Blogs

4 years 11 months ago

April 17, 2020
From: twocents.lifehacker.com
By: Kristin Wong and Lisa Rowan

Bankruptcy is a last resort for people and businesses alike. Many companies file for bankruptcy and continue business as usual; the lesser-known reality is that individuals can file for bankruptcy and emerge in one piece, too.
Bankruptcy is poorly understood, so let’s talk about how it affects your finances.The differences between chapter 7, 13, and 11In general, people file for bankruptcy when there’s no way in hell they can meet their debt obligations. Popular assumption is that those people are bad with money and take out too much credit card debt. Sure, that happens, but often, people file bankruptcy after a major financial blow. It might be a lawsuit debacle or an unexpected illness.
A lot of people think bankruptcy wipes out any and all debt obligations, but that’s not the case. You still have to pay up, and how you’ll pay up depends on what kind of bankruptcy you file: chapter 7, chapter 13, or chapter 11. There are other types of specific bankruptcies, too (chapter 12 is for farmers and fishermen, for example), but these three are the most common.
With chapter 7, you may have to liquidate certain assets (like a car or a second home) to pay off at least some of the debt. Most of your assets are probably exempt, but it depends on your state, your financial situation, and whether or not that asset is deemed “essential.” You have to meet certain eligibility requirements to file, and income is perhaps the most important one. As legal site Nolo explains, there’s a whole set of criteria to determine your income eligibility, but generally, you have to have little to no disposable income.
With chapter 13, you get a plan to pay off your debts within the next three to five years, but you get to keep your assets. After it’s all said and done, some of those debts will likely be discharged. You have to qualify, though, and that means your secured debts can’t be more than $1,184,200 and your unsecured debts cannot be more than $394,725. Secured debt is debt that’s backed by collateral, like your house or car.
Chapter 11 bankruptcy works kind of like chapter 13, but it's typically reserved for businesses. Businesses can file for chapter 7 bankruptcy, too, but again, that means a liquidation of assets, so chapter 11 is usually a more attractive option. Companies get to keep their stuff and keep their creditors at bay while they continue their operations, but they have to come up with a plan to pay off at least some of their debt, or get it forgiven.What happens when you fileWhen you file for bankruptcy, you get an automatic stay. Basically, this puts a block on your debt to keep creditors from collecting. While the stay is in place, they can’t garnish your wages, deduct money from your bank account, or go after any secured assets.
Ironically, bankruptcy isn’t free. The filing fee alone is between $300 and $350 for chapters 7 and 13. And then there are the attorney fees. You can file without a lawyer, but it’s not recommended since bankruptcy laws can be tough to navigate. Attorney fees for chapter 7 average around $1,500, while chapter 13 fees tend to be in the $2,000-$3,000 range. With many attorneys, the more complex your situation, the more you’ll pay.
There are ways reduce the legal costs of filing for bankruptcy. Nonprofit Upsolve, for one, helps you generate your bankruptcy filing forms for free if your case is a simple one. Or, your local legal aid society may be able to connect you with low-cost legal services.
You’ll also have to take a class or two. The government requires individuals to get credit counseling 180 days before you file, and you also have to take a debtor education course if you want your debts discharged.
A couple of weeks after filing, you’ll have to attend a “creditors meeting,” which is basically what it sounds like: a court meeting between you, your bankruptcy trustee, and any creditors who want to attend. They’ll all ask you questions about your financial situation and decision to file bankruptcy.Your assets get liquidated with chapter 7 Nolo says that in most cases, chapter 7 debtors don’t have to liquidate their property (unless it’s collateral) because it’s usually exempt or it’s just not worth it. They explain:

If the property isn’t worth very much or would be cumbersome for the trustee to sell, the trustee may “abandon” the property — which means that you get to keep it, even though it is nonexempt...Most property owned by Chapter 7 debtors is either exempt or is essentially worthless for purposes of raising money for the creditors. As a result, few debtors end up having to surrender any property, unless it is collateral for a secured debt…

After the creditors meeting, your trustee will figure out whether or not to liquidate your stuff. If it does get liquidated, that means you’ll have to either surrender it or fork over its equivalent cash value to pay back your debt.You get a payment plan with chapter 13 With chapter 13, you get a plan to pay off your debts, and some of them have to be paid in full. These debts are “priority debts,” and they include alimony, child support, tax obligations, and wages you owe to employees.
Your plan is based on how much you owe and what your income looks like, and it will include how much you have to pay and when you have to pay it.What happens to your creditYour credit score will plummet with a bankruptcy. The higher your score, the more it’ll fall. FICO notes that the more accounts are involved in your bankruptcy filing, the greater an impact you’ll see to your score.
In general, chapter 7 bankruptcy remain on your credit report for 10 years, and chapter 13 stays on for seven.
After bankruptcy is all said and done, most debts are discharged, but not all of them.
In some cases, student loans can be discharged after a bankruptcy, but you have to pass a federal test for hardship.
Other difficult-to-discharge debts include:

  • Tax debts
  • Alimony and child support
  • Divorce-related debts, including property settlement debts

Bankruptcy is usually a desperate remedy to a helpless situation. But knowing how it works and what to expect can help you navigate some of the misconceptions and figure out what the process actually entails.
This post was originally published in 2016 and was updated on 4/17/2020 by Lisa Rowan. Updates include: Checked links for accuracy; updated formatting to reflect current style; revised article to focus on bankruptcy methods for individuals; updated monetary requirements and averages.


4 years 7 months ago

When financial problems become severe, declaring bankruptcy is the common solution. People in debt may overcome their financial distress by taking advantage of bankruptcy protection. Not only do bankruptcies offer debt relief, but they also lead to a fresh start.
If you want to declare bankruptcy, there are some necessary steps you need to take before you get to a bankruptcy discharge. The bankruptcy process presents variations depending on the details of a case.
There are several factors that impact your experience with personal bankruptcy. One of them involves the list of exceptions that you can claim when you file for bankruptcy. Since bankruptcy laws vary from state to state, debtors may have the option to pick between state bankruptcy exemptions and federal bankruptcy exemptions, depending on state law. Take note that the federal government modifies the exemptions amount every three years.
As you can infer, there are states that limit bankruptcy filers to the state exemptions, but Oregon is not one of them. Oregon allows debtors to choose between its own exemptions and the federal bankruptcy exemptions when they file bankruptcy under Chapter 7 or Chapter 13. These are the chapters under which bankrupt individuals commonly file their bankruptcy petition. 7 is the liquidation bankruptcy chapter 7 and 13 is the reorganization bankruptcy chapter.
federal bankruptcy exemptionsYou need to take into account that there are different types of bankruptcy. For instance, if a joint petition for bankruptcy is filed by a married couple, these exemptions can be doubled according to federal law. This is usually not the case for state exemptions.
What Are the Federal Exemptions?

  1. Homestead

The federal homestead exemption is used to shield your primary place of residence. It may cover any property used as a principal residence, be it a house, a condominium unit, or even a mobile home. Just like state homestead exemptions, this protection doesn’t extend to investment property. Second homes are nonexempt.

  1. Personal Property

When it comes to federal exemptions, personal property includes exemptions for a motor vehicle, trade tools, and jewelry. Exempt property may also cover items such as furniture, appliances, clothing, and household effects. Federal personal property exemptions have both a limit per item included and an overall limit. Make sure you are careful with your calculations. Incidentally, federal exemptions also protect life insurance policies and health aids among other things.

  1. Wildcard

Wildcard exemptions in bankruptcy cases pertain to a dollar amount that can be applied by the debtor toward any asset. It can be used in conjunction with another exemption to fully cover the value of a certain asset. If the federal homestead exemption can cover more than what you need to protect your home, bankruptcy law allows you to deduct up to a particular amount of the remainder to boost your wildcard exemption.

  1. Other Types

Reasonably necessary child or spousal support payment may be exempted, as well as many forms of government benefits, including Social Security, unemployment benefits, and all forms of public assistance. There is also an exemption for life insurance payments. Meanwhile, retirement accounts that are exempt from taxation are also covered, although there’s a cap applied to both traditional IRAs and Roth IRAs.
In case you’re receiving payment for damages from a personal injury lawsuit, much of it can probably be exempted in a bankruptcy case. Compensation that you get based on the loss of your future earning capacity can be exempted in bankruptcy proceedings, e.g. being a victim of a crime or the wrongful death of a loved one. You can pretty much keep a capped amount of personal injury damages, save for those addressing pain and suffering or financial losses.
Learn about Your Bankruptcy Options! Contact an Oregon Bankruptcy Attorney Today!
If you’re interested in filing for bankruptcy to get out of debt, it’s best to have a bankruptcy lawyer review your case so that you can be guided on how to best move forward with your bankruptcy filing. Bankruptcy lawyers can advise their clients on everything from filling out bankruptcy forms before filing to starting afresh after bankruptcy.
For assistance on filing bankruptcy, call us at Northwest Debt Relief Law Firm to speak with one of our experienced Oregon bankruptcy attorneys.
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The post Federal Bankruptcy Exemptions in Oregon appeared first on Vancouver Bankruptcy Attorney | Northwest Debt Relief Law Firm.


4 years 11 months ago

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed by President Trump on March 27, 2020

We hope that all are safe and doing well in these uncertain times. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed by President Trump on March 27, 2020, contains several changes to the Bankruptcy Code, which are detailed below.
1) a) With respect to personal bankruptcy, the CARES Act amends the definition of “income” in the Bankruptcy Code for Chapters 7 and 13 cases so that coronavirus-related payments from the federal government will be excluded from being treated as income.   b) Coronavirus-related payments made by the federal government under the CARES Act will be excluded from the disposable income calculation for purposes of confirming a Chapter 13 Plan.          c) Finally, chapter 13 debtors will now be able to extend their plan payments for up to seven years instead of five years (under the prior law).

2) A. The Small Business Debtor bankruptcy provisions were modified such that small business debtors with debt up to $7.5 million will now be eligible to file for bankruptcy, rather than the old limit of $2,725,625 in debt.

B. Under the chapter 11 reorganization plan, small business debtors can now retain their equity or member interests in an LLC even if creditors are not being paid in full. The law requires a small business debtor to pay their “projected disposable income” over the next 3 to 5 years to creditors who were owed money at the time of the bankruptcy filing. Under the new law, a creditors’ committee is not formed, but the small business debtor will only have 90 days to file a reorganization plan, with very limited right to extend. Additionally, a “standing trustee” will be responsible for oversight of the small business debtor instead of a creditor committee. The standing trustee will be selected by the U.S. Department of Justice from a list of preapproved turnaround professionals.

People with questions about the CARES act should contact
Jim Shenwick   212-541-6224    [email protected]


4 years 11 months ago

Resources for COVID-19 Information
COVID -19 Has Changed How We Live Our Lives What We Can Do to Survive and Flourish

Why are we easily misled about the truth?
Why Smart People Believe Coronavirus Myths, (the following is a clip form BBC.com/future)
We’ve debunked several claims here on BBC Future, including misinformation around how sunshinewarm weather and drinking water can affect the coronavirus. The BBC’s Reality Check team is also checking popular coronavirus claims, and the World Health Organization is keeping a myth-busting page regularly updated too.
You might also like:

At worst, the ideas themselves are harmful – a recent report from one province in Iran found that more people had died from drinking industrial-strength alcohol, based on a false claim that it could protect you from Covid-19, than from the virus itself. But even seemingly innocuous ideas could lure you and others into a false sense of security, discouraging you from adhering to government guidelines, and eroding trust in health officials and organizations.
There’s evidence these ideas are sticking. One poll by YouGov and the Economist in March 2020 found 13% of Americans believed the Covid-19 crisis was a hoax, for example, while a whopping 49% believed the epidemic might be man-made. And while you might hope that greater brainpower or education would help us to tell fact from fiction, it is easy to find examples of many educated people falling for this false information.
Economic Stimulus Payments:
IRS COVID-19 RESOURCE
The Treasury and IRS launch new tool to help non-filers register for Economic Impact Payments
IRS.gov feature helps people who normally don’t file get payments:
The Treasury Department and the Internal Revenue Service have a new web tool allowing quick registration for Economic Impact Payments for those who don’t normally file a tax return.  NOTE FROM DIANE – IN ORDER TO AVOID SCAMS NEVER USE ANY OTHER PORTAL.
second tool next week provides taxpayers with payment delivery date and provide direct deposit information
Small Business Loans:
US Chamber of Commerce: COVID-19 Emergency Loans: Small Business Guide
COVID-19 Information and Resources for Legal Professionals:

Check back regularly as this section is being updated (by Findlaw).

Law Firm Management During Covid-19

Resources for Law Students

Resources and Tips for Remote Working



MUSINGS FROM DIANE:
Quality information is king.  Never take medical advice from someone who wants something from you. Nor should you rely on reports from politicians – most only have one goal – that is to be reelected.  Instead, rely on the scientists.

This is a difficult time for everyone, but the good news is that our actions show we care about others.  We are following common sense social distancing.  We are staying in touch with our friends and family, but in ways not to expose those who are vulnerable.

This too we shall survive, just like those who came before us survived wars, other pandemics and economic depressions.  Humans are resilient and adapt to challenges.

Be kind to each other.

The post Resources for COVID-19 Information appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy & Foreclosure Attorney.


4 years 11 months ago

The Alexandria Bankruptcy Court Trustee Hearings are now by Telephone. Bankruptcy Trustee hearings are now telephonic. That’s the policy of the Alexandria VA bankruptcy court, effective April 9, 2020. (Richmond and Norfolk, too.) People who file bankruptcy are required by law to “appear” in front of the bankruptcy trustee to answer question.  (For most people, […]
The post Bankruptcy Hearings: Now Telephonic by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed - .


4 years 11 months ago

The Alexandria Bankruptcy Court Trustee Hearings are now by Telephone. Bankruptcy Trustee hearings are now telephonic. That’s the policy of the Alexandria VA bankruptcy court, effective April 9, 2020. (Richmond and Norfolk, too.) People who file bankruptcy are required by law to “appear” in front of the bankruptcy trustee to answer question.  (For most people, […]
The post Bankruptcy Hearings: Now Telephonic by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed - .


4 years 8 months ago

The Alexandria Bankruptcy Court Trustee Hearings are now by Telephone. Bankruptcy Trustee hearings are now telephonic. That’s the policy of the Alexandria VA bankruptcy court, effective April 9, 2020. (Richmond and Norfolk, too.) People who file bankruptcy are required by law to “appear” in front of the bankruptcy trustee to answer questions.  (For most people, […]
The post Announcement: Bankruptcy Hearings: Now Telephonic by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed - .


4 years 11 months ago

April 1, 2020
From: NY Post
By: Thornton McEnery

A Brooklyn taxi operator who got his first medallion in the 1970s has filed for bankruptcy as the coronavirus ravages an already struggling industry, The Post has learned.

Joe Pross, who started driving a taxi in 1975 and now runs a fleet of 42 cabs, filed for Chapter 11 bankruptcy protection for his Crown Heights-based medallion company, Walker Service Corp., on March 27, court papers show.

Pross, 75, declined to be interviewed for this story. But his Brooklyn federal court bankruptcy filings underscore how vulnerable taxi operators were prior to the coronavirus crippling tourism and forcing thousands of New Yorkers inside.

Walker Service Corp. appears to be the first medallion owner to file for bankruptcy protection since the pandemic shut down the city, but it’s not likely the last, industry experts say.

 “This industry was on the brink before this happened, and this virus has just pushed it totally over the edge,” said Matthew Daus, a former TLC commissioner who’s now a lawyer with Windels Marx. “I hope we don’t see more bankruptcies, but I’m afraid a lot of people might go under and file for bankruptcy protection. This will be worse than 9/11 economically, especially for the black cars and luxury livery.”

In an affidavit filed with his bankruptcy papers, Pross says his medallions — “once worth millions” — plummeted in value as ride-hailing apps and Uber and Lyft grew in popularity, leaving him and his wife struggling to pay off loans they took out on their medallions to build the business.

By 2019, before the coronavirus even hit, Pross’ fleet was pulling in $29,400 a month — far short of the $105,610 a month he needed to repay $18.7 million in medallion loans, court papers show.

In late February, his lender, Virginia-based Pentagon Federal Credit Union, issued notices of default on six loans and demanded $158,186 within 30 days to rectify the situation.

Pross says he tried to negotiate repayment. Then the coronavirus hit — slamming the brakes on taxi revenue even as drivers and operators continue to face expenses for parking, dispatchers, mechanics and administrative workers.

“The current COVID-19 pandemic has now rendered the debtors with virtually no income to operate its businesses as the debtors have recently suspended operations during the COVID-19 pandemic for March, April and possibly May 2020,” Pross’ filing says.

As The Post reported on March 15 - before Gov. Cuomo even ordered restaurants shut down and non-essential workers stay home — taxi drivers were making as little as $50 a week as people afraid of contagion avoided public spaces.

“The drivers are coming back asking if I can pay their gas because their fares didn’t even cover it. We can’t go on like this,” a taxi operator who asked not to be named told The Post on Wednesday.

Pross’s affidavit also blames Walker’s debt holder, PenFed, saying it has been playing hardball by “shockingly” refusing to extend its 30-day payment deadline.

PenFed acquired $290 million worth of medallion loans, including Pross’s, as part of its 2019 merger with New York-based Progressive Credit Union, according to reports at the time.

The credit union declined to comment on how many medallion loans it currently possesses, but insisted its working hard to keep taxi operators in business.
 
The credit union declined to comment on how many medallion loans it currently possess, but insisted it’s working hard to keep taxi operators in business.

“PenFed actively works with our members experiencing financial hardships, including taxi medallion borrowers who have requested relief,” a PenFed spokesperson said in a statement. “PenFed has an extensive team in New York working to help members who need assistance during this challenging time.”

Pross is hoping to come out of bankruptcy with reduced loans so he can continue to run the business through his main business, Utica Taxi, which operates the cars and garages and employs the dispatchers and other workers, filings show.

But with coronavirus deaths in New York nearing 2,000 and growing, the main business also faces the threat of going under.

“The proliferation of ride-sharing apps such as Uber and Lyft … combined with the economic devastation associated with the COVID-19 pandemic, may eventually render Utica Taxi bankrupt as well,” Pross’ affidavit said.


4 years 11 months ago

Coronavirus Aid, Relief, and Economic Security Act “CARES Act – the Payroll Protection Program
Brief Summary of the Payroll Protection Program Portion of the CARES ACT:
(BBB webinar 3/29/20 Jonathan Gallagher, DEO, Shelley Adday. CHRO)
How it can benefit your business:
Paycheck Protection Program “PPP”, $350B loan program for businesses.  The intention is to provide unsecured (and forgivable) loans to small businesses with the goal to keep employees on the payroll.

  • Term period is 2/15/20 through 6/30/20
  • 100% government guaranteed
  • Can be 100% forgivable if utilized for specific expenses
  • Retroactive back to 2/15/20.  If the business laid-off employees, they can be rehired with no penalty and potentially include the number of employees into the forgivable calculation.

Who can apply for the loan:

  • Any business with less than 500 employees
  • Includes sole proprietors
  • All businesses that could qualify for an SBA loan before the COVID-19 crisis

Loan Details:

  • The loan amount is the lesser of $10M or 2.5X your average monthly payroll expenses.
  • Interest is capped at 4% and payments can be deferred up to 6 – 12 months
  • No credit check, no personal guarantee
  • Must have been in business and paid employees before 2/15/20

PPP – Loan Forgiveness for funds used within the 8 weeks following the loan origination:
The loan may be forgiven UP TO 100%.  which includes:

  • Payroll costs (during the 8 weeks following the origination date)
  • can include mortgage interest on commercial properties purchased before 2/15/20
  • if renting (must have signed the lease before 2/15/20) can add the rents for the 8 weeks following the origination of the loan
  • All utility payments (during the 8 weeks following the loan origination).

PPP – Calculation for maximum loan amount:
The loan application is based on the prior 12 months:
Add together:

  • Payroll costs – wages to employees and certain independent contractors (if acting like regular employees), employee’s income cannot exceed $100,000 annually
  • employer contributions to health insurance
  • Employer contributions to retirement

Above payroll costs divide by 12 = monthly “payroll costs”
Monthly payroll costs X 2.5 = maximum loan amount
Valuation of Forgiveness of the Loan:
Valuation shall be in the immediate 8 weeks following the origination of the loan.  Assume there will be a requirement to support payments.
EIDL Loan (Economic Injury and Disaster Loan) and PPP loan
The Economic Injury Disaster Loan Program (EIDL) can provide up to $2 million of financial assistance (actual loan amounts are based on amount of economic injury) to small businesses or private, non-profit organizations that suffer substantial economic injury as a result of the declared disaster, regardless of whether the applicant sustained physical damage.
You caan apply for both, but you cannot double dip, that means you cannot use both funds for the same purpose.
public service student loans
Resources:
Better Business Bureau webinar: CARES Act and Families First Cononavirus Response Act

MUSINGS FROM DIANE:
Whenever there is new law, or a new interpretation of an existing law – SLOW DOWN.  The truth is no one really knows what it means or what the consequences will be if you act.  The process is the following: new law is created (either through the legislative process or the courts), creative lawyers decide to apply the new law to certain facts, the court may or may not agree with the lawyer’s interpretation and come out with a decision that does or or does not follow the new law.  One of the parties may appeal and the case goes up to a higher court.  Years later there is a “final” decision until the law changes again.

When it comes to the new law dealing with COVID-19, no one, including the people who wrote the law, really know how that law will be interpreted and applied.  Many times you can ask the drafters of the law and they will give opposing opinions on what something means.  So, be very cautious in taking the advice from anyone, including a lawyer, how to interpret this extremely complicated law, and the others that will definitely follow.  Take is slow before acting.

The post CARES ACT – Sources and Summaries for Payroll Protection Program appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy & Foreclosure Attorney.


4 years 7 months ago


Included in the 2 trillion dollar Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a provision that allows homeowners with government guaranteed loans (Fannie Mae and Freddie Mac) to request up to 12 months of mortgage payment forbearance.
Under the CARES Act  a homeowner may ask for 6 months of loan payment forbearance that is renewable for another 6 months. In other words, a qualified homeowner can go an entire year without making a single mortgage payment.
What exactly is a mortgage payment forbearance?
Well, it simply means that a payment does not have to be made presently, but eventually the skipped payment must be repaid.
How are skipped payments to be paid?
There are basically three options here:

  1. Reinstatement: Make a one-time payment for the amount due.
  2. Repayment Plan: Pay extra each month on the amount due.
  3. Loan Modification: Rewrite the mortgage loan to pay the amount due over the remaining term of the loan.

Other remedies.
In addition to allowing for a payment forbearance, FHA and Freddie Mac loans will also receive the following benefits:

  • Waiving assessments of penalties and late fees,
  • Halting all foreclosure sales and evictions of borrowers living in Freddie Mac-owned homes until at least May 17, 2020,
  • Suspending reporting to credit bureaus of delinquency related to forbearance,
  • Offering loan modification options that lower payments or keep payments the same after the forbearance period.

Not sure if you have a Fannie Mae or Freddie Mac Loan?
Us the Fannie Mae lookup tool and Freddie Mac lookup tools to see if you have a government guaranteed loan.
USDA Rural Housing Development Loans.
A similar loan deferment program is also being sponsored by the USDA home loans.
Contact Your Mortgage Company:
Bank of America
Phone: 1-800-669-6607
Cenlar FSB
Phone: 1-800-223-6527
Chase
Phone: 1-800-848-9380
Freedom Mortgage
Phone: 855-690-5900
Lakeview Loan Servicing, LLC
Phone: 1-855-294-8564
LoanCare, LLC
Phone:800-410-1091
Mr. Cooper a/k/a Nationstar
Phone: 1-855-375-4001
NewRez
Phone:1-866-317-2347
PennyMac
Phone: 1-800-777-4001
PHH Mortgage Services
Phone: 888-820-6474
Wells Fargo
Phone: 1-800-357-6675
 
Image courtesy of Flickr and sergio santos


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