If you are over the median income, really, really careful budgeting is required to show Chapter 7 income eligibility on the means test.
The post Chapter 7 income eligibility gets slightly easier appeared first on Robert Weed Bankruptcy Attorney.
SBA
DOES NOT ALLOW EIDL LOANS TO BE COMPROMISED THREW AN OFFER IN COMPROMISE
Many
clients have contacted our law firm seeking assistance in settling their
outstanding SBA EIDL loans through an offer in compromise (OIC).
Unfortunately,
the SBA's current position is that they do not allow EIDL loans to be settled
through an OIC. While the OIC program is available for other types of SBA
loans, EIDLs remain excluded from this option.
The
options to settle SBA loans are provided below.
1.
Hardship Accommodation Plan. The hardship accommodation plan lowers
monthly payments for 6 months, and then payments increase over a time.
2.
Loan modification: Borrowers can request modified payment terms or extended
repayment periods or negotiated repayment plans with the SBA.
3.
Hardship deferment: Borrowers experiencing economic challenges may be eligible
for temporary payment deferrals.
4
Full Loan Repayment from business or personal assets, if possible.
5
Liquidation of Business Assets: Close the business or sell business assets and
pay off or pay down the SBA EIDL loan with the sales proceeds. The SBA loan
documents require that any business assets sold and subject to an SBA loan must
be paid to the SBA at the time of sale. However, the borrower will remain
liable for any deficiency owing after the paydown.
6
Refinancing your existing SBAloan with a private lender and use the loan
proceeds to pay down or payoff the SBA.
7
File for bankruptcy. If the SBA EIDL loan exceeded $200,000 and an individual
or entity guaranteed the loan, both the SBA borrower and guarantor may need to
file for bankruptcy to discharge the SBA loan
8
Default on the SBA loan and engage in Asset Protection Planning in case of
legal action by the SBA or the Treasury Offset Program.
Clients
or their advisers with outstanding SBA EIDL loans who have questions about what they should do can contact Jim Shenwick, Esq
to discuss their situation.
Jim
Shenwick/Shenwick & Associates
Jim
Shenwick, Esq 917 363 3391 [email protected]
Please
click the link to schedule a telephone call with me.
https://calendly.com/james-shenwick/15min
We
help individuals & businesses with too much debt!
How To Join A Meeting On Zoom? | Quick Start Guide
The bankruptcy trustee hearings are on Zoom. If you are not a regular Zoom user, this page shows you what to do. For the instructions on how to join a meeting with Zoom, just click on the link above. Or click on the picture.
The post How to Use Zoom with a Meeting ID and Passcode appeared first on Robert Weed Bankruptcy Attorney.
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